- If you do not use all of your annual Isa allowance for investments it is worth using it for cash
- If you are unsure of what to invest in put cash into your Isa and transfer it to investments when you have decided
- Inflation erodes the value of cash over the long term
The cuts to the dividend and capital gains allowances from 6 April mean that you should prioritise using your individual savings account (Isa) to shelter higher-returning investments such as funds and direct shareholdings. However, there are some instances when you should also consider holding cash in Isas.
Everyone should have an emergency fund worth at least six months of their annual expenditure in easily accessible cash. And if you expect to have a large expense within the next five years, for example, a deposit to buy a home, renovations on your existing home or a new car, due to the short time scale you should hold this in cash. If you are not using your Isa for investments, you could hold this cash within one.