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ISA's
Investments
Individual Savings Accounts (ISA's) are Government initiated savings vehicles. In short, it is vital for any health economy to have a certain level of public saving. Thus the government created first, TESSA's ,PEP's and later ISA's to encourage individuals through tax savings to save on a regular basis. ISA's are available to all UK residents aged 18 or over. An ISA is beneficial to all taxpayers, especially those paying the higher rate.
The government introduced ISA's to replace the pre-existing TESSA and PEP schemes. ISA funds can be invested into several components, namely: cash, stocks, shares and life insurance (although not all providers offer this option).
- A cash ISA will suit an investor that has short term cash flow requirements and will typically need their funds within 1 to 3 years from investment.
- A stocks and shares ISA will suit an investor that has a longer term savings horizon of between 4 and 10 years. This will give the investment sufficient time to grow with the market as well recover from any cyclical downturns that is very common in the investment environment.
Key Features of ISA's
- Single Investments: Up to £7200 per annum.
- Monthly contributions: Minimum contribution start at £50 per month and the maximum is £600 per month. Totalling £7200
- There is no minimum term for which the investment needs to be kept invested, but the longer it stays invested the better change of having the required return.
- Investment funds can be switched within the ISA without loosing the annual allowance.
- ISA's are cheap to administer. An average annual fee of 1.5% and an initial setup charge of 5%
Some key changes were made to the ISA rules that came into effect on the 6th of April 2008:
- The total investment allowance was increased from £7000 to £7200.
- Cash ISA A maximum of £3600 can be saved in a Cash ISA with one provider. The remainder of £3600 can then be invested in a Stocks and Shares ISA with the same or any other provider.
- Stocks and Shares ISA's A maximum of £7200 can be invested in a Stocks and Shares ISA
- Mini and Maxi ISA's no longer exist
- Mini Cash ISA's, Tessa only ISA's and the cash part of a Maxi ISA automatically became cash ISA's
- Mini Stocks and Shares Isa's automatically became Stocks and Shares ISA's.
- PEP's automatically became Stocks and Shares ISA's.
- Existing Cash ISA's can be transferred to Stocks and Shares ISA's but not vice versa.
If you would like more information or to speak to one of our qualified advisors, please give us a call on 08456711100 or submit a query. You can also visit the money made clear website created by the FSA.
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