ISA

Individual Savings Accounts (ISAs) are the new face of tax free saving. More inclusive than the old PEPs and TESSAs, (meaning more savings for a bigger range of the British public,) ISAs have been relieving investors of the income tax and capital gains tax burdens on their savings since 1999. No overseas investment required, no complications, no catch; just all the unfettered savings potential you could ever want. But there’s more to it than that. ISA’s not only negate tax; they provide an enhanced return on your investment.

Essentially an ISA is a medium term investment, whether in cash (e.g. bank / building society accounts, national insurance products and unit trusts) or in stocks and shares. Typically the minimum investment period is five years. If you invest in a cash ISA, you’ll benefit from tax free saving and significant returns on your initial outlay at the completion of the agreed interest period. Interest will typically be paid on the anniversary of the day the account was opened. Thereafter interest will accrue on the compound figure and will continue to be paid every year, until such time as the account is closed.

Stocks and shares ISAs can be invested directly into individual stocks, managed schemes or portfolio schemes (which give you a little bit of everything for your money.) Managed schemes encompass corporate bonds, unit trusts and Open Ended Investment Company (OEIC) umbrella fund options.

The potential return on Stocks and Shares ISAs are significantly greater; fortunately the risks are not commensurate. For one thing internet banking takes all the guess work out of making investments. You can monitor the performance of your chosen scheme on the designated performance indicator page, giving you the ultimate insight into how your investment is performing on an ongoing basis. ISA under performing? No matter. Transfers are quick and easy to arrange, and your account manager will be able to advise you on the best move for your money based on the best potential increase in savings potential.

ISAs are available in both mini and maxi varieties, (the maxi being the ‘supersize’ option!) Maxi ISAs enable you to split your investment between a cash option and a stocks and shares option, up to a combined value of £7000. Or you can take out up to two mini ISAs, and invest in cash and/or stocks and shares up to the values of £3000 and £4000 respectively.

Bear in mind that you’ll be unable to open up one of each in the same tax year. Although this restriction ends at the start of the next tax year, there is still an embargo on making investments in more than one scheme in the same tax year. So choose carefully. Don’t worry; it’s not necessary to close an existing ISA before opening up a new one, provided you’re happy to forego investments in one account for the other.

Whatever you decide, you’ll be relieved to know that investing in an online ISA is as straightforward as it is rewarding. You’ll be assisted throughout the investment process and beyond by your very own account manager – or your very own account managers (plural) depending on how you split your investment. All you have to do is decide which ISA suits you best: mini or maxi; fill in the online form and you’re done.

ISA doesn’t just stand for Individual Savings Account; it stands for tax free e-savings and online investment made easy!