It’s that time of year again when Britain’s savings heads get all in a lather – it’s ISA season!
Traditionally, Britain’s banks, building societies and investment firms all start jostling for our business, plonking all sorts of tantalising deals on the table in order to convince folk that they’re the best bet for our money in the long run, and also trying to cajole us into taking advantage of ourtax-free allowances (Up to £10,680, split between stocks and shares ISAs – more on that later) before the end of the tax year at the beginning of April.
What in blazes is an ISA, anyway?
It’s an ‘Individual Savings Account’, and one of the few totally legitimate ways you can get one over on the taxman. They were introduced in 1999 to stimulate saving, and unlike bog-standard savings accounts, HMRC can’t get its hands on the interest your savings rack up. (For standard accounts, the state gets 20 per cent on the interest, rising to 40-50 per cent for high-rollers) If you still need fast access to your cash, there are no shortages of ISAs which will allow you to get at it without affecting the tax benefits – the money doesn’t necessarily need to be locked up, unless your bank specifies so.
What ISA is right for me?
Only you – and potentially an independent financial adviser – can answer that one, and it depends entirely on how much risk you’re willing to take with your money, and how much you want to try and squeeze out of it. With the pounding financial hangover of the banking collapse only just beginning to subside, savers are more risk-averse than ever. After all, nobody wants to get their fingers, or indeed their cash, burnt. But because of the low base rate (which doesn’t look like it’ll move any time soon), the risk-averse aren’t likely to see their money grow exponentially.
Stocks and shares ISAs which are (surprise, surprise) linked to investment markets can offer higher rates of interests, even if there’s an element of risk attached.
With the world economy still in very much an uncertain place, there are dangers and perils which could see your money decrease, or even be wiped out altogether.
Still, with the top current cash ISA on Gocompare.com’s comparison service represented by Halifax's 4.5 per cent Fiver Saver Fixed offer, it’s still several times higher than the base rate. You only need a minimum investment of £500 to take advantage of it too. If in doubt, seek the assistance and sage monetary wisdom of your local Independent Financial Advisor – they will help you cut through the swathes of occasionally head-spinning jargon and help you find the best deal for you.