Since the ISA was first introduced in 1999 not only has the maximum annual contribution increased from £7,000 to a very significant £20,000 but there are now a number of different versions.
A recent article from Hargreaves Lansdown sets this out in some detail and is well worth a read.
In my experience Cash ISAs are very much over-used. They can be right for short term savings (3 years or less) but, even then, better interest rates may be available from other savings accounts. What I get really upset about is medium/long term savings sat in Cash ISA accounts earning minimal interest when a switch to a Stocks and Shares ISA could provide a much better return at little extra risk.
Holding a limited number of shares in an ISA can be high risk but using a collective investment fund is much safer and there is plenty of help out there to when it comes to choosing a good fund which suits your objectives and risk profile.
Even then you need to put in place a monitoring process. You could choose the best fund now, but if you don’t keep an eye on it things can go very wrong in the medium/long term.
A more recent addition is the Lifetime ISA. Available to those between 18-39 it can fit well for anyone saving for their first house or as an alternative to a pension. The excellent tax benefits must be weighed against a lack of flexibility so don’t rush in without being sure it is right for you.
Junior ISA accounts have been available for some time now. With a maximum annual contribution of £4,368 a considerable fund can be built up in no time at all.
The most recent addition is the Innovative Finance ISA. Don’t be fooled. The extra interest on offer is pretty much matched by the extra risk you are taking on. Right for some people but not those looking for low risk.
Do have a read of the HL article here.
I am not a regulated financial advisor so I cannot give personal advice but I can provide information, education and guidance which will help you make good decisions for yourself. If you feel my guidance would be useful phone or text me, Richard, on 07770 575122 and let’s have a preliminary conversation.
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