I.S.A.s Changing Britain’s Savings Landscape
I.S.A.s continue to grow in scope and popularity nearly 20 years after their introduction.
In an environment where the alternatives are not performing, I.S.A.s have become the preferred method of saving for many British people.
Trust in the returns on pensions has eroded, as has the interest on instant access savings accounts. With inflation currently 1.8% and the greatest instant access savings account paying out 1.1%, putting your money into a savings account means a decrease in your purchasing power a year on.
Much of the success of I.S.A.s comes from their simplicity. Capital gains and income from investments which can include stocks and shares are protected from tax by being ‘wrapped’ in an I.S.A.. Despite the fact that they have become far larger than initially envisioned this simple concept has remained and has proven popular.
Established in 1998, I.S.A.s have grown both in significance and in what they can encompass. The limit on the amount you can invest has risen from £7,000 to £20,000. Seen as a good way of encouraging people to save, under-18s have been allowed to save in junior I.S.A.s. Initially the tax free status of I.S.A. savings did not last through the inheritance process however today savings can be passed to a spouse or civil partner.
Advice For Stocks And Shares I.S.A. Success
The best advice based on past performance is to stick with a few stocks and shares interests and to ride out any volatility. Stocks and shares consistently outperform other methods of saving and the fact that an I.S.A. protects what is in it from tax is an opportunity that should not be missed.
With defined-benefit pension schemes nearly gone from the private sector and the amount you are allowed to invest in an I.S.A. rising, I.S.A.s are fast becoming a genuine option for long term and even lifetime savings.
Paul Hoskin MD at Hoskin Financial
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