If I want some savings investments would an ISA be the best option?
ISAs are a good option as you can use them for short term savings in the form of cash up to £5100 per financial year or up to £10200 per financial year in stocks & shares but only if you are prepared to accept investment risk and to invest for a longer term ie at least 5 years. There are many who think ISAs are a waste of time but the thing to bear in mind is that many investment houses will offer charge deals through IFAs so an investment fund can often be cheaper to access through an ISA as opposed to outside the ISA wrapper. | 12.22.10 @ 22:05
A point to be clear about is that, whether you are save in the form of cash or in the form of an investment of some kind, an ISA is not itself an investment. It is a tax-favoured environment where you place the actual investment.
In most cases there is little gain (or perhaps none at all) for holding your investments within an ISA, but there is no loss, either, unless there is an additional charge for the ISA itself. Effectively the same products (whether cash or other investments) can be held directly as in an ISA, so it makes sense to use your ISA allowance before investing elsewhere.
However, there is a footnote. Depending upon your circumstances other non-ISA investments may be better for you. This may include such items as "investment bonds" and also pensions which, though they have very specific restrictions on what you can do with them, are also a tax-favoured place which can hold a full range of investments and savings products. Indeed, pension investment is even more tax efficient than ISAs.
| 12.22.10 @ 22:31
David makes a very good point as there are many alternatives outside of an Isa which could give you a decent return. Within Investment bonds and Pensions, you can usually have a good diversified portfolio which gives access to most of the markets, equities, cash, bonds and commercial property, whereas as cash Isa's focus on just cash and stocks and shares Isa's focus mostly on stocks and shares | 12.23.10 @ 06:05
Whether or not an ISA will be the best option for you depends on your exact circumstance, however what is worth saying with a fair degree of confidence is that it will be rare that either a cash or investment ISA won't be suitable for building up short or long term savings, and so it is (if you don't want the hassle of going to see a financial adviser) a safe option. | 12.24.10 @ 11:37