ISA myths dispelled

Despite some thoughts to the contrary, one writer points out that saving in an ISA is a simple process.

A writer has taken the time to dispel a number of the myths surrounding ISA accounts.

In a piece for lovemoney.com, Jane Baker points out that although many people may think otherwise, applying for an ISA is relatively simple process.

She goes on claim that the rate of return attached to ISAs is on a par with those offered by traditional saving accounts, particularly as the former allows people to save money on a tax-free basis.

And despite some consumer concern, cash ISAs are deemed to be “just as safe as ordinary savings accounts”, although Ms Baker does acknowledge there is an element of risk for those choosing to invest in a stocks and shares-based ISA.

Meanwhile, contrary to popular belief ISAs are not the sole preserve of wealthy people and can be opened from as little as £1.

Earlier this week, Paul Kennedy, director of tax wrapper and trust planning at Fidelity International, claimed making full use of the increased ISA saving allowance “can add significantly to an investor’s pot of money”, and searching for the best isa rates can provide increased returns.

As Cash ISAs tend to be ‘variable rate’, which means they generally rise and fall to reflect changes both to the Bank of England base rate and for providers’ own competitive reasons, so it is worth keeping an eye on your rate to ensure you’re still getting the most competitive deal. If not, simply transfer to a better payer.

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