The beginning of the tax year is one of the best times to put money into your Investment ISA. The personal finance experts at money.co.uk comment on if they are worth the investment.
Investment ISAs differ from a regular Cash ISA in that they put your money into the markets - either in stocks, bonds or something else, rather than holding it in a cash savings account.
This means there’s more risk than in a standard account, but also potentially far higher returns - especially with the exceptionally low rates on offer from most cash ISAs at the moment.
James Andrews, personal finance expert at money.co.uk, said: “There are two main ways to invest with ISAs, firstly you can open an investment ISA with a lump sum – for example if you’ve recently inherited some cash, received a bonus from work, or had a fixed-term savings bond expire and are looking for somewhere to put the cash.
“You can also set up a direct debit with many providers, letting you put a little away each month, after opening an account with a nominal sum.
“But before you make a decision on how much to invest, it’s essential you research the whole process to find out if you should invest or not.
“If you’re after a quick return on your money, investment ISAs are generally not seen as the way to go. While you can make double-digit returns in a year by investing in the right stocks and funds, you can also make losses - and this particularly applies over the short term.
“Typically, you’ll need five years or more to be confident in getting a better return from the markets than from cash savings - with the longer you hold the money in the markets the better the chances of making a profit.
“It’s also a good idea to make sure you spread your money across different funds and shares, and review your investments regularly.
“And if all that sounds too complicated, there are now ISA providers that take the work out of it for you. You simply answer a few questions on how long you plan to put the money away for and how much risk you’re comfortable with, then they do all the rest of the work for you.
“This service does come with slightly higher fees though, so make sure you check the details thoroughly before investing.
“To compare the best stocks and shares ISAs, visit https://www.money.co.uk/savings-accounts/investment-isas.htm”
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