As turmoil in the stock markets continues, ISAs can offer safer alternatives.
It will take a brave investor after last week's market turbulence to plunge a further £7,000 into the murky waters of our stock markets. However, savers may feel trapped between a rock and a hard place: if they don't invest, they could lose valuable tax breaks.
To maximise their ISA allowance, savers must invest £7,000 in stocks and shares before April 5, giving a married couple a potential tax break of £14,000. ….
How much can I invest?
This tax year you can invest £7,000 in stocks and shares or investment funds via a maxi ISA, and the returns will be free from income tax (where applicable) and capital gains tax.
They are particularly valuable for those planning for retirement, because income taken from an ISA is tax-free, whereas your pension is taxed. This is why maximising ISA investments can be crucial. ….
However, changes to the ISA rules for the next tax year open up even more opportunities for timing your investments. From April, not only do the limits on an equity ISA rise to £7,200 and the ceiling on cash ISAs lift to £3,600, but all savings in previous cash ISAs can be reinvested in an equity ISA. ….
Funds that manage your risk
…. Steve Wilson, a financial adviser at Alan Steel Asset Management, likes the look of Schroder's Multi-Manager Cautious Managed Fund for its low-risk approach. ….
Other funds worth considering
Wilson said the crucial thing when going back into the market is to choose a well-run fund with a good track record.
He said, "Investors have done well with Invesco Perpetual High Income, and M&G Recovery is another to consider."
Quote courtesy of Scotland on Sunday, 27 January 2008.
