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ISA investors urged to spread risks

ISA investors urged to spread risks

Category: Investments

Updated: 11/03/2010
First Published: 11/03/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Investors in stocks and shares ISAs have been told they must diversify their portfolios to reduce the risk of losing money.

The end of the 2009/10 tax year is fast approaching, with ISA savers having until just 5 April to make the most of their allowance for the current tax year.

Since October last year, investors aged 50 or over have been able to put a new maximum of £10,200 into a stocks and shares ISA.

Come the new tax year, all investors aged 18 or over will be able to benefit from the increase, meaning an additional £3,000 a year can be squirreled away from the taxman.

Despite the remarkable resurgence seen in stock markets over the past year, investing in stocks and shares still remains more risky than cash ISA.

Stock markets can go down, as well as up, and if they do, investors could lose money.

However, investors can spread their risks and lower the chance of losing out, if they invest in a number of different funds.

"With interest rates at historic lows, savers and investors alike should plan to make the most of the improved allowance," said Andy Parsons, advice team manager at The Share Centre.

"While see-sawing markets have left some wary of investing in equities, those not ready to invest directly into the stock market could consider funds as a way of reducing their overall risk.

"Funds by their very nature help to diversify a portfolio because they include a variety of equities and other investments. With a diversified portfolio, returns from better performing investments can help offset those which aren't performing as well."

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