As another tax year draws to a close tomorrow, time is nearly up for those looking to make the most of their current ISA allowance. And with data from Aegon showing that 9% have yet to put money into an ISA but plan to do so before the tax year ends, now's the time to make a choice.
While the internet may make everything seem instantaneous, that doesn't mean that you'll be able to open a new ISA five minutes before midnight tomorrow, transfer in the maximum of £20,000 and guarantee that it still counts for your current allowance, rather than next tax year's identical £20,000 ISA limit. You need to give yourself some time to pick and contact the right provider for you.
Not everyone has waited until the last minute, with Aegon's research revealing that 28% of respondents have already put some money into an ISA this tax year, yet only 16% are choosing to put the full £20,000 in. Additionally, a lot of savers are choosing to put some of their ISA funds into a stocks & shares ISA, with over 50% expecting the FTSE 100 to beat the best performing cash ISA.
There's nothing wrong with not investing the maximum, or taking a risk on the stock market, as long as you understand what you're signing up for. The annual ISA allowance is something that you lose if you don't use it, which means you miss out on accumulating a large pot of tax-free savings, or at least delay your efforts in doing so. Investment ISAs can provide you with greater returns, but you could also lose some (or all) of your investment if the funds perform badly. In both cases, it's important to think long term.
If you want to have access to your cash again in a year or two, a cash ISA may be your best bet, and our Best Buy tables can give you an easy and unbiased view of who's currently offering the top rates. If, on the other hand, you don't mind setting some money aside for at least five years and risking it on the stock market, a stocks & shares ISA is certainly worth considering.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.