Investors have pulled billions out of the stock market in the past year – are you planning to get back in there with a stocks and shares Isas? Or are you not willing to risk your savings for a bigger return?
Isa season is well and truly upon us and there’s no shortage of hot fund picks, top share tips and sure-fire winners being recommended to get your money growing in the next financial year.
From 6 April 2012, you’ll be able to invest up to £11,280 in a stocks and shares Isa, the highest amount in the history of these kinds of savings accounts. Using your full allowance over two or three years could provide you with a deposit on a house, or a child’s university education, all protected in a tax free shell.
But do you have the appetite to invest your money at all? The Investment Management Association (IMA), the trade body that represents the UK’s fund management industry, reported last month that sales of investment funds dropped by almost 40% in 2011.
It seems you were spooked by the Eurozone crisis, which saw the UK stock market fall by around 14% in a mad August collapse.
Now might be the time to invest
Putting your money at risk in order to get a better return is a big, brave step. But right now, it might be a necessary one.
It’s the third year of the Bank of England base rate sitting at 0.5%, and while inflation has dropped fairly significantly over the past couple of months, there are still no short-term cash Isas able to outstrip it. So, in real terms, you’re losing money by keeping it in cash.
Looking at the markets, you may tentatively think that we’re heading in the right direction. Positive developments in Europe and economic recovery in the US have buoyed the confidence of traders. The FTSE 100 UK stock market has recovered to the levels that it was at before the volatility of last summer.
And flicking through the weekend papers, stories abound of ‘Isa millionaires’ – those that have invested their full allowances into Isas (and Peps and Tessas before them) to be sitting on a small fortune, all sheltered from HMRC.
Thumbs up to Isas
We know that you like Isas. When I wrote about proposals to scrap Isas on Which? Conversation last year, you came to a vociferous defence of them. A massive 97% of you wanted Isas to stay, and some of you even pushed the advantages of stocks and shares Isas in particular, like Bill Hall:
‘Stocks and shares Isas can also lose you money, but if you invest through one of the fund supermarkets and select a variety of funds from their suggested portfolios on balance, you are much more likely to beat inflation and enhance your savings.’
But what about you? Would you be happy to head into the stock this year and where are you putting your money? If not, what’s holding you back from stocks and shares Isas?
Would you invest in a stocks and shares Isa?
Yes – I have already invested in one (47%, 188 Votes)
No – I don’t want to put my money at risk, but have a cash Isa (26%, 105 Votes)
Yes – I’m thinking about investing in one (17%, 67 Votes)
I don’t have any savings to invest (6%, 24 Votes)
No – I prefer a normal savings account (5%, 20 Votes)
Total Voters: 405