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Would you invest in a stocks and shares Isa?

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

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I started investing in general in 2008 when savings became pointless and have a S&S ISA I mainly use for investing in dividend income shares – some FTSE 100 companies pay 6-7% dividend and while of course there is risk picking some of the bigger companies can mitigate this (for example vodafone has good income and has gone up from 110 pence to 170 pence in that time). However, never invest anything you can’t afford to lose – an example here would be BP whose share price has suffered significantly over the last few years. Investments inside and outside of the ISA have had a gain far superior to anything from a traditional cash savings account. Do research invest, in what you know and only risk what you can afford to lose – easy

Reality Check says:
7 March 2012

I have invested in an oil & gas company in China and held the shares for the past 8 years or so – they owe me nothing and if I cashed them in they’d be worth just over my tax free capital allowance. I also invested a nominal amount in a gold mining company that is AIM listed so I’m hoping that might strike just when I need it but I NEVER invest what I can’t afford to lose – all gamblers should have the same code of practice!

Likewise I’d never invest what I can’t afford to lose – My ISA S & S has lost money in recent years – but the amount invested is now tiny.

I invest in S&S through Independent Broker,Have £37,600 in S&S,now worth £45+

Simon says:
9 March 2012

I put half my allowance into a cash and half into stocks & shares. In the S&S ISA most of my money is in Tracker funds (specifically Fidelity Moneybuilder UK Index and iShares plc
FTSE UK Dividend Plus) to minmise Management fees.
So, spread the risk. Savings, pensions, ISAs & Property. Just make sure there *is* a good spread, so if you have a lot of £ tied up in your house, make sure your pension is not heavily invested in property too.

RexL says:
16 March 2012

I hold £62k in a 1 year fixed rate cash ISA which will pay out £3.2% on 5/4/12. The provider offers me 2.7% for next year! I’m planning to move it all into a self select S & S ISA. I’ve got 5 stocks in mind, 3 bonds and 2 shares which should produce around 5% at least. There might even be some capital growth..

I already manage the funds in a Standard Life SIPP and you soon get to understand how to switch funds as the markets change direction. In simple terms it’s easy to move between equities and bonds and money instruments. SL now offer a whole range of managed funds for S&S ISAs with different ratios of fund types and this to me takes much of the risk out of investing in a S&S ISA. And you can switch funds at will as far as I know. I need to check the charges but right now I am seriously thinking of going this way in 2012/13.

I’m interested in investing in Investment Funds ISAs. However, although a very good, but dense, article is in my recent Money Mail I find that a clear concise and unambiguos ‘How To’ is missing from the article. There’s plenty of information about Investment ISAs around but nobody seems to want to write the definitive ‘How To’