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Guide to ISAs

Shopping around for the best ISA

The finance sector is immense! There are many companies and organisations offering a vast array of financial products. Trying to wade through what seems like a never ending jungle of terminology and different product types can be off putting for the best of us. When it comes to looking for the best ISA to suit you it may be wise to organise an appointment with an Independent Financial Adviser to discuss your options and requirements. The Financial Services Authority regulate all Financial Advisers who offer help and advice relating to ISA's and they have an online register which contains details of all UK registered Financial Advisers.

By using a registered financial adviser it gives peace of mind by knowing that the FSA is fully structured and offers

  • an established complaints procedure
  • access to the Financial Ombudsman
  • access to a financial services compensation scheme

However, with the best will in the world the FSA are unable to guarantee the performance of any fund in particular!

Although an ISA can be opened at anytime throughout the year the market tends to get flooded with really competitive deals a few months before the start of the tax year. It is a great time to take advantage of these deals as you are always able to transfer to another provider once the initial enticing offer has ended. Always bear in mind that if you do choose to transfer there may be a cost involved, check this with your fund manager.

Some key points that are worth considering when looking for the best ISA are;

Points to Consider Comments
Age of Applicant If you are 16 years then it is only possible to invest into a Cash ISA.
To invest into a Stocks and Shares ISA the person must be 18 years of age.
The Amount to be Invested You can invest up to £10,200 into an ISA per tax year. The full allowance maybe invested into a Stocks and Shares ISA or alternatively you could choose to invest up to £5,100 into a Cash ISA with the option of placing the rest of the allowance (£5,100) into the Stocks and Shares ISA. The way you choose to split the allowance is totally up to the individual, on the condition that the allowance is not exceeded.
How long are you investing the money for? If you can invest the fund for more than 5 years a stocks and shares ISA maybe suitable, if the time period is less than 5 years a Cash ISA could be ideal.
Are you going to need instant access? Many Cash ISA's offer instant access, whilst others have notice periods or fixed terms to adhere to before the funds become available. If instant access is not required then the Stock and Shares ISA's are worth considering for the potential returns that they offer.

ISA's can be purchased from a variety of sources, listed below are just a few;

  • Banks
  • Building Societies
  • Financial Advisers
  • Larger retail outlets
  • On-line
It is advisable to discuss your savings options with an Independent Financial Adviser

Once you have chosen an ISA provider the application process is very straight forward indeed. In many cases it can be done online, by post or if you are seeking help and advice from a Financial adviser they will be able to assist with any necessary paper work. It is advisable that you read and fully understand the "Key Facts" document which will be presented to you by the supplier of the ISA or Independent Financial Adviser. This document contains information detailing the cost of the product, the cost of any advice which has been given, any management fees which may apply particularly with Stock and Shares ISA's, and other useful information about the product and the supplier.

ISA's are generally quite flexible, if at a later date you feel that your current scheme isn't performing well there is an option to change where or who the fund is held with. The best way to do this, whilst protecting your funds tax free status, is to transfer the funds from one ISA account to another ISA account. Your Financial Adviser or Fund Manager can organise this although there maybe a charge for the transfer. The other option if you hold a Cash ISA is to transfer the funds into a Stocks & Shares ISA, however it is NOT possible to transfer a Stocks and Shares ISA into a Cash fund.

PDF ISA Guide Download the ISA PDF Guide here - see our other free PDF guides here

Guide Contents

What is an ISA?
Different types of ISA's
Shopping around for the best ISA
Frequently asked questions about ISA's
Where to get further help and advice about ISA's

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