This article is part of the special series, Investing with ISAs.
Having always made full use of the annual ISA allowance, Morningstar senior ETF analyst José Garcia Zarate has typically split his savings between cash and stocks, but this coming tax year he’s ready to make a change. "I won’t have anything in cash this year as interest rates do not compensate for inflation," José explains.
Seeking Returns from Cash ISAs
In the past, when it came to saving in cash ISAs, Jose was never loyal to any one provider; he simply looked for the best rates and moved the cash from one place to another. At the moment he’s got all his cash ISA holdings consolidated on a 2-yr fixed rate at 4.1%, which he contracted last year. "It was a special offer from a high street bank," José says. "Not bad given the atrociously low interest rates on offer for cash products at the moment."
Seeking Better Returns from Stocks & Shares ISAs
José manages the stocks portion of his ISA assets online where he has complete control and instant access from anywhere in the world. "At the moment I am using ETFs—predictably for an ETF analyst—but I also have active funds in my ISA," José admits. His strategy right now is to overweight equity investments and non-sterling exposure. "Sterling has been going down the drain and I see it continuing that way, so I've mostly favoured USD and EUR currencies." Having said this, José says not investing in anything fancy, "just ETFs tracking the S&P 500 index and dividend-enhanced broad European and Emerging Market indices."
José is happy with the returns these investments have generated so far as he's profited from the equity rally and the foreign exchange factor. It's not all plain-sailing though: "Managing the portfolio myself means that I have to keep an eye on developments and act on them when necessary, which can be tiresome," says José. Managing your own ISA investments sometimes goes well and sometimes goes horribly wrong, but if it's the latter then you only have yourself to blame. "That’s not a bad thing," José says, "you learn from your mistakes…"