We're now in the final week of the current tax year, meaning it’s your last chance to make the most of the 2014-2015 tax-free ISA saving allowance of £15,000. Whether you’re saving cash for a rainy day, or investing in individual stocks, bonds and funds for a long-term goal such as retirement, the ISA allowance enables you to do so without paying tax on any income or capital gains.
Morningstar.co.uk hit the streets of London to hear what local savers are doing with their ISA allowance. While the elder members of the public that we spoke to are mostly putting away cash, younger savers who typically have a longer time horizon are sensibly investing in a mixture of stocks and bonds—individually and via collective products such as funds—but run the risk of missing the 2014-2015 deadline to make the most of this year’s allowance.
If you don’t have the time, money or inclination to top up your ISA before the end of this week, from Monday April 6 you’ll be able to start putting money into next tax year’s ISA wrappers.
ISAs aren’t only for the wealthy. Save small amounts regularly throughout the year in a monthly ISA saving plan, and not only could you build up a decent savings pot with the help of compound interest, but you can also mitigate emotional mistakes by putting your investments on autopilot. Most ISA providers will let you save as little as £50/month. Need investment ideas? Morningstar’s co-head of investment consulting recently shared his three fund ideas for an ISA investor.
If you’re setting up a Junior ISA for a child or grandchild, don’t forget that funds already set aside in a Child Trust Fund can be transferred to a Junior ISA from April 6, 2015. The Junior ISA structure offers better investment choice, and many options come at lower cost and with higher interest rates.
