Savings accounts and investment strategies aren’t always the easiest thing to get your head around and how interesting are interest rates? Well as the title says March is ISA season in Morecambe.
I’m writing this article as a quick guide to ISAs as the topic has come up three times recently; with the checkout lady at ASDA, with a guy at the petrol station on Morecambe Road and most recently on my visit to Halifax!
This really isn’t surprising as it’s that time of year again – the end of the tax year. With each end there’s a new beginning and some savers are carrying out their year ritual of picking one of the various isas available.
So what exactly are ISAs?
ISAs are Individual Savings Accounts and they can help you keep some money away from the taxman. Before April 5 2013 you are able to invest up to £11,280 in ISAs and this amount can either be entirely in a Stocks and Shares ISA or it can be split with £5,640 going into a Cash ISA. Often both fixed and variable rate accounts are offered by banks and all interest earned is tax-free.
While it’s true that the tax benefits can vary depending on individual circumstances and that you should always read all information on financial products and speak with an advisor, ISAs have long been the choice for people looking to implement a tax reducing investment strategy on the run up to the end of the tax year.
Why are ISAs popular?
ISAs were introduced in 1999 and replaced other products including Personal Equity Plans (PEPs). The change was to bring this financial product to the masses and replace the image of the other products which were seen as something for the middle class.
The money invested in ISAs are from post tax income yet the interest earned on the ISA is completely tax free which is why they are so popular. It is also possible to invest in an additional ISA each year, repeating the strategy for the tax savings.
So my advice is, consider investing in an ISA but always talk to your bank about which product may suit you best. There may be different ISAs out there that are better suited, or if you are carrying balances on high APR credit cards diverting your money there may offer you better savings overall. Either way, find out more to make an informed decision – just don’t wait. The tax year is coming to an end and this is the deadline to invest in some products.
Photo credit: Images_of_Money
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