Britons switching from cash ISAs to equities
16 August 2010 16:10:44
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| Low interest rates fuel interest in stocks and shares ISAs. |
Chris Linpow, an investment specialist at NFU Mutual, revealed that a growing number of savers are considering alternatives to cash ISAs as a result of the ongoing Bank of England base rate hold at 0.5%.
He said that, while ISA accounts have been "popular" among hard-working savers since 1999, many of the 17 million cash ISA savers are now reconsidering their long-term options.
"The tax-free benefits of cash ISAs are cold comfort for savers with the latest consumer prices index inflation figure at 3.2%, while even the best instant access account offers 0.45% below the break-even point," he explained.
"While many cash ISAs are paying interest rates below the level of inflation, many people do not think about the potential income available from equity investments, yet this can be a significant part of any returns available," Mr Linpow pointed out.
However, the expert noted that investments may fall as well as rise, and that investors must recognise the risk associated with this kind of ISA.
Britons can now put up to £10,200 a year into a stocks and shares ISA, after the annual contribution limit was raised on April 6th 2010.
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