ISAs: Are they a good place to put our savings?

Although investment may not be my area of expertise, one school of thought I always subscribed to was to diversify, diversify, diversify. Hedging your bets, and spreading your money far and wide is well documented as the best course of action.

But as a concerned parent who has our family’s long-term financial future at heart, it’s still hard to know which are the most worthy homes for the little bit of extra money that we have squirrelled away. There are so many unnerving stories in the news about stock markets plunging this year, while it is widely known that rates on savings in the UK are pretty dismal too.

So, what to do with your money in the face of such a conundrum? One of the most popular options in the UK are ISAs, which are generally user-friendly, and give you as an individual up to £15,240 (the ISA allowance) to protect from tax for the next financial year. The ISA framework is divided into further branches though, and I thought I’d take a look at five of them.
Some you will probably be familiar with; others, perhaps not…

Cash ISAs:
This is the most popular of the bunch, and has been serving Britons relatively well in various forms since 1999. Setting them up can be easily done with your bank, building society, or even investment firms, and, unlike standard savings, you benefit from a tax efficiency. However, interest rates on Cash ISAs have plummeted recently, so be sure to choose carefully if you decide to allocate some of your ISA allowance to this.

Stocks & Shares ISAs:
If you have a greater appetite for risk, you could put your money into a stocks & shares ISA. Money within this type of ISA is invested in ‘qualifying investments’. In addition to listed stock market company shares, these include things like unit trusts, corporate bonds and other public debt securities. Bear in mind S&S ISAs are investments though, not savings accounts, so be sure to tread carefully.

Help to Buy ISAs:
This is a great option for potential first-time home buyers, as it is essentially free money to the tune of £3,000. If you save £200 a month, Government will top you up with £50 (25%). New accounts are available for four years, but once opened, there is no limit on how long you put funds into it for. So that means if you save £12,000 on your own, you’ll be boosted to a total of £15,000. The solitary catch is that is only valid for houses costing under £450,000 in London and £250,000 outside the M25.

Junior ISAs:
This is definitely one for you and your kids to consider. From the age of 16, they are free to open one for themselves, although you can do it for them while they are a child. The annual limit for JISAs is
£4,080 a year, and is available in both the Cash or Stocks & Shares varieties. Not only is it a good little investment for them, but it’s also a good way to ingrain the habit of saving.

Innovative Finance ISAs:
One of the increasingly popular forms of investing at the moment is peer-to-peer lending (P2P). I hadn’t heard of it before, but essentially it involves you lending your extra money to fellow consumers in need of a loan for a return of up to 6%. And from April, these returns will have the potential of being tax-free courtesy of the new Innovative Finance ISA. Bear in mind though that P2P loans are not covered by the Financial Compensation Services Scheme like money in the bank is, so do your homework beforehand and ensure you are comfortable with the risk.

Of course, places to put your money aren’t limited to ISAs, and there are many ways to skin a cat. But securing the financial security of our families is as difficult as it has ever been, and it’s good to know that there are a variety of options out there. Just be sure to do your research first, and don’t be scared to ask for advice from the real experts!

- This is a PR Collaboration 


  1. Thank you, this is a really useful guide, much easier to understand than the jargon filled official info!

  2. There is generally a relationship between risk and return i.e. how much the investment will potentially deliver to you. So the "boring" cash is safe but earns low returns, the more adventurous investments can give you bigger returns but could lose you money. One useful way to determine how best to allocate your money between the various types is to assess your "risk profile". If you look up this term on the internet, you will find a number of on-line tools that help you gauge the proportion of your money you should ideally place in a safe, 100% protected investment account (e.g. cash ISA) and how much money you are prepared to have "at risk" i.e. not protected but potentially delivering better returns. You can then draw up a pie chart for yourself with slices for each type of investment, and allocate your money accordingly. Don't forget to revisit your risk profile when you circumstances change, e.g. when you marry, have a child, the child goes to uni, etc.