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Author Topic: Tax-free saving: Use it or lose it --- part 2  (Read 2396 times)

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Tax-free saving: Use it or lose it --- part 2
« on: September 13, 2006, 07:51:47 PM »

You can invest up to 7,000 each year in a shares ISA (assuming you don't already have, or intend to open, a cash ISA - in which case you are limited to 4,000). Most are run by investment fund management companies


Some stockbrokers and investment companies allow you to open an ISA and then pick and mix your investments. You may want to hold individual shares in your ISA along with a selection of funds and bonds, for example.

This type of ISA is for the more investment savvy with strong ideas, or good advice, on what to buy and sell.

Income funds

These range from funds intended to provide a high level of income from a mixture of bonds and shares (with less chance of capital growth) to those that invest purely in shares that pay good dividends but that also have capital growth potential.

Capital growth funds

Generally, these are more aggressively managed than income funds and some may solely invest in smaller companies, increasing the risk still further.

Foreign-invested funds, such as those that put money into shares in European or North American stockmarkets can also be held in an ISA. Some invest in emerging markets, such as those in Eastern Europe or the Far East, but these are considered very high risk.

Tracker ISAs

Tracker funds aim to follow the performance of an individual share index such as the FTSE 100 or FTSE All Share. They remove the risk of choosing individual companies that might perform badly, but you can only ever do as well as the market index.


Cash ISAs offer the same level of risk as bank or savings accounts.

ISA share funds can go down as well as up in value, depending on the shares held. Performance figures are available, but the best performer will vary each year as funds will invest in widely differing types of shares.



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