Global Outlook

Are shares still risky or is a cash ISA still the best option for UK investors?

In UK investing in the Individual Saving Account or ISA is one of the best methods for making your money and all the proceeds obtained are tax free. During the financial year of April 2011-April 2012 the ISA allowance was £10,680. However you need to use the annual ISA allowance in its entirety as it cannot be rolled over. The cash ISA permits the investor to place his money in saving accounts with tax free interests while the investment ISA (shares) is basically investing in stocks meaning the investment is at a risk to rise and fall depending on the stock market. So the share ISAs are more risky than cash ISA however they are likely to provide better returns.

Before selecting the type of ISA (cash or shares) the investor must consider visiting an ISA or an Independent Financial Adviser who can assess your financial outlook and select the best solution. Despite being risky there are several types of investments to select from in shares ISA making them perfect for several people. So in case you are looking for higher returns on the investment you may want to take a slightly higher risk and go for shares ISA while a cash ISA is for a safe investor.  The shares ISA brought in some favorable tax rules that were welcomed by the UK investors. These rules included dividends not subjected to more tax, no tax on capital gains, no tax on bonds interest; capital gains/trades/income not considered as taxable incomes so no need to report them to HMRC. The pension situation in UK has always been bleak so this is a good opportunity to better the living conditions in twilight years.