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Investment expert offers ISA tips

Tuesday 1st April 2014

Stuart Welch, CEO of TD Direct Investing, offers some top tips for those that already have or are considering an ISA:
“As we head towards the end of the ISA season, making the most of your allowance is something many investors will be looking to capitalise on.  Additionally, those looking to open an ISA for the first time would do well to consider the deals available before the season concludes in two weeks’ time.
“Below are some top tips from TD Direct Investing and some reminders of the common myths around ISAs that could help investors make informed decisions about their investments.”
1. Always understand what you are investing in and whether it will suit your needs
For a stocks and shares ISA, it is a good idea to set up regular payments into the account, rather than large lump sums. This will help you avoid getting your money caught up in inevitable market value fluctuations.
2. Get to know your ISAs – you can have all three types at once – Stocks and Shares, Cash and Junior 
Each tax year it’s possible to subscribe to a cash ISA, a stocks and shares ISA, or a combination of both, although the total cannot exceed the annual ISA allowance. The main thing to remember is that if you don’t use this allowance, you will lose it and the amount that you can invest in your ISA wrapper will be correspondingly reduced.
3. You can invest your full ISA allowance into a Stocks & Shares ISA
It's a good idea to use as much of your ISA allowance as you can afford each year because returns are tax-free and you won’t be able to carry over any unused ISA allowance to the following tax year.
4. Stocks & Shares ISAs can potentially offer higher returns than a Cash ISA in a low interest environment, but are often higher risk
Over time, even modest subscriptions can grow into a sizeable portfolio and by holding the investments within the tax wrapper of an ISA you can be sure that there will be no CGT liability whenever you decide to sell.
5. You can use your ISA and pension in conjunction to maximise your tax-efficient savings portfolio
For UK investors, the most important tax wrappers are ISAs and pensions. The two are designed to complement one another when used in conjunction can make a powerful combination.
6. Stocks and Shares ISAs are a great tax-wrapper to make the most of your income and Capital Gain allowances
One of the key advantages of a stocks and shares ISA is that any capital growth is free of capital gains tax.
7. Gear your ISA and other investment arrangements to your short, medium or long-term financial plans
It is normally possible to pay in various lump sums throughout the year and then invest the money when you are ready. Another option is to set up a direct debit to make regular investments, or pay in a lump sum at the start of the tax year. A stocks and shares ISA should be considered a medium to long term investment.
8. Remember, there is a limit to how much you can invest in an ISA each year
All adults in the UK can invest up to £11,520 into an ISA for the 2013/14 tax year. The full amount can be invested in a stocks and shares ISA or up to half (£5,760) can be put into a cash ISA. 
9. The value of your investment is always subject to go down as well as up and you may not get back the original amount invested
A regular investment facility like a direct debit allows you to spread your payments.  It also enables you to take advantage of an effect known as pound cost averaging. By drip feeding money into your investments it can even out the fluctuations in the market and removes the risk of mistiming the purchase.
10. Opening an ISA is easy
You can open an ISA online or in our TD Investor Centre in London in just minutes, it’s not complicated.

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Editorial Contact Details - Conor Shilling
0845 672 6000
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