Best ISA

By: EconomyWatch   Date: 1 October 2009

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The best ISA, or Individual Savings Account, depends on several factors such as

  • an individual’s propensity to take risks

  • the degree of necessity to get the money back

What makes the ISA score over Personal Savings Accounts is that it is an efficient way to invest, particularly since you do not have to pay taxes on the returns and capital gains.

Best ISA for Low Level Risk Investors

Low risk investors are advised to opt for cash ISA as their requirement is to invest for a short period. Cash is a good option for those who find it difficult to hold their investments for a period of five years or more. Also, the other ISAs can be very volatile. However, if you choose cash, the returns may not be good. In any investment, a critical principle to be aware of is that the more risk you take, the more returns you are bound to get.

If you choose cash, your choice should be based on:

·         the best possible rate

·         consistency

·         information that you have collected from a reliable source

For low-to-medium risk investors, choose a balanced mix of:

·         bonds

·         shares

·         others types that augment a balanced portfolio

Being a low-to-medium risk investor, you may be wary of taking risks even if you want to develop a balanced portfolio. Opt for absolute return funds that offer positive returns in any market. Its advantage is that volatility is kept in control.

Best ISA for Confident Investors

Confident investors have unlimited options to choose from. Equity ISA is the best ISA to choose. Decide the right approach and start building a core portfolio with a mixture of global and UK funds. Minimize your risks by diversifying your asset classes. Strive for a balanced approach in the investments you make.

Best ISA for Experienced High-Risk Investors

High-risk investors are advised to opt for volatile investments in equities as they may already be having a diversified portfolio and an inclination to take more risks. Experienced high-risk investors normally tend to have sufficient investments, and ISAs may form a small part of their portfolio. Try to include speculative funds that have substantial growth potential but they carry the risk of great volatility.

Before making a final choice, decide the type of ISA you want to invest in and find one that fits your needs.


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Most Popular in ISA Individual Saving Account

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