Maxi ISA

By: EconomyWatch   Date: 25 September 2009

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A Maxi ISA is a type of individual savings account that is meant for investors who want exposure to stocks and shares. The important thing to consider in a Maxi ISA account is whether you are interested in funds such as unit trusts or in individual shares. Most of the providers of unit trusts offer a free ISA wrapper option.

Maxi Individual Savings Account – Options and Limits

Maxi ISA is a good option for long term investors who have risk taking capacity. You have two options with Maxi ISAs. You can invest your complete allowance of £7,200 in stocks and shares listed in recognized stock exchanges worldwide. Although one can buy individual shares and stocks, it is risky. Many investors invest in collective investments such as investment trusts, corporate bond funds or units so that the risks are spread. The second option is to use your allowance for both cash and stocks. You can invest only up to £3,600 in cash and the remaining amount can be in stocks and shares. If you opt for both cash and stocks, you should have both the accounts with the same provider.

In a Maxi ISA, you can opt for either individual stocks and shares or funds based on your risk appetite. You can opt for individual shares if you are a high-risk investor. Funds let you to spread the risks. A fund supermarket is another option you can consider. These fund markets will let you choose funds across a network and may not charge for the ISA wrapper. It is better to consider a discount broker who would charge less than investment supermarkets or fund groups. One needs a self select ISA in order to buy shares. Stock brokers offer self select ISAs with a wrapper charge of around £20 a year. You can also seek the help of a portfolio manager who would do the transactions on your behalf.

Basic rate taxpayers can not have tax savings on dividends from stocks in a Maxi ISA, although investment growth is tax free. A Maxi ISA is a good option for high rate taxpayers with a long term investment horizon.


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Most Popular in ISA Individual Saving Account

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