“I don’t trust ISAs – they lost me money!” I hear a similar statement all too often and every time I do, I’m a little bit heartbroken. Why? Because ISAs are great and, believe me, if you ever lost money in an ISA, it was not the ISA’s fault.
Think of your investment as a bag of pick’n mix sweets – chocolate éclairs, lemon sherbets, raspberry bon bons, vanilla fudge… anything that suits your mood, anything that takes your fancy. The sweets you pick may, or may not, be wrapped in a wrapper. Here, the sweeties are your investment funds and the wrapper is the product (often actually called a wrapper, when it comes to investments) through which you are investing.
It is not the wrapper that makes the sweets taste good or bad, which makes the investment perform well or poorly; the wrapper is there to protect its contents.
You may have guessed where I’m going with this – ISA is a product; it is a wrapper that protects its contents and in the ISA’s case, it helps to protect them from the taxman. The only effect an ISA has on the performance of your investment is that it saves you tax and therefore helps the investment grow faster.
If you are guilty of ‘blaming’ ISAs for losing you money, you should absolutely give them another chance. You need to remember that you only get one ISA allowance in a tax year (currently £11,520) and if you don’t use it, you lose it forever, together with the tax savings it provides.
If you feel unsure about which ‘sweets’ to pick for your investments (and there are thousands to choose from), we would be very happy to help you find the right mix to suit your circumstances.
There are only a little over 3 months left of this current tax year, so be sure to make your financial review a priority and give us a call if you need our help.
The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.