Equity Isas

By Author: Lecia Selbo
Total Articles: 49
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The vast majority of savers are aware of the tax saving benefits of cash ISAs, but a lot of people are unaware that their money could be working harder for them in an equity ISA, consisting of investments in stocks and shares.

Currently, you can put up to seventy two hundred pounds into ISAs over the course of the tax year. You can put the whole lot into stocks and shares, or you can put half into a cash ISA and half into an equity ISA. However, you cannot put more than thirty two hundred into a cash ISA over the course of the tax year.

The maximum ISA allowance is set to rise to 10,200 GBPat the beginning of the 2010 to 2011 tax year, which begins in April. This means that you will be able to invest up to 5,200GBP in a cash ISA, and up to 10,200 in an equity ISA.

While cash ISAs carry little investment risk, this does mean lower returns. The cash ISA returns can be fixed provided that you are able to do without your investment money for a set period. Some people prefer this level of stability from an investment, where they know exactly what kind of return to expect.

All the money that you earn from ...
... an equity ISA is exempt from tax, with no upper limit. Equity ISAs only offer potential returns, rather than a guaranteed income, so if you would prefer to have a guaranteed return, you would be best off with a fixed rate cash ISA.

The equity ISAs with the greatest potential returns are usually the riskiest, so if you are looking for higher returns, it can pay to do a fair bit of research to find out which markets are likely to do well over the coming year before investing in an equity ISA.

One thing to watch for with equity ISAs that invest in foreign markets is that exchange rates can affect your return. If you are lucky, the exchange rate fluctuations will increase the value of your investment, but it could just as easily go the other way.

If you are looking to purchase funds directly from companies when using your equity ISA, then you may find that this actually costs you more than going down the fund supermarket route. These supermarkets usually do not charge you the initial 5 per cent fee that some independent company fund managers do.

This ISA article was written by #Pen Name#. For equity and cash ISAs with great rates of return, check out Legal and Generals range of ISAs. Lecia Selbo is a private investor writing about his own ISA with Legal