Maxi ISA, Mini ISA and Cash ISA Saving Guide
The are two different types of ISA: a Maxi ISA and a Mini ISA / Cash ISA, and different rules apply to each of them. In general you have to be over 18 to have an ISA, although some cash ISAs are available from the age of 16. But which is the best ISA for you?
In a Maxi ISA you can invest up to the maximum £7,000 with just one manager e.g. a bank or building society. This means that up to £3,000 can be invested in the cash ISA, up to £1,000 in their insurance ISA and any remaining element – or even the full £7,000 – to be invested in the equity ISA.
You can take out three Mini ISAs - equity ISA, cash ISA and insurance ISA. You are allowed to invest with a different manager for each but you can are restricted to a maximum of £3,000 in equities, £3,000 in a cash ISA and only £1,000 in an insurance ISA.
Length of ISA Investment
Ideally, for an ISA you need to be able to keep your money invested in it for at least 5 years, ideally 10 years. For this reason, ISA investment cannot be seen as an alternative to a bank or building society savings account, where you can withdraw funds as and when required.
How should you Invest?
This is a commonly asked question and it depends on your personal circumstances and preferences. If you already have an IFA, then get them to review your portfolio or investments. They should be able to advise you accordingly and their service will be free because they earn a small commission for placing your ISA. Do make sure that they explain all the options and review growth potential.
The other query is how much risk you are prepared to take. As a general guideline, the closer to home and the more diversified a fund is, the safer it will be. A mixture of equities and fixed interest will also spread the risk.
If you looking for the best ISA, don’t just go for last year’s best performers. Chances are that what was great last year, could be at the bottom of the league this year! Look for consistent performance, not cumulative performance. A fund’s 5-year track record might appear great because of one exceptional year, whereas if a fund has done consistently well over several years, there is a good chance that it will continue to do so.
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> ISA Investment Advice
