This year has seen a 60 per cent rise in the amount of Instant Savings Accounts (ISA) opened.
According to The Share Centre, ISA
accounts are on the increase, January and February of this year saw a 60 percent rise in the amount opened, compared with the same period in 2007.
The Share Centre launched a new Funds ISA in January, which it claims accounts for 36 per cent of all ISA's opened during the first two months of 2008. Speaking of the maxi ISA, Ian Benning, Product Development Manager at The Share Centre said:
"Stocks and shares ISAs are a great way for investors to protect some of their stock market profits from the taxman. The credit crunch and recent market fluctuations will have no doubt left some investors wary of investing in the stock market."
With only a few weeks to go until the start of a new tax year, time is of the essence for existing ISA holders to maximise their tax free savings. For those considering investing in an ISA for the new tax year, The Share Centre advises the earlier you start saving, the better:
"The earlier in the tax year you invest your allowance, the longer your investments benefit from tax free growth" said Mr. Benning.
"Investors should take full advantage of their ISA allowance. Simply setting up an agreed direct debit is a good way to earmark savings or investments. £7,000 may seem a lot of money to start with, but over time these savings or investments together with any interest or profits could soon grow into a significant amount," Benning concluded.
Despite the reported rise in ISA accounts, new research from Alliance & Leicester shows that, out of all participating savers, only 51 per cent used an ISA.
The survey showed that 80 per cent of savers believe a high interest rate is one of the most important factors to consider when choosing a savings account, compared with 42 per cent who cited tax efficiency as a key factor.
The research also revealed that financial issues are now more talked about than sport, politics and celebrities. Ewan Edwards, Head of Savings at Alliance & Leicester said:"Our survey reveals money matters have a firm place at the forefront of people’s minds at the moment.
"So much so, that people are now discussing financial related issues more than sport or politics. Nevertheless people still aren’t getting all the benefits they could from their savings, with only half of those with savings getting the extra benefits that come with sheltering their savings in an ISA."
According to Alliance & Leicester, those questioned who did not have an ISA were still unsure of how they work. Just under a third of non ISA holders said they did not have a lump sum to invest, stating that for this reason ISAs were not for them. Contrary to this popular belief, ISAs can be opened from as little as £1.
"It’s concerning that people think you need a lump sum to start an ISA," said Mr Edwards, "when you can save from as little as £1. It’s time for an end to confusion and for people to make the most of whatever they can save – and not be put off by the idea that it’s overly complicated."
"When choosing a deposit account, the first priority should be to make the most of tax-efficient savings schemes, so an ISA should really be people’s first port of call."
© Fair Investment Company Ltd