ISA 'wrapper' could double investment returns

25 March 2009 / by Rebecca Sargent
As the end of the tax year approaches, savers are being reminded to make the most of their annual tax free savings allowance, or ISA.

According to figures from Fidelity International, using a stocks and shares ISA can make people's money work harder in the medium to long term.

In fact, according to Fidelity, every investor could see returns doubled if their investment was wrapped in an ISA than if it was held in any other non-pensions tax 'wrapper.'

According to Fidelity's calculations, a portfolio of interest bearing sterling corporate bond funds held in an ISA would see returns 67 per cent higher than the same amount held as a collective investment in the first year, increasing to 75 per cent after five years, and 100 per cent over 20 years.

Commenting, Rob Fisher, head of UK personal investments at Fidelity International, said: "It's not going to be news to anyone that an ISA is tax efficient but the prevailing economic conditions, the importance of utilising your ISA and indeed pension allowances could get overlooked.

"We are urging investors to take advantage of the allowances available and not to miss out when maximising profit is of the utmost importance."

Graham Barber, head of financial planning at investment firm Rensburg Sheppards agrees, saying: "If anyone was in any doubt about the importance of regularly reviewing their finances then the events of 2008 should have removed completely any complacency.

"However, the time and effort spent considering objectives, risk and asset allocation is only one aspect, investor's also need to treat maximising the tax efficiency of investments as a priority."

© Fair Investment Company Ltd