ISAs | 15th November 2018 | 601 reads
Which ISA should you choose?
Choosing an Individual Savings Account (ISA) used to be simple. There was either a cash...Read more
ISAs | 13th September 2018
Choosing an ISA isn’t always easy breezy. It’s all too easy to get caught in a trap when it comes to your banking. Navigating the jargon and all the different products can become complicated, and, at the end of the day, some people find themselves with an account that isn’t exactly what they thought it would be. So, take a look at these common ISA traps, and make sure you don’t fall victim when you’re trying to save.
When it comes to ISAs, there are several types, each carrying various levels of risk to your money. On the one hand, you’ve got simple cash ISAs where the risk is minimal. At the other extreme, there are stocks and shares ISAs and innovative finance ISAs that could leave you with less money than you started with. So, why do people choose to go with high-risk ISAs?
Did you know that in 2016/17, the average stocks and shares ISA fund grew by an impressive 15.8%? The average cash ISA returns stand at 1.01%.
ISAs with higher risk to your money often provide the most significant returns, but only with smart, well-thought-out investment. If you aren’t very experienced in investing, or cannot afford to lose your money, investing in high-risk ISAs is not the best option for you. It could lead you further away from your financial goals. It’s up to you to decide what’s best.
Just like when investing in higher-risk ISAs, fixed-rate ISAs also tend to have higher interest rates, and give higher returns. But, some conditions have to be accepted with this. Fixed-rate ISAs don’t allow you to withdraw cash throughout the term of your investment. Those that do will have a limit to how many times and how much you can withdraw before you lose any benefits that come with your ISA.
If you overstep the conditions of your fixed-rate ISA, it’s likely you will experience slashed interest rates and possible charges to your account. Therefore, if you’re the type of person who needs to dip in and out of your saving from time to time, you should opt for a variable-rate ISA instead.
If you chose a cash ISA because of the enormous bonus you receive when investing your savings, make sure you make a note of when this bonus will disappear. Some ISAs will provide you with huge interest rates for a certain amount of time, then reduce back to their standard rate. If your rate goes back to normal, and you find your ISA isn’t as beneficial as others on the market, don’t be afraid to move your money. This way you can make sure you’re still getting good returns.
At Apples for Oranges, we believe there’s an ISA for everybody. If you need help finding the best ISA for you, use our comparison tool to compare the best on the market.