2014 could be ‘perfect time’ to invest in an ISA

Individual savings accounts (ISAs) and self-invested personal pensions (SIPPs) are two of the UK’s best kept investment secrets, according to Stephen Sutherland, chief investment strategist at specialist investment firm ISACO.

In his new book, Sutherland explains that the two investment vehicles can be used to boost returns and create a tax-free income for life.

Sutherland argues that all UK adults should have an ISA or a SIPP, or else risk needlessly handing money to the taxman. Others in the industry have warned that investing in an ISA could lead to consumers losing value to inflation, even with the tax breaks on offer. As a result, it’s vital that savers assess the different options open to them to see which would be the most beneficial.

The low interest rates currently on offer have also impacted on the number of people planning to use ISAs this year. According to a survey 54% of Britons plan to put money in their ISA, a fall of 9% when compared to last year.

Whilst Sutherland and his book do not focus on ethical finance, the advice and processes can be transferred and adapted to suit sustainable investors. For instance, Sutherland advocates investing for the long-term, thoroughly investigating companies and researching fund managers to gauge performance.

He added, “With the 2014 ISA season rapidly approaching, now is a perfect time to be thinking about investing in the UK’s most popular tax shelter. Any gain you make on your cash whilst it sits in the ISA wrapper will be completely tax-free.

“The best time to invest can often be when it feels the most difficult to do so. If history does repeat itself, the next 10 years is probably going to be a decade of outperformance – which means that now could be a perfect time to be investing, as long as you are doing so for the long haul.”

There are ethical ISA options available, including the UK’s first Islamic ISA, which launched in January. The new year could also provide savers with extra choice as the Treasury is currently in discussions around extending the ISA regime to peer-to-peer lending and crowdfunding.

Further reading:

Savers warned about inflation ahead of ISA deadline

Poor ISA rates deter consumers – costing £191bn in tax-free savings

Treasury looks to extend ISA reach to peer-to-peer finance and crowdfunding

Consider sustainability and ethics when investing in ISAs this year

First UK Islamic ISA gives consumers ethical tax-free way to save