Exploding the ISA myths
Informed Choice chartered financial planner Martin Bamford was quoted in The Sunday Times today, in an article exploding the most common myths about Individual Savings Accounts (ISAs).
Discussing the myth that ISAs are not worth the effort because of the low annual limit:
Martin Bamford of Informed Choice, the adviser, said: “When you look at the tax advantages for a single tax year, they may not seem worth it but the cumulative tax advantage is very appealing.
“We are working with clients who now have more than £100,000 in their Isa portfolios, and with the new £10,200 annual Isa limit, it doesn’t take very many years to build a substantial tax-efficient investment portfolio.”
On the myth that you should wait until ISA season before you invest:
Bamford said: “If you have capital to invest there is little sense waiting until near the end of the tax year to invest it. In fact, waiting until the last minute each tax year means you can miss out on a year of tax-efficient investment growth — something that can easily outweigh any special offers you might be able to find during Isa season.”
And talking about the need to pay the full charges on your ISA investment:
You should pay the full charges for Isa funds only if you are receiving advice and ongoing service from an adviser. Bamford said: “Most of the initial charge on an Isa fund is used to pay commission to the adviser. Typically 0.5% of the annual management charge is used to pay for ongoing service and advice. If you are not receiving this advice, demand a discount. With a typical 1.5% annual management charge, 0.75% goes to the fund manager, 0.25% goes to the Isa platform and 0.5% goes to the adviser.”
You can read the article in full here and find links to all of our national press coverage in 2010 here.