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Posts Tagged ‘cash isa’

Despite the negative effects caused by the financial crisis, one financial commentator has took a more optimistic view after expressing hope that it will may have acted as a reminder of the need to save money, and encouraged people to take more notice of their financial status.

Although the ongoing economic downturn continues to have a negative effect on many Britons, one financial expert has expressed hopes that it may encourage people to take a more prudent view towards money management.

Laith Khalaf, pensions analyst for Hargreaves Lansdown, states that although the recession means that many are suffering from pay cuts or freezes or even losing their jobs as well, as focusing on paying down debts – which could include those accrued on credit cards – it will hopefully act as a reminder of the need to have an adequate amount of money set aside into a savings account.

"Hopefully one of the good things that will come out of the current climate is that people do realise that they need to save more and that they don't simply spend their money," he states, adding that consumers should be aware of the pressing need to put cash away not only for a rainy day but also for their retirement.

Mr Khalaf goes on claim that at the beginning of 2008, the country's household savings ratio was at the lowest point seen for around half a century.

Since then, there has been an increase recorded in the amount set aside, which has been described as "an encouraging sign" by pension experts.

"As more money flows to people as we hopefully recover from the recession my hope is people will start to save more," he added.

Indeed, he states that it is crucial the Brits make adequate provisions when planning financially for retirement. Whether a bank account, cash ISA, pension pot or some other form of financial vehicle is used he states that it is “somewhat secondary” to the overall underlying need for putting money away for retirement.

It has been reported that 12 million people have yet to start saving towards retirement, with half of these claiming that any surplus funds were used up on everyday expenses. The study, carried out by a Lincoln Financial Group highlighted the importance of saving.

If you managed to make use of your Individual Savings Account (ISA) allowance in the last tax year, then you will be pleased to know that as of 6th April, you have another £7,200 of potential tax free investments in which you can deposit into ISAs.

If you didn’t manage to use up last years ISA allowance don’t worry, just deposit your savings into an account as soon as possible and benefit from tax free returns on your investment.

If you aren’t familiar with ISAs, it’s well worth checking them out, as you could be missing out on some great tax-free returns on savings and investments.

Savers are given a great opportunity to save at least £3,600 each year (also further possible £3,600 in investment ISAs) and pay no tax on any of the earnings. All individuals aged 16 and over can apply for an ISA, giving them the opportunity to invest upto £7,200 each tax year and earn tax free returns on their investment. The ISA allowance can be made up of either up to the full £7,200 in an investment ISA, or up to £3,600 in a cash ISA, and up to the remaining amount in an investment ISA.

Think of cash ISAs like a savings account, offering all of the features you would expect to see in a number of types of savings accounts, but with the difference being that you don’t have to pay any tax on the returns on your investment. It is common knowledge that with stocks and shares dealing comes risk, and there are no exceptions when it comes to investment ISAs, so you must be careful with where you plan to invest.

There are several different combinations of features that will differ from provider to provider, so it is up to you to choose the one that suits you best. You can choose whether you want to make a lump sum investment, or regular payments, and if you want your interest to added onto the total, or paid into a separate account.

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