ISA's

These investments have been in existence since 1999, being the successors of PEPs and Tessa’s. They are available to all UK residents over the age of 18. (Over 16’s can take out a Cash ISA) The benefits are that the Investment is largely free of Income and Capital Gains Tax and for this reason they are generally the first recommendation from the Financial Industry. There are two types of ISA – Cash and Stocks and Shares. The legislation concerning these investments has changed recently.

Since 6th October 2009 anyone over the age of 50 can now invest up to £10,200 in an ISA. This can be made up of up to £5,100 in a Cash ISA and the remainder up to £10,200 in a Stocks and Shares ISA. You can choose to invest the total amount of up to £10,200 in a Stocks and Shares ISA.

For people under 50, the limits are £7,200 (Cash ISA £3,600) From 6th April 2010 the limit rises to £10,200.

You could use the Pound Cost Averaging technique to Invest over the year and benefit from the smoothing out of short term fluctuations.