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The Government likes to keep us on our toes, and yet again there are major changes in the financial industry.

From 1st July the Individual Savings Account (ISA) will become known as the New Individual Savings Account (NISA).

As well as the name change, you’ll also be able to put more of your savings into an account where the taxman can’t get his hands on your interest! The increase is from £11,880 per person, per tax year, to £15,000.

You can put the whole amount into a cash product or a stocks and shares product if you want to or alternatively you can split the allowance however you like between a cash NISA or a stocks and shares NISA.

The potential returns that you can receive from investing in a stocks and shares NISA are much higher than with a cash NISA, as shown below, however it is important to remember that there is also additional risk.

Value today of £5,000 invested 10 years ago in cash at an interest rate of 4%Value today of £5,000 invested 10 years ago in a stocks and shares ISA in a UK mid cap fund

£7,401

£19,970

Source Moneycomms.co.uk

Stock markets can be volatile and impact the value of your investment. This is much less of an issue for younger investors as over time there’s a good chance that the market will recover and they will get their money back.

However, if you are nearing retirement, may not wish to risk taking a big hit on your savings at a time when your potential to earn money by working is coming to an end.

What this highlights, is that it’s essential you get good financial advice to ensure that you are investing in the right products and funds for the long-term.

Contact FMB today. Call: 01539 725855

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