Personal Finance: Internet Investor

WITH THE new tax year now well under way, our thoughts should be turning to arranging our savings for the next 12 months. Are you still confused about Individual Savings Accounts (ISAs)? Most people seem to be. Help is at hand, though, on a number of websites.

Moneyworld has a clearly laid out set of "faqs" (frequently asked questions) explaining how ISAs work, while MoneyeXtra has attempted to go a step further with the establishment of an online database of all ISA products as they are launched. There are search facilities with this database which allow you to specify what kind of ISA you are considering investing in, and how much money you want to put in.

Among the criteria available to personalize the search are: the frequency of investment; CAT-marked or non CAT-marked products; maxi or mini ISAs. In addition, for equity ISAs, you may choose the type of investment, be it actively managed, tracker or self-select. You may even specify a preference for a particular industry sector.

Once the search is completed, the results page may be customised to rank the results by provider for cash ISAs and, for equity ISAs, by the provider; Micropal star ratings or annual charge.

Among the ISAs now available, online savings provider netISA has announced details of its new Maxi ISA with a warning that we could miss out on the best deal for our savings if we don't do our homework on charges. Under the ISA rules, all CAT Standard ISAs are allowed to charge a maximum all- in annual fee of up to 1 per cent.

However, netISA's account is not CAT-marked, charging an initial 1 per cent but has an annual fee of only 0.35 per cent. Assuming identical growth rates of 7 per cent per annum, including gross income and a pounds 5,000 investment at the start of each tax year, allowing for all costs and charges, after five years an investor would have paid an extra pounds 170 in charges on a CAT Standard ISA over netISA's product. Over 10 years the extra cost jumps to pounds 1,416.

The netiSA investment vehicle is the netPEP FTSE-100 Tracker Fund managed by Barclays Global Investors, which, since its launch two years ago, has achieved an annual growth rate of over 20 per cent. Reuters/Hindsight named netPEP as best performing Tracker PEP for the year to January 29 1999. Although you may no longer take out a new PEP, netPEP is still accepting transfers from other existing PEP funds on the same cost basis as netISA.




Robin can be reached at

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