Hundreds of thousands of investors will be making a key decision this week – where to invest this year's Individual Savings Account (ISA) money before the end of the tax year on 5 April.
Those wanting the financial lifeboat of cash would be well advised to read our feature (above) on whether to go into a fixed-rate account or float. Those investors though, buoyed by stock market outperformance and willing to take the risk, are no doubt eyeing the soaraway FTSE.
And this ISA season there is something unusual going on. The fund management industry, instead of plugging a new snazzy product like absolute returns funds that turn out to be disappointing once the marketing lustre has worn off, is simply letting the good news from the stock market speak for itself. Of course, marketing budgets are being raided, but fund managers this year are not trying to persuade us they have discovered the secret of investment alchemy. This should mean fewer investors will get their fingers burnt by following the latest investment fad.
However, in all the excitement of watching the FTSE approach record highs it is worth bearing in mind that it took 14 painful years for us to reach these sort of levels following the bursting of the dotcom bubble. What's more, the financial crisis in Cyprus and its consequential effect on eurozone confidence is a sharp reminder that what looks rosy today could go badly wrong.
If you are thinking of investing in the run-up to the tax deadline, ensure it's not cash you could need in a hurry nor is it money you can't afford to lose.
The best investment strategy is often to invest gradually over the long term, drip-feeding money into the market rather than following the herd into trying to pick the right time to take the plunge.
Independent on Sunday writer Sarah Davidson was named consumer mortgage journalist of the year at the 2013 LSL Property Press Awards this week. Industry experts who judged the awards commended her work as "clearly structured in order to set out and explain each scenario, distilling complex issues into easy to understandable language".
The awards are organised by LSL Property Services and The Wriglesworth Consultancy.
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