Money: ISAs are bad for our sanity
Sunday 23 May 1999
Here's why: as soon as you sign for a cash mini ISA, you can only save a maximum pounds 3,000 in a mini stocks and shares ISA. If you had opened a maxi ISA account, you would get a total cash and share allowance of pounds 7,000. So saving between pounds 1 and pounds 3,000 in a maxi ISA leaves the rest of the pounds 7,000 to go on the stock market. That's why anyone signing up for mini cash ISAs has potentially lost the chance to invest up to pounds 4,000.
The subject is fiendishly complicated so it's not surprising that people have been going for the simplest ISA option, a tax-free savings account offered by those helpful people at your building society.
While business at the building societies has been booming, things have been sluggish at many fund managers since the crazy end to the last- ever PEP season. The baffling ISA rules don't exactly help to attract the average first-time stock market investor.
We won't see the first official take-up figures for ISAs until the autumn, but last week we had some of the first concrete evidence of fund managers' distress.
Announcing Perpetual's first-half results, chairman Martin Arbib commented that the transition from PEPs to ISAs had "so far had an adverse impact on sales". The company announced disappointing first-half profits and Mr Arbib said business was likely to stay subdued. One of the reasons he gave was that the boom in cash ISAs had already restricted the choices for many investors. If other managers join this chorus, maybe the investment rules will be relaxed a little.
There are a few useful attempts to help customers through the maze - including the newly launched CATmark logo, which will be easily identifiable as a way to spot a good-value stock market deal. But only 11 firms have signed up to display the mark.
Those of you who are still undecided about ISA investments for this year, but know that you want to put at least some savings into the stock market, should choose one of the maxi ISAs that will allow you to mix cash with decently performing stock market funds.
Some ISA fund managers are offering fairly good rates on the cash part of their maxi ISA schemes. Top payers include Virgin (5.75 per cent), Standard Life (5.35 per cent) and Johnson Fry (5.30 per cent).
Other managers with good maxi combinations (this sounds like an order in McDonald's) include Gartmore, Legal & General and Jupiter.
If you have already signed up for a mini cash ISA, you may find you can't open a mini stocks and shares ISA with your favourite fund manager as several don't offer mini ISAs at all. So bad luck if you fancied a mini ISA at (for example) Foreign & Colonial, Equitable Life, Schroders or Templeton.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israel hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The missiles were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45
The secret report that helps Israel hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
£30000 - £34000 Per Annum 25 days holiday, Private healthcare: Clearwater Peop...
£400 - £450 per day: Orgtel: Business Analyst - Credit Risk - Banking - London...
£500 - £600 per day + competitive: Orgtel: My client, a leading bank, is curre...
£20 - £22 per hour + competitive: Orgtel: Senior Fund Administrator, Top Four ...