ISA or account linked to stock market

shorty001

I currently have an ISA to which i have religiously been adding the total allowance each year so i now have a healthy balance and no plan for the money. I have been advised that an ISA is probably not the best place for the money if you consider inflation and if its likely to just sit in the account for the next couple of years. So have been advised that a better alternative (for a proportion of it) is an account linked to the growth of the stock market.

So any help/advice would be appreciated.....i always thought that just putting my money in an ISA was the best way to save for the future. So after having this advice am a little confused what to do.

Thanks!!

Welliesorter

If you need to ask the question it could be that stock market-related investments aren't for you!

It's a really difficult one to answer because it all depends on what you expect to happen to the economy over the next few years.

Certainly if you'd invested in the stock market in the last few years and needed the money now you'd be regretting it. However, the fact that the stock market has fallen so badly could mean that it's bottomed out and the only way now is up. This is by no means certain, so it all depends on your attitude to risk. Something else to consider is where you expect interest rates and inflation to go over the next few years. If inflation outstrips interest rates it will erode the value of cash held in savings accounts.

I know that's a very inconclusive answer, but in the present climate I'd be surprised if a conclusive one could be given, even by an expert. I'm certainly not one of those.

Maybe I shouldn't comment without a disclaimer. What spare cash I have is divided between an Icesave account and some shares that are worth less than half of their value a year ago, so I may not be the best person to advise!

purch

So have been advised that a better alternative (for a proportion of it) is an account linked to the growth of the stock market

As most accounts linked to the stock market have managed to grow by a staggering Minus 15% or more in the last 12 months whoever is advising you is probably not the best person to be listening to.

dunstonh

An ISA is just a tax wrapper. it is a container for your investments. So you can invest/save in cash in a csah ISA or stockmarket in a stocks and shares ISA.

Investments should be for the absolute minimum of 5 years. Ideally longer. If you are looking long term, then investing may make sense. If you are looking short term then cash makes sense. Often a combination (if long term) is the best option.