Confused about ISA

Dumbledore55

I have a maxi ISA with Abbey that I took out in July 2000 supposedly to pay off my mortgage.

I orignally paid £90 per month and at some stage increased it to £100 per month. I'll sound totally stupid but I didn't really realise that there was any risk of the ISA going down in value abd I don't think this was ever explained to me because I'm not really a risk taker when it comes to money.

I'm now on a repayment mortgage so won't need the ISA specifically to pay it off but could consider doing so when/if the ISA reaches the amount I owe. At the moment the ISA is performing really well but I've no idea whether I should keep putting money in it or cash in the currently healthy profit I've made.

Total invested since 2000 - £6750
Current Value - £9238.52

I know I can't take out another ISA this year, so do I wait until March 2008, stop this one and take out a mini cash ISA?

I will soon be in a position (December) to pay extra into the ISA but I don't know whether to do that or make extra payments on the mortgage (fixed at 6.24%). I'm allowed to pay 10% per year and currently owe £92000.

I'm a higher rate taxpayer - just for information.

I've always been so concerned with debt, I've never really considered the best way to invest money so any advice would be greatly appreciated.

Thnaks - DD

dunstonh

If you are a higher rate taxpayer, then you shouldlook to keep the ISA going.

Risk is a sliding scale. Its not an on/off position. Whilst Abbey's ISAs are pretty naff, you could transfer it to a much better option (fund supermarket) and pick a fund range that matches your risk profile.

You should be looking to utilise your tax free allowances before paying off the mortgage because the long term benefits of having funds in a tax free environment will be more than the short term gain of reducing your mortgage.

Dumbledore55

Thanks Dunston - can I transfer it now or do I need to wait until the end of this financial year?

debbie42

You can transfer ISAs at any time. Make sure you do actually transfer (via your new provider) rather than close it and move it as you'd lose the tax wrapper then.

dunstonh

One other thing is that I cannot see any justification to why you were put on a MAXI ISA and not a MINI. Typically, if your annual contribution is less than £4000 you would expect to be put on MINI basis. If you have felt you have missed out on your MINI cash ISA allowances, you may wish to raise that as a complaint with Abbey. They cannot do anything about it but it would be fed back to the person that set it up and their may be an "inconvenience" payment made.

Around Feb 08, you would want to notify the new provider of your wish to move to MINI ISA status for the new tax year (assuming you wish to keep the regular contribution going).

Dumbledore55

That's really useful thanks. I've no idea why I was put on a maxi either and I went back a year later for a review and said I wasn't really happy or confident with the product. The only advice I got then was to overpay the mortgage a bit because it would make me feel better.

Being a novice on the 'supermarkets' front is there an article I can read for some guidance?

jem16

A good post to read with lots of info on fund choosing and using Hargreaves Lansdown as the supermarket is this one;

http://forums.moneysavingexpert.com/showthread.html?t=416337

If you don't feel that DIY is for you, you could ask an IFA to review your ISA and move it for you whilst picking suitable funds.