are stocks based ISAs a good idea?

ard123en

Hi Alll

Ive had a mini cash isa every year for the past 3 years and put a little extra into an on-line savings account

and have also started a save as you earn scheme this year with my employer

I dont have a pension at the moment the financial planner at my bank RBS has advised me to use some of my 4k allowance in a stocks based mini isa is this a good move ?

ard123en

lipidicman

If you are going to buy shares, doing so in an ISA is a good move

If you are asking if shares are a good move, then you wont get a good answer here.....

....my crystal ball is broken!:rotfl:

I will say:
remember that past performance is no indication of future growth!

dunstonh

You also dont need to invest in shares to have an equity ISA. There are asset classes of lower risk than that (as well as higher risk) which can be used to suit most people.

I would be wary of using a bank to purchase an equity ISA with. Very high charges and generally poor performing funds are what banks offer.

lipidicman

Good advice.....I still need to get my Bonds ISA

carnet

dunstonh wrote:

You also dont need to invest in shares to have an equity ISA. There are asset classes of lower risk than that (as well as higher risk)

Asset classes with a higher risk than shares - which can also be placed in an ISA ?

Hedge Funds ? Warrants ?

Twopints

EDIT:I posted this in good faith, but fortunately was corrected by more knowledgeable folk - see below. The only thing right is the link to Martin's article.

*** IGNORE THIS POST ! ***

If you already have a mini cash ISA this year then you can't have another ISA anyway.

If you want to invest in equities, you need a Maxi ISA which has a £7000 limit where you can still put up to £3000 in cash (hence an "allowance" of £4000 for shares?) . But you cannot have a mini and a maxi ISA in the same tax year. With a maxi ISA you do not need to put in cash you can use the whole £7000 for equities.

As far as I know there is no such thing as a stocks based mini ISA.

Please see this article by Martin when he clearly explains it in terms of suitcases and handbags (not to mention cakes): ISA's

lipidicman

Twopints wrote:

As far as I know there is no such thing as a stocks based mini ISA.

You dont know very far then. You can have such a thing!

dunstonh

If you already have a mini cash ISA this year then you can't have another ISA anyway.

As far as I know there is no such thing as a stocks based mini ISA.

Yes you can. You can have a mini equity ISA. Often referred to as a stocks and shares ISA.

Asset classes with a higher risk than shares - which can also be placed in an ISA ?

My point was to highlight a risk spread a risk spread was available and doesnt just mean UK stockmarket. As for Higher than UK shares (me adding in the UK ). i.e. Europe, Japan, Far East, Emerging countries or you can pick specialist areas such as property share funds, pharmaceuticals, telecoms, media etc. It can be lower than UK stockmarket with corporate bonds, index linked stock, fixed interest securities etc.

Or you can expand on the options by using single company shares in a personal self select ISA where you pick the individual shares to be held in the ISA (1 share or many). Investment trusts can be used as well.

Stocks and shares ISA are not risky. Its what you put inside them that can be. That risk can be very low to very high. You can choose what is appropriate to you. Just because some may not like the stockmarket, it doesnt mean it should put you off equity ISAs as non stockmarket funds are available.

Twopints

lipidicman wrote:

You dont know very far then. You can have such a thing!

Oops. My bad.

Midas

Twopints wrote:

If you already have a mini cash ISA this year then you can't have another ISA anyway.

If you want to invest in equities, you need a Maxi ISA which has a £7000 limit where you can still put up to £3000 in cash (hence an "allowance" of £4000 for shares?) . But you cannot have a mini and a maxi ISA in the same tax year. With a maxi ISA you do not need to put in cash you can use the whole £7000 for equities.

As far as I know there is no such thing as a stocks based mini ISA.

Please see this article by Martin when he clearly explains it in terms of suitcases and handbags (not to mention cakes): ISA's

You can currently put up to £4000 per year into a mini stocks and shares ISA, which you can buy in the same year as a mini cash ISA (up to £3000 can be put in to the cash ISA).

If you have a maxi ISA, you can't invest in a mini ISA in the same year.

Midas

Martin puts it fairly neatly in his article (follow the link from Twopints above).

This is the key bit...

" What's all this Mini and Maxi stuff?


Unfortunately the ISA rules are unnecessarily complicated and each year anyone opening an ISA must pick whether to go for one of two types of ISA container, either mini or a maxi

To MAXIMISE your share based investments go for a MAXI ISA

A Maxi is a suitcase type container as everything has be bundled together and bought from just one provider. You can have up to £3000 in cash and whatever you don't use up in shares.



So you could have up to the full £7,000 in share type investments. Usually maxi ISAs will therefore be bought from investment companies who pay relatively poor cash returns, so maxi's are best used for share investment.

For the best CASH returns MINIMISE your share based investments with a MINI ISA

If Maxis are suitcases. Minis are more like two handbags. Each can be bought from a different company and must carry something different. The limits here are £3,000 in the cash bag and up to £4,000 in the shares bag.

It's very important to note the rules strictly prevent the opening of a mini and maxi ISA in the same tax year. Do this and you are potentially invalidation any tax gains.



Therefore think before opening any ISA, even if you open a mini-cash ISA with just a pound at the start of the tax year, there's no going back that year, you're on the mini route. And if you later decided you wanted to invest the maximum £7,000 in shares that year, you'd find £4,000 of your shares allocation had gone."