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Question:

I'm 54 years old and shall have around £10,000 to invest when a savings bond matures at the end of November, after I have spent some of it. I'm not too impressed with saving rates at the moment but is it worth putting the money into a shares ISA in the current climate or is there a better option? -WP, Preston

Answer:

Cash ISAs tend to be for the short term where immediate access to the cash is important. Stocks & Shares ISAs tend to be used when someone needs income and/or growth over the medium to long term. The general view seems to be that interest rates will remain low for the next 2-3 years so the rate of return on a Cash ISA will reflect this. In contrast Dividend income on equities can be as high as 4% and the yield on Corporate Bonds can be as high as 5%. In addition the FTSE 100 is current around 15% off its peak, so, accepting past performance is no guarantee of future returns, there would still appear to be good value to be had in terms of the potential for capital growth over and above the current dividends/yields available. In respect of investing is Stocks & Shares Isa’s you need to remember that the value of your investment can fall as well as rise. Ring Steve for more help during office hours on 0845 094 9025.

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