Top-paying, variable-rate cash ISA rates have fallen by as much as 35pc since September, analysis by Telegraph Money has revealed.
And according to Moneyfacts, the average rate of a Cash ISA has fallen to a record low of 0.82% – ten years ago the rate averaged at 5.06%.
Cash ISAs are just savings accounts you NEVER pay tax on. Everyone in the UK who’s 16 or over gets an ISA allowance at the start of each tax year. If you put money in it then it isn’t eligible to be taxed, and this stays the same year after year.
But despite the record low rates of return, Scott Herbert, Partner & IFA at Clarke Nicklin Financial Planning doesn’t think that should put you off investing though:
“It’s vital for savers to consider their options. It highlights the need to research and source the best rates possible and to continually keep a track of how your investment is performing.
“ISAs are a great way of putting cash aside. You don’t pay tax on interest or on income or capital gains from your investments; also the ISA limit for 2016/17 is increasing to £20,000 up from the existing £15,240.”
Isa season is here again, and many are rushing to take advantage of their £15,240 tax-free allowance before the the new tax year starts in April.
“There are other options available for you to consider though” adds Scott. “Whilst ISAs are an integral part of financial planning its worth looking at alternatives such as Smoothed Investment returns, cash and having an equity portfolio.
“Whichever investment route you are suited to will ultimately depend on your attitude to risk, higher risk means higher return but for the more cautious there is less chance of losing it.”
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.
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