Wednesday, 23 July 2014

NISA ISAs - a guide to the new ISA rules.

If it were left to me I would probably shove money in brown envelopes under the mattress. The many varied bank accounts and investment plans available often leave me confused and bewildered and I suspect I am not alone in this!
 Luckily since my mum and the internet both tell me the mattress is not the best place for any spare cash I might save which is fairly infrequent to be honest there is no need for burglars to tidy my room to get to my cash. What little I have is stashed safely (and I hope sensibly) away with people who know more about how to look after it than me.
Pink Piggy Bank On Top Of A Pile Of One Dollar...

 (Photo credit: kenteegardin)
Now if you have any extra money and are wondering what to do with it.....well you could send some to me but I'm guessing a more formal investment plan might be what you are looking for. Have you considered an NISA?
Most people have heard of ISAs which have been around for a while now. But did you know that new ISA rules ( and a name change)  came into effect on 1st July this year (2014)? 
The Government announced the New ISA (NISA) at the last Budget raising the investment limit from £11,520 to £15000 to supposedly make the system simpler. You used to only be able to pay in half of this (£5,760) as cash - the rest had to be stocks and shares etc, but from July 1 you can theoretically pay in the whole £15000 to a cash NISA.
Here's a round-up of the new rules:
From 1 July, you could choose to pay in:
  • £15,000 to a cash NISA and nothing to a stocks & shares NISA.
  • £15,000 to a stocks and shares NISA and nothing to a cash NISA.
  • A combination of amounts between a cash and a stocks & shares NISA, up to the overall annual limit of £15,000.
  • You can only open one cash NISA and one stocks and shares NISA to put new money into each tax-year. But you can also open other NISAs to transfer old ISAs into. This is the same rule as for current ISAs. (information from Money Saving Expert.com)
But Scottish Friendly  is warning savers to be wary of being drawn automatically into holding all their ISA funds in cash and to consider the alternative funds available through ISA investments.
Apparently in the last few weeks before the new rules came into effect a number of savings providers lowered their already low interest rates even further in anticipation of the launch of the NISA and the mutual organisation believes that more needs to be done to communicate the alternatives that are available to ISA investors.
Neil Lovatt, Scottish Friendly’s Director of Financial Products, said: “For every one investment ISA taken out, three cash ISAs are opened.
“Cash is easier to understand as it offers security and access to the savings without penalty that investment ISAs do not. People are being put off by what they think is pure equity investments and instead are opting for accounts that offer poor returns on their cash.
“The changes introduced in the budget gave savers a glimmer of hope and incentivised people to put more money aside each month. However, the Cash ISA market has not risen to the opportunity, instead choosing to offer low rates of interest on cash ISAs and in some cases actually reducing their rates for fear of overly high inflows”.
Still with me? The very simple moral of the story is you should definitely do some research before investing your money. Not all providers offer the same deals! 

You can follow Scottish Friendly @scotfriendly on Twitter for news, top tips and events and check out their profile on The Drum.
Disclaimer: This is a sponsored post. If you are in any doubt as to whether any plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.

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