Belfast Telegraph

It's 'use it or lose it' time over Isa funds

By Rob Griffin: Money Matters

The countdown has begun again. With less than one week until the end of the tax year, time is running out for people to use up any of their remaining Isa allocation.

Savers only have until Sunday, April 5 to place funds from their 2014-15 tax-free allowance in cash or stocks and shares Isas, or they'll lose the opportunity and any subsequent investments will come out of next year's quota.

However, the big question is whether anyone will be bothered about putting money in a cash Isa given the meagre rates of interest being paid, according to Rachel Springall, a finance expert at the data provider Moneyfacts.

"Savers will have been hoping for a buzzing Isa season, but instead they are finding a stagnant one. They are faced with a 'use it or lose it' scenario, but with cash Isa rates as poor as they are today, it will be no wonder if people lack the enthusiasm to save tax-free," she said.

While Ms Springall supported last year's decision to increase the maximum amount that you can put in an Isa to £15,000, she argued that banks and building societies must offer greater rewards if they are going to attract any new customers.

"Increasing the Isa allowance is great, but it's the savings rates that really need improvement," she said. "The average Isa has fallen to 1.45% from 1.62% a year ago and 1.78% two years ago."

However, while high-street banks are refusing to fight for custom, it's a different story in the world of stocks and shares, with investment firms desperately trying to lure people into their funds at what, traditionally, is a popular time of year for buying.

The difficulty for investors is that the investment companies push products that have already performed well, so there is a danger that they jump in at the top of the market. Patrick Connolly of Chase de Vere said: "Investment companies, platforms and execution-only firms usually push 'flavour of the month' funds."

Belfast Telegraph

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