“The ISA deadline of 5 April is fast approaching but people still have time to save or invest their allowance of up to £15,000 tax free this year. With the Chancellor’s recent announcement to introduce the flexible ISA which will see, for the first time ever, Britons being able to withdraw and re-invest some or all of their tax allowance within the same year, it is now more important that people use it rather than lose it. Of equal importance is how people invest within their ISA, our BlackRock Investor Pulse survey* found that just 18% of Britons hold stocks and shares in their ISAs, compared to 43% of people whose ISAs sit purely in cash. Meanwhile, 37% of people do not hold an ISA at all.
“Of those holding ISAs, 39% intend to use it to fund their retirement whilst just over a quarter (27%) intend to build up their long term wealth using it. Although these are forward thinking goals, Britons must realise the risks of holding their ISAs in cash. Cash has lost almost 30 per cent of its real value in the past 10 years because of inflation. Even if a saver has been quite nimble in chasing the best deposit and cash ISA rates, they would still have made a loss in real terms of 6 per cent.
“Whilst the prospect of financial planning is not exciting to all, people should carefully explore the options available for their ISAs. Those with a lower appetite to risk that still want exposure to the markets could consider drip-feeding their investments each month, as this can help to smooth the stock market ride. Dipping your toes into the markets can make a big difference in the long run.”
The BlackRock Investor Pulse survey was conducted amongst a nationally representative sample of 27,500 individuals identified as financial decision-makers, in 20 countries, aged 25 to 74 years old. The sample for the UK is 2,000.
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