Common Misconceptions About ISAs

Morningstar debunks myths and misconceptions about ISA accounts and savings

Morningstar 5 April, 2012 | 4:01PM
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The specifics of investing within ISAs can give rise to multiple questions and misunderstandings. The following article will address and clarify certain ISA-related issues and misconceptions.

ISAs must be purchased from your current bank

Investors are encouraged to shop around for the best ISA scheme: you don’t have to stay with your current bank. With interest rates at historic lows, cash ISAs offering interest rates that are above 3% are few and far between. Therefore, it’s worth shopping around for the best deal—it may not necessarily be the deal offered by your bank. Meanwhile, remember that only half of your ISA savings can be saved in a cash account. The remainder--or the entire annual allowance--can be allocated to a combination of the following:

- Shares and corporate bonds issued by companies officially listed on a recognised stock exchange anywhere in the world
- Bonds issued by the UK government or other countries in the European Economic Area
- Units or shares in OEICs or closed-end funds
- Life insurance policies

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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