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For those looking to put away some money for
the future, the world of finance can seem
like an overwhelming place, filled with different
companies offering lots of different kinds
of savings accounts. It’s easy to be
put off, but don’t be. The crucial thing
that you really need to know about if you
want to start saving is the ISA. The ISA,
or Individual Savings Account, was introduced
by the government in 1999 to help encourage
people to put their money into savings. ISAs
may seem complicated to the first time saver,
but in fact they’re really a very simple
money-saving device.
An
ISA is not so much an account as it is a tax-free
wrapper for your savings. That is, once you’ve
put your savings into an ISA, the tax man
cannot take a percentage of the interest you
earn. They can be used on both cash savings
and shares, and they really are that simple.
The only complicated part of the whole process
is choosing which ISA to go with. Each bank
or savings company will have something different
to offer, and just like normal savings accounts
there's a variety of ISAs available. From
instant access and fixed rate to accounts
with base rate guarantees, it’s important
that you work out which offers the best deal
for you.
Companies
will also offer incentives to persuade potential
customers that they have the most to offer.
Feel free to take these into account when
choosing, but remember that extras should
be useful and lasting, rather than just a
flashy way of drawing your attention. For
example, Legal and General have an offer on
at the moment for cash-back benefits with
their ISA,
i.e. if you invest in one of their eligible
stocks and shares by 5 April 2009, they will
refund the 2009 annual management charge.
Now, if investing in stocks and shares was
something you were planning on doing anyway,
then this could be a very helpful extra.
Ultimately,
ISAs are there to help you to save more effectively.
If you do make the decision to set one up,
be sure to take advantage of what it offers
you. Check all of the terms and conditions
before signing up so that you can remain tax
free on as much of your savings as possible,
and save away – there’s really
nothing more to it than that!
Rates
and offers quoted are correct at the time
of writing (16.02.09) and may be changed subject
to the discretion of the provider.
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