Category Archives: Investing

Super ISAs Fail to Grab Savers as Rates Fall

ISA popularity seems to be dropping. According to the most recent data from the British Bankers Association (BBA), the amount of money placed into tax-free savings accounts at the end of August has dropped 15% compared to the same time last year.

In the period from January to August 2014, £9.3 billion was placed into cash ISAs by savers around the UK. Across the same portion of 2013, savers invested £11 billion into cash ISAs.

For the government, these figures are likely to come as something of a disappointment. July saw the introduction of the “super ISA,” which were first announced in the 2014 Budget by Chancellor George Osborne. This resulted in a number of reforms including a new, higher tax-free savings limit of £15,000. The restrictions in how much of this could be held as cash were also lifted, so for cash-only savers the allowance increase nearly threefold.

More than half of the money deposited in cash ISAs during this period, a total of £4.9 billion, was invested in just a single month. The month in question was July, so this disproportionately large figure is likely down to people holding onto their money until the changes to the ISA rules came into effect.

At the time, the large amount of money deposited in July was taken as good news. It seemed to explain a slow start to the year’s ISA activity, as savers held back in order to take advantage of super ISAs. As BBA Chief Economist Richard Woolhouse put it, “it seems people were just waiting until the new rules came into effect to invest their money.”

However, with figures now showing data for the whole of July and the following month, this optimism seems to have been not entirely well-placed. With ISA deposits still 15% below the previous year’s levels, it appears that 2014 has still marked a fall in the fortunes of ISAs even with the introduction of the new, more attractive rules.

In their place, new options such as retail bonds and peer-to-peer lending are growing in favour. These kinds of options are a form of investment rather than straightforward saving, and accordingly they come with a level of risk. However, amidst low ISA rates it seems many savers are wiling to accept those risks in the pursuit of better returns.

Poor ISA rates have dropped further, and this could be partly because of the fall in ISA deposits. A two year fixed rate ISA will now net you 1.97% interest at most, whereas in July the best offer was 2.06%.

Stock Market Starters: The Things An Investor Should Know

Stock market investing is usually compared to gambling for many reasons. The only difference is that the assessment of risk in the stock market is measurable and that it is not done for fun but for the limitation of risks and losses in making investments. Before you begin investing, you must understand a few things to make best with your stock market investing experience.

1. Money You’re Ready to Lose

When investing in the stock market, the money you invest is money that you’re willing to lose. The more you’re detached from expectations with the money you provide your investment, the better. The question is not how much you’re willing to earn; the possibilities of earning can be endless. However, the question is how much are you willing to lose?

2. Join Groups First

Investing in equities or mutual funds first is the key to learning how to assess risks and losses. An equity can help you get money quickly with minimum losses. However, you must not withdraw the money and allow it to grow for at least five years. Surely, you can earn faster with individual stocks, but these entail great losses as well.

3. Stock Market Trends

Learning to read the ticker tape, analyzing and predicting which company would rise and fall by the months, quarters and years and knowing when to pull off a day trade to help minimize your financial damages are important skills you’ll need to learn as you invest in the stock market. Reading the daily news and about the company’s status to date helps you know when you should pull out your investments.

4. Patience

As with any kind of venture, patience is the key to victory. The stock market deals with long term gain. Although day trading is appealing, it does not guarantee good gains, only recovery or break-even ties with your budget. If you invest, you must be willing to wait out the storm and see your money grow naturally.

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