Investors are being encouraged to diversify their investment portfolios by taking advantage of their ISA allowance before the tax year ends.

With the new ISA allowance enabling over 50s to invest up to £10,200 into a stocks and shares ISA, The Share Centre is urging investors to “squirrel away” an additional £3,000 from the taxman.

Andy Parsons, advice team manager at The Share Centre, explains why over 50s should make full use of their ISA entitlement.

“With interest rates at historic lows, savers and investors alike should plan to make the most of the improved allowance. While see-sawing markets have left some wary of investing in equities, those not ready to invest directly into the stock market could consider funds as a way of reducing their overall risk,” he said.   

Highlighting three funds ranging from low risk to higher risk, Mr Parsons outlines how these funds can help diversify an investor’s portfolio.

In the low risk category, he has selected L&G’s Dynamic Bond fund as it is “ideal” for investors seeking additional income without wishing to increase their risk.

Meanwhile, he suggests Invesco Perpetual’s High Income fund offers a medium level of risk and would suit investors who “prefer to follow a manager with a proven track record”.

To provide an element of high risk to their portfolio, he has selected First Sate’s Global Emerging Market Leaders fund, as it offers the potential for long-term capital growth.

Commenting, Mr Parsons adds: “Funds by their very nature help to diversify a portfolio because they include a variety of equities and other investments. With a diversified portfolio, returns from better performing investments can help offset those which aren’t performing as well.”

© Fair Investment Company Ltd