Over 50s should consider taking full advantage of the ISA limit changes due to take place on October 6, experts at BlackRock have urged.

The changes will see the ISA limit for over 50s increase from its current level of £7,200, to £10,200, and according to Tony Stenning, managing director, UK Retail at BlackRock, over 50s should make the most of it.

“Anyone in this age category should consider taking full advantage of the new limit since it enables them to save a substantial sum each year, with gains being tax free and the money can be accessed at any time it is needed,” he said.

According to Mr Stenning, a person aged over 50 who invested the full ISA limit of £10,200 each year for the 15 years to 65 into an equity fund with a 7 per cent return will have accumulated a tax free nest egg of £275,000, from contributions of just £153,000.

However, Mr Stenning argues that over 50s may want lower risk investments than equity funds: “Someone investing after the age of 50 is likely to want lower risk investments, as the day when the money is needed is closer.” 

“As we have seen equities can plunge in value over short periods. Historically these down-turns have been reversed but that can take years,” he added.

As a result, Mr Stenning suggests that an absolute return fund may be an option for over 50 ISA investors: “Someone who suffers a 50 per cent fall in the value of their equity portfolio has to achieve a 100 per cent increase in order to climb back to break even.

“In the meantime they lose out on all the important benefits of compound returns. So an absolute return fund, with a record of generating steady returns year in and year out, may suit.”

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