30 April 2013 / by Oliver Roylance-Smith
The 2012/13 tax year may be over, but many of the most popular plans from the ISA season are still available – and with the new tax year underway, now could be a great time to get ahead and maximise your ISA allowance for 2013/14.
Available for ISA and non-ISA
Even if you’ve used your ISA allowance this year, many of these plans are also available for non-ISA money and with low minimums and a variety of terms, offering some competitive opportunities. The current economic environment gives both savers and investors some very real challenges. To help you review the options available, we bring you a round up of ISA season best sellers from the best the market has to offer, for both ISA and non-ISA deposits and investments.
CASH AND SAVINGS
Cash savers have been hit hard by the current economic environment since not only have they had to deal with this continuous period of record low interest rates, but banks are not as desperate for your money as they used to be and so the rates on offer are very low. On top of this, there is the threat of inflation to deal with which is having a real impact on overall returns.
Short term
Looking for an instant access home for this year’s cash ISA allowance? The E-Cash ISA from Scottish Widows Bank can be opened with a deposit of just £10 and pays 1.30% AER. Part of the Lloyds Banking Group, transfers in are accepted, and there is no notice period or loss of interest for withdrawals.
If you’re looking for a non-ISA savings plan that still offers easy access, Scottish Widows also offers a Direct Transfer Account which is open to non-ISA deposits from £1,000 upwards. This plan offers 1.00% gross/AER (variable) and has no notice period or withdrawal limits.
Medium to longer term
For those looking to tie up their savings for longer, Investec’s Kick Out Deposit plan offers a potential 4.60% per year (gross, not compounded) and will mature early or ‘kick out’ provided the value of the FTSE 100 at the ends of years 2, 3, 4 or 5 is higher than its value at the start of the plan (subject to averaging).
The Growth Deposit Bond from Legal & General also links your return to the FTSE by offering 150% of any rise in the Index over the six-year term, capped at 40% of your original investment. Alternatively, for those who do not want a cap on any potential returns and prefer a five-year timeframe, the Deposit Growth Plan from Investec will return 130% any rise in the FTSE over the term of the plan (gross, subject to averaging) without any upper limit.
If you’re looking for a six year term, you may also want to consider the Societe Generale Money Builder Deposit Plan 1, which is a structured income deposit plan linked to the performance of five blue chip FTSE 100 companies; Vodafone, BP, British Telecom, Rio Tinto and Tesco. This plan offers a potential annual income of 8%.
INVESTMENTS
Income
The Enhanced Income Plan from Investec has been our most popular investment, offering a fixed income which is paid to you each month, regardless of the performance of the FTSE 100 Index. The annual income is currently 5.76%, which equates to 0.48% paid to you each month. Capital is at risk if the FTSE drops by more than 50% during the plan and fails to recover by the end of the plan, in which case your initial investment is reduced by 1% for each 1% fall.
Gilliat also offers a six-year income plan, the Step Down Income Builder plan, which provides the opportunity for up to 6% per year (quarterly payments of up to 1.5%) with income accruing for each week the FTSE remain above a particular level. These levels are 5,000 points in year 1 and 2, 4,500 points in year 3 reducing to 4,000 points in year 4 to 6. Capital is at risk of the value of the FTSE is below 4,000 points at the end of the term, in which case your initial investment is reduced by the same percentage fall.
Growth
One of the most popular types of growth investment is the Kick Out plan, which offers the opportunity to mature early or ‘kick out’ from year one onwards. The highest rate currently available is through Investec’s Enhanced Kick Out Plan which will return 8.5% per year (not compounded) should the FTSE finish higher at the end of the year than its starting value. Therefore, the FTSE only has to go up a little in order for the plan to mature early. Capital is at risk if the FTSE falls by more than 50% during the investment term, which is five years.
For those looking for a kick out plan but who have a slightly defensive view of the FTSE 100, RBS’s UK Step Down Defensive Kick Out offers a potential 7% each year provided the Index is higher than a particular level at each anniversary. The defensive part of the investment refers to the required level falling by 3% each year (from year 2 onwards), ending at 85% of its starting value in the final year. Another defensive option is Morgan Stanley’s FTSE Defensive Bonus Plan which offers the potential for 6.75% each year (not compounded) provided the level of the FTSE at the end of each year (from year 2 onwards) is at or above 95% of its starting value.
Other popular fixed term investments include Investec’s Defined Returns Plan which offers a fixed return of 40.5% at the end of year 3 or 67.5% at the end of year 5 if on either date the value of the FTSE is higher than its value at the start of the plan (subject to averaging). With all of these plans your capital is at risk is the FTSE falls by more than 50% during the investment.
Funds
For those looking for investment fund options, the Fair Investment Fund Supermarket has over 1,500 funds from over 90 investment managers. We also provide you with our popular choices and our fund selections across a number of other sectors including Emerging Market funds, Ethical funds, Managed funds, Bond funds and Absolute Return. All of the funds in our Select Range have a 0% initial charge when invested through the Fair Investment Fund Supermarket and you can also transfer your existing holdings at no charge.
Click here to look at more investment options >>
No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. Different types of investment carry different levels of risk and may not be suitable for all investors.
Some structured investment plans are not capital protected and there may be the risk of losing some or all of your initial investment. There is also a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated, in which case you may not be entitled to compensation from the Financial Services Compensation Scheme (FSCS). In addition, you may not get back the full amount invested if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.
© Fair Investment Company Limited