ISA tips

Did you know?

It’s worth remembering that before you invest in an equities ISA, make sure you have enough money in cash for emergencies and everyday needs. If you don’t, you could be forced to encash your longer−term investments when share prices are low rather than retain the freedom to choose the best moment.

Consider your financial needs. Do you need an income now? Can you wait for capital growth? Or would you benefit from a mixture of both? Older people, for example, tend to have a greater need for investment income.

First−time equity investors should start with a collective fund, probably a unit trust with a medium to low−risk profile. After that, higher more risk investments in smaller companies or specialist trusts could be considered.

Over what timescale are you prepared to invest, 5, 10, 15, 20 or more years? This again is largely, though not exclusively, age−linked. If it is less than five years, stock market investments will not be appropriate.

Spread your money across a range of assets.

Treat performance rankings of collective funds with care. If a fund has gone up considerably in one year, ask yourself whether it is likely to achieve anything like that in the next. Future values of investments cannot be predicted, past values are not an indication of future performance.

Review your investments regularly. It is vital to keep track of performance and make sure that your portfolio is on course to achieve your financial goals and objectives.