Five considerations for your ISA

Posted by Jason Chapman in Portfolio management category on 26 Feb 14


1. Choosing the right ISA
Choose your ISA to reflect your aims. Savers, and those who are likely to need access to their capital in the short term, may be prefer a Cash ISA. Although, Cash ISA savers should be aware of headline grabbing rates that expire after only a short period. Longer term investments are likely to offer potential for higher returns, although they can come with a higher risk. Those who can afford to take a long-term view could consider a Stocks and Shares ISA. You may also find our page Understanding Stocks and Shares v Cash ISAs of use.
2. Spread your risk
Holding a range of investments within an ISA is key to managing risk. Within a Stocks and Shares ISA you can choose to invest in a variety of investment vehicles. By choosing to invest in funds rather than single company shares, you will naturally increase your diversity, as investment funds typically contain between 40 to 100 underlying stocks, thereby spreading your risk. Of course, if you you then purchase funds in differing sectors and geographical regions, you are diversifying your portfolio even further.
3. Let the experts help
There are over 2,300 funds to choose from through Willis Owen and the choice can seem overwhelming. However, our Fund Space research tool allows you to slice and dice the fund list to meet your own particular needs. Don't forget we have fund and fund manager ratings within Fund Space from independent ratings agencies Financial Express and Morningstar OBSR. Using these to filter to those highly rated funds can save you hours of research.
4. Avoid timing the market
Timing when to invest to coincide with the top and bottom of the market cycle is virtually impossible. Unfortunately, the 'right moment' is only ever clear once it has passed. The best you can do is simply make sure you invest, and the earlier the better. The impact of compounding, which is to say the exponenetial growth that can be achieved by earning growth on previously earned growth, is profound. The earlier you start investing, the longer your assets have to work in the market for you. So, if you didn't invest early this tax year, you may wish to invest early next tax year. The earlier you start investing, the longer your assets have to work in the market for you.
5. Review your portfolio regularly
It's always wise to review your portfolio at least once a year. Fortunately, Willis Owen make this easy for you by providing you with the tools and information you need. With our Your Space tool you can check your valuation, view factsheets on each of your funds, as well as use interactive charting to plot a fund performance against it's sector or another fund. Our portolio scan shows, at a glance, how your entire portfolio is invested, including its sector, asset and geographical spread, as well as its performance.
Don't forget, you have until 5th April to secure your ISA allowance for this tax year. You cannot carry over any unused allowance, so it's a case of use it or lose it.