ISA options

their strength until the time was right for confrontation and victory. “Doing nothing needed huge bravery when politicians, rulers and even the generals on their own side were clamouring for action, and it is no different for fund managers. Brilliant failure may be exciting to read about in the history books, but it spells disaster for one’s financial planning and – worse – can destroy one’s irreplaceable capital.” Wise words, indeed.

March already and the Isa season is upon us. Before suggesting specific funds and trusts for private investors – this I will do next week – what are the options open for investors?

Cash Isas and help to buy Isas can only be invested in cash. Stocks and shares Isas can hold a variety of products including openended funds, investment trusts, corporate bonds and government bonds. Lifetime Isas can be invested in cash, stocks and shares, or a combination of the two.

For those opting for shares, bonds or property related funds, investors should have a long-term investment horizon – I would suggest between five and seven years. The annual contribution limit across all adult Isas is £20,000 for the 2018-9 tax year. This can all be put into one cash, or one stocks and shares Isa.

To open a cash Isa or help to buy Isa you must be at least 16, and to open all other types of adult Isas you must be at least 18. Not more than £5,000 per tax year can go into a lifetime Isa – your £4,000 maximum contribution plus a government bonus of up to £1,000.

The maximum contribution for junior Isas in the 2018-19 tax year is £4,260. Parents or guardians can open a junior Isa for a child under 18 living in the UK.

If you don’t use your Isa allowance each year it is lost – you cannot carry forward unused allowances from previous years. If you are not sure what to invest in you could temporarily hold your annual Isa allowance in cash in the short term and invest thereafter.

‘Targets are better seen as reminders to stop and think,

rather than for knee-jerk action’