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Friday, 31 March, 2000, 10:30 GMT 11:30 UK
Isa facts - plain and simple

Isas were launched in a fanfare, but the initial take-up was slow because they were just too complicated for many investors. BBC News Online gives you the simple facts about what you can - and cannot - invest.


What is an Isa?

To start, it is not actually an investment. It is a tax-free "wrapper" to put your investments in. Think of it as a bag of pick and mix sweets - the Isa is the bag, you choose the investments that go in it.

What can I pick and mix then?

In terms of the amount, any sum up to 7,000. But then things can get a bit confusing. It depends if you go for a mini or a maxi.

Why would I want to buy a skirt?

See what I mean? A maxi Isa is where you invest your whole 7,000 with one company.

Usually the total amount would be invested in shares, but it needn't be. The provider may be able to allow you to put up to 3,000 into cash savings and 1,000 into insurance.

With a mini Isa, you split your money up before you invest it. You can have a mini for all three parts of your Isa, either with the same provider or three different ones.

The limits are 3,000 in cash, 3,000 in shares and 1,000 in insurance. But you don't have to buy three minis - you can just have the one or two if you want.

Can I have a mini and a maxi?

This is the really important thing - you can't mix minis and maxis. The Inland Revenue won't allow it, so if you've already got a mini Isa for this tax year you can't take out a maxi.

I think I understand. Where do I get one?

Just about anywhere. Banks, building societies, fund managers and supermarkets all offer a range of products. You'll see plenty of adverts in the financial pages and many companies allow you to buy online. Just make sure you read the small print. Here are some tips from financial advisers to give you a start:


Christine Ross, UBS

"You could go for the latest fashion which are the technology stocks. Some of them have put on some fantastic increases and long may that continue.

"But some people may take a view that they are pretty high and could go down.

"If you really don't know where to start I would go for a good middle of the road UK balanced or growth fund. Make sure it's in line with what you want from your investments. We always hear that these can go down - it's very true, but over the longer term you should be OK.

"There are lots of special offers around at the moment. There are also lots of deals over the internet, with some organisations being willing to give back commissions, for example, if they are not giving you any advice."

Nick Perryman, Douglas Deakin Young

"I think you've got to be quite alert. Don't think that the rate that's the best at the start will remain the best rate going forward.

"Keep an eye on the weekend press - most of the quality newspapers carry tables which show the rates of these cash Isas and be prepared to transfer if the rate you're getting isn't terribly good.

Clearly the general trend, at least with cash Isas, is probably upwards with rising interest rates but you have to ask where you have your money at the moment.

"If you've got it in an ordinary building society account and you're paying tax you might as well get it over into a cash Isa as soon as possible to get that additional extra tax benefit."

Justin Modray, Chase de Vere

"Look at what's in the Isa and then see if it will fit in with what you want.

"Compare the performance over recent years - although the Isa has only been around for a year, you should be able to check the trust's track record over a much longer period.

"Go for a fund manager that offers a good selection of funds. Then you can switch within the same group and keep your costs down."

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