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Saving for the future


Saving for the future

If you are approaching retirement you are probably looking for somewhere safe to store your money and we're not talking about hiding it under the mattress or locking it away in a safe. Over the course of your life you are probably going to accumulate a fair bit of cash and it makes good financial sense to put it into a savings account with a good level of interest but which you can access any time. One of the easiest savings accounts to manage is an ISA.

An ISA is an Individual Savings Account. It is a flexible and tax-free way to save money. Any growth on your investments is not subject to any income tax or capital gains tax so you can make the most of your investments.

The Government introduced ISAs to encourage more people to save and to do this it had to offer a tax free incentive. However, because they are so easy to have and don't give the Government any money there are certain limits on the amount and number of accounts you can have.

The standard ISA limit for this tax year is £7,200 in a Stocks and Shares ISA. You could choose to invest up to half of this in a Cash ISA which is a cash deposit savings account that offers variable or fixed rates. A Stocks and Shares ISA invests in funds across a range of 'assets' such as shares, bonds and property. The rate of the return varies because they reflect the performance of the underlying assets and generally offer a greater rate of return over the long term but have more ups and downs in the short term. Cash ISAs are therefore more secure.

From October this year, the ISA limit for this tax year is increasing to £10,200 if you are aged 50 or above on 5 April 2010. This is going to come in particularly handy for those of you who lost out on company pensions in the 1980s and early 90's and also because state pensions are pretty much non-existent. However, you should remember that once you have invested the maximum amount allowed in any tax year, you cannot invest more, even if you have withdrawn some money from your ISA that year.

Legal & General offer five different types of ISA on their website, including an Index Tracker ISA, Actively Managed ISAs and even Ethical ISA's so you can find something to suit your needs.


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