Adrian Watson, Regional Manager of Financial Planning at Brewin Dolphin’s Cardiff office, said:
“It looks like we’re getting bolder in the way we save. You need cash for the short term but once you’ve got some rainy-day money, long-term cash should be invested, especially given a decade of low savings rates and the erosion of inflation.
“Even putting as little as £50 a month into a stocks and shares ISA can go a long way for savers who’ve set financial goals. You don’t need to be wealthy to invest. An initial investment of £500, with £50 invested each month into a stocks and shares ISA could grow to £8,231.93* over 10 years. This compares with just £6,693.07** in a cash ISA
“If someone is in the position to be able to take advantage of the full £20,000 ISA allowance and invest in a Stocks and Shares ISA each tax year, then they could be an ISA millionaire by 2042.
Tom Jemmett, fund analyst at Brewin Dolphin, said:
“You also don’t need to be an expert to invest. Picking stocks yourself can be high risk. There is merit in considering a fund approach, in which the decision on individual stocks or bonds are made by a fund manager, or passively follow an index, and whereby holdings are spread across a range of investments. For those who favour a more cautious approach, the likes of Threadneedle UK Equity Income and Trojan Income may be a good place to start. Alternatively, for those willing to take on a bit more risk, Old Mutual UK Smaller Companies and Aberforth Smaller Companies are options worth considering”.
- The value of investments can fall and you may get back less than you invested.
- Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation, which are subject to change.
- We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time. In addition, we reserve the right to act as principal or agent with regard to the sale or purchase of any security mentioned in this document. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk
* Assumed average return of 4%, after charges and ISA allowance increases by 2.5% assumed rate of inflation each year.
**Assumed growth rate 0.5%