AN INDEPENDENT financial advice expert at a Chester firm has issued helpful hints on alternative saving methods.
John Chadwick, founder and chairman of Chadwick McLean Independent Financial Advisers, has advised savers on alternatives to cash ISAs in the current financial climate.
John said: “When you look into the current interest rate being applied to your cash ISA, the results can be quite shocking.
“For example, one current variable rate is just 0.2% a year – that’s just £10 interest on an amount of £5,000 each year.
“Since the last budget, it has been possible to transfer your current and previous tax year cash ISA into a stocks and shares ISA.
“It is vital to remember to transfer, rather than withdraw, your money and pay it into a new ISA account, otherwise you lose tax-free benefits.
“The term ‘stocks and shares ISA’ may sound too risky for some savers, particularly following the turbulence of the stock market in 2008.
“However, you are allowed to invest in fixed interest bonds through stocks and shares ISAs, such as government and corporate bonds.
“Fixed interest bonds are very different to shares in that they have a fixed maturity date and pay a fixed rate of interest during their lifetime.
“There are thousands of different fixed interest bonds in issue and it is a specialised investment area.
“Fortunately there is a large range of funds available in the retail market.
“So the cash ISA investor who is disappointed with the low interest rate being paid on their account could transfer to an ISA investing in fixed interest bonds.
“It is important to seek independent financial advice as there are many bond funds to choose from, and remember the higher the yield, the more risk is attached to the fund.”