Shares: How to use this year

28th February 2011

An Isa or individual savings account is a tax-free savings account designed to give you 100% of the money you earn on your investment.

Individuals can save up to £10,200 in an Isa each year, either all in an equity Isa or up to £5,100 in a cash Isa and the rest in an equity Isa. From 6 April – the start of the new tax year – this limit goes up to £10,680 or £5,340 for the cash element.

With an equity ISA you can invest in individual stocks and shares or investment funds. Any profit you make will not be subject to income tax or capital gains tax.

Independent financial advisers can help you pick stocks or funds but investors will be charged for the advice they receive. If you don't want to pay for advice, you're free to pick stocks or funds yourself.

Which ones will be right for you depend on your attitude to risk.

Some providers make this easy to do. For example, Standard Life has launched a new online Stocks and Shares ISA, (available here) aimed at simplifying investment options for people who want to manage their ISA investments online but aren't sure what funds to choose. Investors can access the MyFolio range of risk based portfolios. These offer people a simple choice of active investment strategies designed to maximise potential returns across five risk levels.

Mark Till, director at Standard Life, says: "People can assess the level of risk they are comfortable with and match themselves to the appropriate investment strategy knowing the hard work will be done for them by our investment team."

Isa investors aren't limited to UK companies as you can diversify into emerging markets and overseas funds. In fact, new research from online stockbroker and fund supermarket Interactive Investor shows that ISA investors are looking further afield in their pursuit of high income growth. Figures reveal that nearly a quarter (24%) of investors plan to invest in new emerging markets such as Africa and Vietnam this year, a 52% increase on 2010.

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