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2012/13 ISA Contribution Limits

December 12, 2011 | Comments: 0 | Views: 159

The overall ISA contribution limit for the 2012/13 tax year is £11,280 per person. You can save up to £5,640 into a Cash ISA and anything up to £11,280 into a Stocks and Shares ISA, so long as the overall ISA limit has not been exceeded.

Some other rules also came into place in April 2011 where all PEPs became Stocks and Shares ISAs, and all TOISAs became Cash ISAs.

You can transfer a Cash ISA to a Stocks and Shares ISA but cannot then reverse the move. You can also transfer freely between Stocks and Shares ISAs. However you may still only open one Cash ISA and one Stocks and Shares ISA per tax year, per person.

Of course knowing the ISA allowances is only the beginning. Once you have decided that you would like to invest in an ISA, whether that's for long term investing or for your retirement, then planning your investment strategy will be the key to your success.

There are certain restrictions on what you can invest in within an ISA. There are certain investments that you cannot buy and so you should be aware of these. Typically a fund manager will state on their fund factsheet whether the fund can be bought within an ISA.

To invest your 2012/13 ISA allowance successfully and to ensure that it meets your needs it is important to be aware of the need to match your funds to your risk profile.

Research suggests that it is the proportion of your investment that you allocate to different types of assets, such as equities, bonds, property, commodities etc. that will determine the overall rate of return that you achieve.

There is no doubt that with interest rates on cash deposits currently lower than the rate of inflation in the UK the prospect of investing for long term growth is far more attractive at present. That coupled with a downturn in equity prices presents quite an opportunity.

However the art of tailoring a portfolio of investments not only to your needs but also to your personality can be difficult. Getting some investment advice could save you from making some very easy mistakes. Mistakes that could be avoided and could save you money in the long run.

A quality investment advice process should take you through your needs and goals, your risk profile and current status and then make recommendations according to your personal requirements.

Jaskarn Pawar, Director, Investor Profile Ltd

Investor Profile is a UK based Financial Advisor and IFA.

Source: EzineArticles
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