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 Reports and Commentary from the Investment World

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Portman ISA

Portman ISA 2006-03-28

There are a plethora of ISA products in the U.K market place. Currently some of the best interest rates are offered by The Portman Building Society. The Portman Building Society (U.K) has launched two new ISA accounts:  a regular premium saver account paying a whopping 8% interest tax free for 12months and a 15 day notice account paying 5.3% tax free.

The regular saver account has a minimum premium of ₤50 per month up to a maximum of ₤250 per month, with the ability to top up in the final month to the ₤3,000 limit. The 15 day notice account pays 0.8% bonus for 6 months and has a minimum opening balance of ₤1,000. Whilst these interest rates are excellent, you should be aware that at the end of 12months the money is transferred to the Portman’s Easy Access ISA, which pays 4.5%. To transfer to another ISA provider at the end of the 12 month term, you will be charged a ₤30 transfer fee.

What is an ISA?
An ISA (Individual Savings Account) is a special type of account within which you can save and invest up to £7,000 tax efficiently each tax year. ISAs were introduced by the U.K Government to replace TESSAs and PEPs from April 1999 and they are designed to encourage more people to save and invest. The favourable tax treatment of ISAs may change in the future but the U.K Government has stated that the scheme will run until 2009. Any resident aged 18 and over (16 for cash ISAs) can open an ISA.

Types of ISAs
ISAs are different from ordinary accounts because they offer you a choice of two different components: Cash or Stocks and Shares You can pick and mix from these components to suit your needs. What you choose depends on whether you go for a Mini ISA or a Maxi ISA. You can't have both so it is important you choose the right one for your needs.

There are 2 types of Mini ISA: Cash or Stocks and Shares
You can invest in up to two Mini ISAs in each tax year - one for each of the two different components. You can hold each component with a different ISA provider if you wish.

Maxi ISAs
 Maxi ISAs allow you to combine investments of the two components, but must include at least the Stocks and Shares element. This type of ISA must be held with one single product provider.

 TESSA-only ISAs are designed for investment of capital from a matured TESSA (up to a maximum of £9,000), and will accept cash investments only. This means you can continue to earn tax-free interest after your TESSA matures. What's more, you can have a TESSA-only ISA in addition to your standard ISA allowance.

Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.