October 2017
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Don’t get conned by the great ISA scam

As we approach the end of the 2010-2011 tax year, we’re being bombarded by ads from financial services companies and articles by personal finance journalists telling us to put over £10,000 into an ISA. And most people will do what they’re told, guaranteeing they’ll lose money. Beware of two things:

On Cash ISAs, you can often get better interest rates on normal 2-3 year fixed savings accounts than you’ll get on your ISA, even after paying tax. So make sure you’re not getting fooled into a lower interest rate by the ISA label.

With Unit Trust ISAs, remember as soon as you put money into a unit trust you’re losing about 10% of your money in initial charges and the difference between the price you buy units and the price you can sell them. But have a look at, say, five of the bestselling unit trusts. You’ll find they all hold pretty much the same shares. So why not just buy the shares directly yourself? You’ll save yourself 10% immediately and up to 3% a year every year through not having to pay the unit trusts’ exhorbitant charges.

As ISA frenzy grips the country, don’t get conned into making financial services insiders rich with your money. And if you want a really good investment, why not buy my book Pillaged – it costs £8.99 or less and will probably save you tens of thousands of pounds.

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