"Where we're putting our Isa money in 2017"

Published by Moira O'Neill on 24 March 2017.
Last updated on 24 March 2017

Piggy with question marks

“I’m reducing my risk” Moira O’Neill, editor

As an investor, I’d like to think I’m optimistic about the long term. Otherwise, why would I invest? But given the unpredictable global and domestic political situations, I’m feeling quite pessimistic about the immediate future, so I want to cut the risk in my investment portfolio. I am, therefore, going to split my allowance between two defensive funds.

The first is a niche fund that could help me weather 2017’s potentially stormy markets, First
State Global Listed Infrastructure
. Infrastructure is perceived by many to be a defensive sector, where mature businesses offer steady and reliable income that often has inflationary pricing linked in.

The second choice is a strong ‘goalkeeper’, in the form of Sebastian Lyon’s Personal Assets Trust. This trust aims to protect and increase shareholders’ funds over the long term by investing in equities, fixed-income securities, cash and cash equivalents (which may include gold).

“I’m keen to get on the property ladder” Helen Knapman, deputy editor

I took out a Halifax Help to Buy Isa account as soon as they launched in December 2015; I knew the product would be popular as it was paying a marketleading interest rate at the time, and I didn’t want to miss out.

The interest rate was cut in December 2016 from 4% to 3.5% but this is still the best rate on offer, so there’s no point me transferring my cash to another

Help to Buy Isa elsewhere. With Help to Buy Isas, the government contributes £1 towards your deposit for each £4 you save, up to a maximum contribution of £3,000 on savings of £12,000.

As I’m keen to get on to the property ladder, this is still the best type of Isa for me at present, and I’ll continue to pay into the account on a monthly basis until I buy a property – which will hopefully be this year.


“I’m investing in Junior Isas” Rachel Lacey, special projects editor

This year, we are maintaining our holding of Rathbone Global Opportunities for our two sons’ Junior Isas. We aren’t investing huge sums for our sons every month, but as we hope this money will go towards big ticket expenses such as buying their first home or going to university, we want it to work as hard as it can.

We chose this fund because it was one of the first funds I selected when I began investing, and in that time it has served us well. In the past five years alone, it is up by 107%. The fund’s aim is to provide long-term growth from a global portfolio of ‘under the radar’ growth companies, and manager James Thomson feels like a safe pair of hands for our children’s savings.

The fund is flexible in terms of the size of the companies it invests in and their location. However, it does describe its ‘sweet spot’ as mid-cap growth companies in developed markets and it steers clear of direct holdings in emerging markets. Currently, however, it is biased towards larger caps with more than 50% of the portfolio invested in the US.

Among the top holdings are household names including Amazon, Facebook and Visa.


“I’m fed up with paltry returns on cash” Gary Adams, web content manager/writer

Fed up with paltry returns on cash Isas, I made the decision to put most of my savings into a stocks and shares Isa in September 2015. I chose five funds – four passive and one active:


Since 9 September 2016 to 13 March 2017, these funds are up 30.8%, 21.4%, 30.7%, 32.9% and down 7.7%, respectively. In contrast, factoring in inflation, the money I have left in a cash Isa is worth about the same as it was before.

It goes without saying that my investment return is significantly more than what is offered by a cash Isa. However, two things come to mind: first, there is risk and it’s not an unusual view to believe that today’s markets are extremely high and due for a price correction; and second, the psychological cost of withdrawing money from investments is high.

Not wanting to lose out on compounding affects or the fear of beginning a bad habit means that this money is off-limits to me, even if actually taking it out is as simple as clicking a mouse button.


“I’m happy with index trackers” Jasmine Birtles, columnist

I am putting my Isa money, as I usually do, in an indextracking fund. It’s the Scottish Widows FTSE 100 fund, which tracks performance of the biggest companies listed on the London Stock Exchange.

I can honestly say that I have never opened a cash Isa. In my view, Isas are for long-term investing – really an addition to my pension – and I know that in the long term, cash (ie savings accounts) actually loses money because it doesn’t keep up with inflation.

Cash is fine for the short term, but for long-term investing we need riskier products. I tend to put my money into index-tracking funds because they are a cheap and effective way to invest in the stock market. I have investments in the HSBC FTSE 250index fund as well.

A few years ago I put some Isa money into Nutmeg, setting my risk profile as pretty risk-happy (because I am). But, on the whole, I’m pretty happy with index trackers for much of my future investments.


“I have shares in an investment trust” Jeff Prestridge, columnist

I have always believed in building long-term wealth by investing in shares and investment funds. My Isa strategy is no different. Forget cash, think equities.

Of course, it would be different if I were using Isas to build a home deposit – cash every time – but I’m not. I am in my 50s and frantically planning for a future without gainful employment and where income from self-employment will be at best sporadic.

I have an online Isa with Hargreaves Lansdown and drip money in on a monthly basis.
This year, I have bought shares in Edinburgh Investment Trust, a global fund managed by Invesco Perpetual.

It complements other Isa holdings in the UK, emerging markets, natural resources and Japan – all investment fund or trust based.

My only regret is that come 5 April I will not have fully utilised my £15,240 Isa allowance. But then there is always next year...


“I’ve invested in a cautious fund” Darius McDermott, columnist

I’m very cautious in my outlook at the moment. The UK and US stock market look expensive, as do bonds, and there is a lot of uncertainty in the world. I can’t really find any asset class that look an out-and-out buy.

So I’ve put my Isa money into Smith & Williamson Enterprise. It’s a long/short equity fund in the absolute return sector, designed to be less volatile than the UK stock market. Unlike many peers, the managers generally don’t use futures to provide their short exposure, as they feel these are a bit of a blunt instrument, and their shorts aren’t just hedges to dampen volatility but are genuine sources of alpha.

This strategy has seen the short side of the fund perform well, even in rising markets. This is reasonably rare and obviously a huge plus.

I’ve taken a bit more risk with my children’s Junior Isas as they have a longer time horizon. I’ve split their allowance between BlackRock Gold & General and GSAM India Equity Portfolio.

“I’m buying an ethical cash Isa” Simon Read, columnist

The money I stick in an Isa this year will be in cash, simply because it’s possible I may need it sooner rather than later.

I prefer ethical Isas, as I like to know that my money is doing good rather than being used to fund something bad. But that means my choice is limited.

Just three companies offer ethical cash Isas, where you can see where the money is lent: Charity Bank, Triodos Bank, and Ecology Building Society. Charity uses savers’ money to lend to charities and social enterprises. Triodos backs “organisations which put people and the planet before profits”.

Ecology lends to “projects that respect the environment and support sustainable communities”.

Sadly, Ecology’s Foundation Isa, which paid 1%, was closed to new savers “due to high demand” last year.

That leaves me with the choice of 33-day notice Isas from Charity and Triodos, which pay 0.9% and 0.75% respectively. I’ll go for the higher rate at Charity.


*Member of Moneywise’s 50 First Funds for beginners

A financial adviser will help you understand whether this is an appropriate investment for your circumstances.

Don’t be taken in by the promise of high returns and always consider how much you are willing to invest and then choose on that basis.

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