Cash ISAs

If you are 16 years old (or older) and a UK resident you can invest in a Cash ISA.

Under the ISA rules you can split your £10,680 ISA allowance (20011/12) between Stocks & Shares (for the over 18's only) and Cash ISAs. You can invest up to half of your yearly allowance (£5,340) into a Cash ISA. Anything you don't invest into a Cash ISA can be invested into a Stocks & Shares ISA, up to the £10,680 limit.

What were Mini Cash ISAs, TESSAs and TOISAs (TESSA only ISAs) are now all part of the new Cash ISA regime. Many investors may still have Tax Exempt Special Savings Accounts (TESSAs). While the earlier versions matured and were allowed to roll over into similar high interest cash accounts, and, in some cases, specialist equity-linked accounts, that system has since been modified.

We at Allenbridge do not currently offer this type of interest bearing account; the best rates for Cash ISAs can usually be obtained from building societies and banks - particularly worth checking out are internet based accounts for the highest rates.

However, with interest rates now at a historic low point, many clients have become unhappy with the Cash ISA investments they made when rates were higher and have sought to take some measure of risk in return for the opportunity to protect their capital from further erosion by inflation.

But it should be remembered, stock market based investments carry the risk of falling in value as well as the prospect of growth, and deposits are more secure, have steadier growth and are generally more easily accessible.

The ISA rules now enable you to transfer your cash ISA into a Stocks & Shares ISA. It is important to remember that this is a one way process; you cannot transfer your Stocks & Shares ISAs back into Cash ISAs.

Investors may also be attracted by the opportunity to consolidate their different ISA holdings into one central ISA account. Many, however, may wish to adopt a cautious approach to money coming from these cash accounts and would want to invest carefully in risk-controlled investments, rather than be subject to the higher volatility of pure equity funds.

If you are considering transferring your Cash ISA to a Stocks & Shares ISA a shortlist of fund appears in our Fund Directory.