background image background image background image

Seven tips for boosting your ISA returns

Equities 4 minutes to read
Jack Watkins

Content Manager, Saxo Bank Group

Summary:  ISAs, or individual savings accounts, are a great resource for building up a pot of money that can add to your financial security over time. However, that pot can become much larger if you know how to make it work harder for you. Read our seven tips below and find out how you can supercharge your ISA returns.


1) Contribute regularly 

Whether you choose an investment or cash ISA, you don’t need a big lump sum to get started. Smaller contributions on a regular basis will still help your savings pot to grow, and you’ll be less aware of the money going out. However, remember that if you don’t use your full ISA allowance each year, you can’t carry the unused balance forward.

If you choose to invest in a stocks and shares ISA, putting in a set amount each month can also help take the stress out of natural stock market fluctuations. The value of investments tends to move up and down in the short term, but by making monthly deposits you can avoid the risk of putting all your money in just before a big drop. Financial advisers call this process ‘smoothing’, as it delivers a smooth progression of investment growth and risk protection over time.

2) Don’t forget the past

The humble ISA is over 20 years old, having been introduced in April 1999. It’s possible that many of us will have an old ISA or two knocking around that’s been forgotten about. Since the rates on many best-buy cash ISAs have dropped dramatically in recent years, and your old investment ISA might not be in the right funds for your current circumstances, it’s worth taking the time to evaluate your options.

The good news is that your ISAs can be rehabilitated, with most providers allowing for ‘transfers in’. This means you can seamlessly transfer an old ISA into a newly opened account. Just don’t withdraw the money – you’ll lose the ISA benefits – and make sure you go through the proper transfer procedures. Your new provider should be able to help with this.

3) Take (appropriate) risks

With UK interest rates at consistently low levels, and inflation well above this and set to rise further, the money in most cash ISAs and other savings accounts is effectively losing value in real terms every year. 

Yet despite this, according to HMRC data, subscriptions to cash ISAs continues to outstrip those to stocks and shares ISAs. In 2018/19 – the last year with published data available – cash ISA subscriptions increased by £7.3 billion, whereas stocks and shares fell by £5.2 billion.1

History shows us that stock investments perform better than cash in the long run, so the additional risk of an investment ISA could lead to a healthy reward.

Just make sure the amount you invest is suitable for your risk tolerance – a financial adviser can help guide you if you’re unsure.

4) Review frequently

The ISA you have may not be the one you need. Cash ISA rates drop, investments fall out of favour, and your circumstances can change too. That's why it’s important to do regular health checks on your ISA and be proactive – you might find you’re better off allocating your money elsewhere. Use all the available tools and resources to do your research and make decisions, as this will help you build a savings pot that’s right for your circumstances and future goals.

5) Choose the right ISA 

Are you a first-time buyer or saving for retirement? A help-to-buy ISA or lifetime ISA comes with an additional government bonus of 25% but, as their names suggest, they can only be used for specific life events. Additionally, these are in effect cash ISAs.

A stocks and shares ISA is available to any UK resident over 18 and offers great flexibility when it comes to investing your money. With many providers you’ll have the opportunity to select your own investments, often from thousands of eligible shares, ETFs, bonds and investment trusts.

6) Ride your pay rises

If your wages rise or you finally pay off a long-standing debt, try not to get used to the extra income immediately. Instead, increase the contributions into your ISA. You’ll end up with more savings without feeling the pinch.

7) Keep it diverse

If you choose an investment ISA, make sure you keep your eggs in a variety of baskets. Investing in shares across a range of countries and sectors, as well as holding assets such as corporate or government bonds, will help ensure that your portfolio can ride out a market downturn in a specific asset class, sector or region of the world.

1Source: HM Revenue & Customs, Individual Savings Account (ISA) Statistics, June 2020

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992