Why are ISA’s Low Risk Investments?

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When talking to an investment manager, you often hear about how individual savings accounts, or ISAs, are low risk investments. One of the most quoted reasons for this is the fact that an ISA is guaranteed interest, and therefore, even if you choose to do nothing with it and just allow it to remain in cash form like a standard savings account, you are still guaranteed to earn from the venture. In other words, an individual savings account is essentially money for the future that you stash today; it’s a virtually pain-free way to save so you can enjoy the fruits of your labor in your retirement years.

But this isn’t the only reason why an individual savings account is considered a low risk investment. Today, there are multiple options for “absolute return” funds which is actually the accepted industry term for what many deem as low risk investments. In a word, absolute return funds – or low risk investments – are those that are virtually guaranteed to make a profit despite the overall state of the national and global economy.

This is where investing in bonds comes into play. Corporate bonds and government bonds that have 10 year tenures, for example, often fetch returns higher than the forecasted inflation rate making it a worthy way to safeguard your ISA. The only caveat in these types of investment is to ensure that your actual earning is higher than what the traditional cash ISA would offer, otherwise there would be no incentive to not retain your account in savings form.

After government and corporate bonds, investing in precious metals may also be a viable investment alternative for your ISA depending on how it is structured. In many cases, one has to request their investment manager to authorize the conversion of the savings account into one that can be used to directly purchase precious metals like gold and silver bars and coins. In a tough and volatile global economy, precious metals like gold and silver hold tremendous value as these are assets that remain largely stable amidst the uncertainties. Investing a portion of your ISA on precious metals is certainly a good idea to hedge your other investments in more volatile assets.

All told, ISAs are one of the better long-term investments because one has all the privilege to choose lower risk ventures over riskier ones. By ensuring guaranteed interest for your ventures, you can be confident that it will fetch a significant return to help you build a stable fund for your retirement years.

Comments: 23

  1. Chad July 16, 2013 at 10:33 pm

    Should you have had £10,000 spare, and was searching for the greatest possible return, where would putting it? You will find however, something to bear in mind. I would like % risk don’t wish to risk losing a cent from my original capital. But I haven’t got to use the savings either, in order to let it rest alone for however a long time, within reason for example about 5, possibly, though that’s flexible.

    I had been searching at ISA’s however it does not appear you receive so good of the return. What’s the average return in the finish of the season having a maximum purchase of a cash ISA?

    Also, when banks say they provide, for instance, 5% interest in your savings, is the fact that monthly or each year. Therefore if I had been to deposit £1000 into my account, would I recieve £50 per each month, or simply following the finish from the year?

  2. Jefferey July 22, 2013 at 7:48 am

    I have just opened up a Cash ISA Plus using the RBS:

    http://world wide web.rbs.co.united kingdom/personal/savings-investment/g2/isas/cash-isa-plus.ashx

    Once I opened up the account the consultant stated which i was at an excellent position to capitalise on my small savings because he stated which i could set up to £3,600 in to the acount before April the fifth after which add another £3,600 after April the fifth, is the fact that right? do you consider this is an excellent account or shall we be held wasting time? xxxxx

  3. Miquel September 7, 2013 at 6:54 am

    I’d a customer machine in virtual machine linked to a website Controller (also virtual pc). I made the Domain controller an ISA firewall and nw I can not even ping the server. Can anybody help.

    I’m able to ping it now, however i can’t connect.

    They are able to both ping one another, but my client can’t connect.

  4. Lucretia September 27, 2013 at 8:14 am

    I’ve got a 2-year fixed term ISA. Say I receive £500 interest each year, could it be smart to pay for it to another account? Quite simply, whether it’s compensated into the same ISA, would I receive interest about this money and in year 2? Or will it make no difference in either case?

  5. Chi September 27, 2013 at 10:20 pm

    I have to access some funds inside a cash isa i’ve having a building society and deposit it right into a current account with another bank for investing. What’s the easiest method to do that? I’ve not designed a withdrawal from my isa before and am a little unsure in regards to what the process is.

  6. Mattie September 29, 2013 at 11:31 pm

    Basically transfer prior to the maturity date, I lose 1yrs interest. Basically permit the ISA to mature first will i lose my ISA allowance for your ISA?

  7. Henry September 30, 2013 at 7:03 am

    One sign prior to the day’s judgement is when prophet isa (as) can come to earth having a group,

    but exactly how lengthy is he stated to remain ?

    and may you allow us a verse in the quran proclaiming that .. or any evidence.

    im curious,

    as well as for muslims, because we beleive only god knows your day of judgement , would you beleive this year?

    or do you consider atleast certain parts around the globe Can get affected?

    thanks.

  8. Brian October 4, 2013 at 1:37 am

    Logical Explanations, please. Just science with empirical evidence.

  9. Santos October 10, 2013 at 7:22 pm

    I’m 15, potential 16. I’ve $760’s in the bank and i’m attempting to invest the cash.

    @Tigger, the minute rates are just getting less and less with savings accounts. Despite a Bank I’d barely make $10’s annually.

  10. Hector October 11, 2013 at 3:53 pm

    I presently have £12, 765.64 within my ISA account. This really is up from £12,750.46, since i was lately compensated £15.18 in interest for that month. According to these amounts just how much may be the current rate of interest on my small account? Show me the workings please.

    I am unhappy using the current rates of interest: I did previously get roughly £50.00 monthly in interest on these savings.

  11. Tyree November 1, 2013 at 8:44 pm

    I intend to buy about £20.000 price of Premium Bonds although not sure it whether it well worth it. Has someone here bought Premium Bonds and therefore are you content together with your investment?

  12. Christoper November 19, 2013 at 10:50 am

    I’m from England, so please perfect solution with info highly relevant to England, and never elsewhere! Thanks.

    I’m 18 and wish to put some cash away to ensure that I dont just waste it, and was considering opening an ISA. Basically (for instance) opened up an ISA with £100, would I later have the ability to increase it? E.g., basically arrived to a little more income would i have the ability to add more in. And would this produce more interest. As with, basically opened up it with £100 and also the rate of interest was 2%, basically then added another £100, would I receive 2% of £200, or simply 2% of £100?

    Or, what are the better a few things i could purchase rather? I would not have the ability to put money in, so bear that in your mind! Thanks

  13. Lazaro November 20, 2013 at 9:13 pm

    What’s the minimum and maximum amount of cash, place into an I.S.A ?

  14. Josiah January 17, 2014 at 9:16 am

    I’ve 15.000.00 pounds to place away for any couple of years i’ve cash Isa’s and publish office index’s link certificate’s what is your opinion H.

  15. Kieth January 30, 2014 at 10:42 pm

    hello I’ve lost my job and am looking for some cash. I’ve got a fixed interest rate isa that’s for four years most likely in the second year. Can one withdraw my money out. and just what must i do

  16. Christal March 9, 2014 at 3:15 am

    I’ve committed to one of these simple items and am watching its value fall quickly, must i be concernrd?

  17. Aurore March 21, 2014 at 11:28 pm

    Hi All,

    I have some savings and I am thinking to take a position them into ISA purchase of my bank, Barclays. What’s your experience with that, could it be safe? low or high dangerous?

  18. Truman March 23, 2014 at 5:16 am

    I’m within my forties and free of debt. I’ve stored hundreds of 1000’s of dollars(pretty much all my savings) in Compact disks for a long time. I’m seeking options due to the terribly low rates of interest. I’m thinking about rental property–a duplex or four-unit building to begin. I don’t enjoy or trust the stock exchange. Can you really buy Compact disc-like instruments inside a stable foreign country like Australia or Canada? What are the options apart from Compact disks?

  19. Cherlyn March 29, 2014 at 6:39 pm

    I suppose I’ll lose the eye around the take into account the entire year – that is fair enough, however am i going to be billed anything once the year appears?

    Thank you!

  20. Rosaline April 18, 2014 at 4:25 am

    or ISA? what is the very best one most abundant in interest…? i havent an idea about banks and things…

    or must i invest or something like that

  21. Cathi April 20, 2014 at 3:40 pm

    I wish to set something up in my women to become setup just in case anything transpires with me.

    Will I setup life insurance coverage or something like that like a few ISA’s?

  22. Sherwood May 23, 2014 at 10:31 am

    what will be a good safe investment on her 20k and really should she like a non earner be worried about ISA’s (she recieves about 6K in earnings from opportunities)

    thanks

  23. Dominique May 31, 2014 at 9:25 pm

    I am 27yr old, therefore could invest as much as 50,000$ tax-free (5,000$ each year since age 18). When the investment could return a greater percentage than the price of borrowing, why don’t you?

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