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The risk outweighs the reward to most savers

ISA sales down in 2008

29-April-2008, Writes Dan Drage dan.drage@consumerchoices.co.uk

ISA sales during the busiest period for this tax advantaged account were the lowest on record in 2008

Further evidence of the credit crunch engulfing the savings market was released yesterday, with the revelation that 2008 was the slowest year for ISA sales to date.

The sale of ISAs generated £532 million between March 1st and April 5th according to the Investment Management Association (IMA).

That was nearly half the £957 million generated a year ago, before the credit crisis began. In 2000, shortly after ISAs were introduced, sales were £3.3 billion.

"There's plenty of negative sentiment out there, markets have been a bit panicky and people have just shied away"

Ben Willis, head of research at investment advisor Whitechurch Securities, calls this ISA season an ‘unmitigated disaster’:

‘It's been pretty disastrous. There's plenty of negative sentiment out there, markets have been a bit panicky and people have just shied away.’

IMA Chief Executive Richard Saunders was keen to put a more positive spin on these figures:

‘The ISA season this year was modest, though over 250 million pounds (of) inflows in the last five days of the tax year pushed it up to respectable levels’

He continues:

‘In current uncertain market conditions it is encouraging to see two months of positive net retail and ISA sales, a significant improvement on the previous three months. Retail investors continue to be cautious, however, with bond funds proving popular.’

The total funds under management fell to £432.7 billion in April from £441.6 billion in February.

Chris Eagle, Commercial Manager at Credit Choices, can still see many ISA advantages:

‘Cash ISAs represent the possibility of tax-free savings and shouldn’t be ignored. Although share ISAs are a little risky, if you know the markets and enlist the help of a reputable fund manager, they can pay great dividends over time.’

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