Taking control of your ISA allowance

Staci West 26/02/2019 in Equities, Investment Trusts, X Millennials

You’ve probably seen the newest wave of investment apps targeting millennials, with Moneybox’s kumquat advert being at the top of list. I feel for the annoyed cashier in the advert and I roll my eyes every time it comes on the telly. If you look closely, the young man using the app to ‘round up’ his weekly shop has saved £15 that week into a Stocks & Shares ISA.

This young man is unusual in that he has a Stocks and Shares ISA, not a Cash ISA. Why? Because 96% of millennials do not have an investment portfolio, according to an article in the Financial Times last year. Most consider saving money for a house deposit in a Cash ISA, but are terrified of investing in the stock market.

However, while cash may be ‘safe’ and your savings won’t fall in value, they won’t rise much either with interest rates so low.

“Even if you are on the right track, you’ll get run over if you just sit there.”
Will Rogers, social commentator and actor

The basics

An ISA (individual savings account), is a tax-efficient wrapper for savings and investments. Each tax year, we are each given an annual ISA allowance: a maximum amount of money we can put into an ISA. Once this money is in an ISA, you won’t pay any tax on income earned or any capital gains. You don’t need to declare an ISA on your tax return either, so less messy and time-consuming paperwork to complete.

If you’re saving or investing in any capacity, there’s really no reason not to use an ISA wrapper. There are a number of different types of ISAs, which can make it feel a little overwhelming, but we’ve already discussed some of the big ones.

For example, our millennials guide to investing towards your first home looked at the pros and cons of a Lifetime ISA or a Stocks & Shares ISA when planning for a house purchase. When we discussed retirement we looked at Lifetime ISA or a Stocks & Shares ISA, and if you want to see all six different types explained at once we have a handy reference video.

Cash ISA vs Stocks & Shares ISA

One thing we haven’t touched on is Cash vs Stocks and Shares ISAs – or in other words should you save or invest? Many tend to believe cash is the best place to start, as it’s very straightforward – and it is ‘king’ after all – but what if stocks and shares are the queen? After all the queen rules the castle…

This week we’re bringing you our very first millennial video, to give you a closer look at whether a Cash ISA or a Stocks & Shares ISA is the right choice for you.



If you’ve decided that a Stocks & Shares ISA is the right option, and you’re ready to start your journey of actively investing your allowance, you’re in luck because we know a thing or two about researching the right fund.

Here are four Elite Rated ‘millennial’ funds, all launched between 1981 and 1996, when we millennials were born.

Baillie Gifford Japan Trust

Launched in January 1981 – the year the millennial generation was welcomed to the world – this trust invests in Japanese small and medium-sized companies, which offer exceptional growth opportunities.

Janus Henderson European Selected Opportunities

This fund was launched in September 1984 and today, invests in mega and large-cap European companies. The manager looks for companies with a good track record and the potential to surprise in the future.

Invesco Asian

Launched in February 1990, this fund invests in the shares of companies in Asia and Australasia (excluding Japan). Manager William Lam came to FundCalibre’s offices recently to give us an update on the fund. Watch his interview here.

Fidelity Special Values Trust

Our youngest millennial was launched in November 1994. Run by Alex Wright since 2012, this trust could appeal to any investor with a medium to long-term time horizon, who is looking to back UK companies.


And because it’s all about the numbers, here’s a little illustration: if you invested £65 a month (or £15 a week) for the last 5 years into a Cash ISA paying the same interest as the Bank of England base rate, you’d have £4,013.25* – a profit of just £48.25 on the £3,965 you’d have put in the account. However if you invested the same amount into say Baillie Gifford Japan Trust, your balance would be £5,617.91* – a gain of £1,653.

*Source: FE Analytics, total returns in sterling from 31 January 2014 to 31 January 2019

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.