UK Individual Saving accounts,also referred to as ISA, have worn the admiration of many investors in this season.This is mainly due to its numerous benefits to the business oriented persons with information relating to the accounts.The accounts have disadvantages too . For this reason investors must make sure that they keep themselves informed of the weaknesses of these products for business success reasons. Take a look at the pros and cons.
Firstly, it is good to remember that these accounts are very flexible and convenient. They give investors the sole role of deciding on when, where and how to invest. Furthermore, the amount of returns is welcoming. The returns are better in comparison to that of other accounts in the stock market..For example, with a cash ISA account an investor can earn returns ranging from 1-6% per annum or from 10-20% annually by using Shares investment accounts under the same category.
ISA accounts are very affordable to many business men and women. This is because lower taxes are charged on dividends and no tax on income upon retirement. Dividends paid are also low at 10% of the total income, which is given to the issuer. The product is more beneficial for investors who invest for long term because it empowers the business persons to be at a position to buy income producing assets. This saves the retired investor from taxation burden. It should also be remembered that ISA are diversified. The stock market offers many financial products as part of the accounts, leave alone shares. Investors can choose to invest in unit trust, bonds and other market stocks as per clients’ tastes and preferences.
As already said here, ISA accounts are not entirely excellent though they are very useful to a professional investor. A person willing to invest in these accounts must learn the art of speculation to determine when to sell or buy shares. This is what determines whether losses or profits are made and without this skill one may find it almost impossible to do gainful investment. There is also the risk of market volatility. Stock markets do turn volatile and result to loss of control on the business trends due to inability to speculate correct stock prices.
Moreover, it is sometimes very expensive in terms of charges, related fee and commissions. If the value of stocks invested is low say below $10k chances of making repeat settlement of costs can arise and lead to losses. Furthermore, the losses cannot offset easily. The capital gains made outside the ISA accounts cannot be used to off set losses arising from business carried out by using ISA accounts. This means that an investor must be prepared to invest large amounts of cash in the accounts each year to be safe in financial crisis, otherwise it is advisable to invest in accounts outside ISA if the capital amount is little or not sustainable.