ISA investors more cautious

New research from Barclays Stockbrokers reveals that whilst the majority of ISA investors are reacting to recent market volatility with increased caution, they have not been deterred from investing in the stockmarket completely.

When asked how market volatility has affected their investment outlook, 42% said they see the recent volatility as a buying opportunity. However, almost half (46%) of the investors questioned say recent market conditions have made them more wary, although they intend to continue investing in the stockmarket. Only 7% of those who have invested in an equity ISA in the current tax year claim that the market downturn has put them off stockmarket investments.

A confident two thirds (63%) of investors plan to invest in a stocks and shares ISA in the next tax year (2008/2009) despite recent volatility in financial markets; this is because they invest for the long term and claim that short term volatility does not affect their investment decisions. Only 11% are taking a more cautious approach and are waiting to see what will happen over the coming months before they invest again.

Tom Ryan, Director at Barclays Stockbrokers said: “The sustained bout of market volatility has clearly affected the confidence of ISA investors but it is encouraging that many of them are still going to invest in a stocks and shares ISA in the next tax year. Equities should be viewed as a long term investment, so even though the markets are rocky at the moment, investors should still be confident that they could make gains over the long term.”

Almost a third (30%) of equity ISA investors are willing to take risks, even if it means their capital is at risk. On the flip side, 57% of investors are more cautious and whilst they are willing to take risks, they want to protect their initial investment.

Tom Ryan, Director at Barclays Stockbrokers continues: “Now is the time that investors should be reviewing their portfolios and ensuring that they are invested in the appropriate mix of assets. They should also be planning how to invest their ISA allowance in the next tax year, especially in light of the increased overall subscription limit for a Stocks and Shares ISA. Although market volatility may be dominating for the short term, there are still gains to be made and investors should be taking advantage of their tax free allowance.”

Through the Barclays Stockbrokers Investment ISA, investors have the ability to trade in a wide range of investments including funds, Investment Notes, equities, iShares and REITS within the Investment ISA. Investment Notes offer the opportunity to invest with levels of capital protection on some of the Notes whilst gaining returns linked to the equity markets. Investors can also use flexible order types when trading to actively manage their portfolios and potentially limit any losses. These include ‘At Best’, ‘Stop Orders’ and Barclays Stockbrokers award-winning ‘Trailing Stop Order’ service. Investor should remember that the value of their investments can fall as well as rise and they may lose money.

Barclays Stockbrokers offers ISA investors attractive commission rates from as little as £6.95 per online trade when trading eleven or more times per calendar month; and the most an investor will ever pay online is £12. Investors will also be able to take advantage of Barclays Stockbrokers new administration charges which will see investors opening a new ISA account incurring a flat administration fee which is tiered according to the amount held:

For balances of up to £7,500 a charge of £30 per year will be made (compared to the old charge of £35).

For balances over £7,500 a charge of £50 per year will be made (compared to the previous charge of 0.5% up to a value of £120)

From 6th April, new updated charges will come into effect for all ISA accounts (including those which are currently PEP) the 2008 / 2009 tax year. Furthermore, any Barclays Stockbrokers Funds Market investments will be discounted when calculating the annual administration charges.