How over-50s can make the most of new ISA limit

Tony Stenning, Managing Director, UK Retail at BlackRock said: "October sees the ISA limit increasing from £7,200 to £10,200 for those aged 50 and over. Anyone in this age category should consider taking full advantage of the new limit since it enables them to save a substantial sum each year, with gains being tax free and the money can be accessed any time it is needed.

"The new £10,200 a year limit means that someone saving the full amount each year into say, an equity fund which then achieves an average of 7% pa growth over the 15 years to retirement at 65, will have accumulated a tax free nest egg of £275,000 over the 15 years, from contributions of just £153,000

"Someone investing after the age of 50 is likely to want lower risk investments, as the day when the money is needed is closer. As we have seen equities can plunge in value over short periods. Historically these down-turns have been reversed but that can take years. Someone who suffers a 50% fall in the value of their equity portfolio has to achieve a 100% increase in order to climb back to break even. In the meantime they lose out on the all important benefits of compound returns. So an absolute return fund, with a record of generating steady returns year in and year out, may suit."