Over 50’s to invest over £2.8bn in stocks and shares ISAs

Based on a targeted ISA research study Legal & General, the UK's second largest stocks and shares ISA provider, estimates around one million investors age 50 and over will top up under the new ISA rules.

Based on these figures we estimate the realistic value of the top up stocks and shares ISA market created by the increase in allowances for the over 50 age group, is £2.85 billion in the 2009/2010 tax year.

The research takes account only of stocks and shares ISA and unit trust investors aged 50 or over.

It shows that over one in five (21 per cent) in this age group have taken out a stocks and shares ISA or unit trust and 23 per cent of this group say they are going to use their additional ISA allowance before 5 April 2010.

Claire Evans, Legal & General Unit Trusts Marketing Director said: "The benefit of our targeted research is that this is the first time this opportunity has been quantified. Legal & General has shown how much additional investment we can realistically expect the over 50s age group to make. We estimate almost a million investors are planning to top up in the current tax year providing a clear opportunity for advisers to contact clients who fit this profile now."

A second group (21 per cent) in this sample (i.e. those age 50 and over who have taken out a stocks and shares ISA or unit trust) claim they will top up but are unsure when - possibly waiting to see whether the economy is showing signs of recovery first.

Claire added: "Our research also shows that a fifth of the over 50s in this target group say they do plan to use their ISA limit but they do not know when. So there are many more over 50's out there, we would estimate around 870,000 investors, who might also invest up to the new limit given the right market conditions.

In our experience these investors tend to use their ISA allowance in Q1, just before tax year end. We believe many are holding back, possibly waiting to see whether investment markets show further signs of recovery. We call them the last minute investors and this group could contribute around £2.6 bilion of investment, taking the total potential stocks and shares ISA top up value for 50's and over sector to £5.45 billion. Only one in four in our sample (24 per cent) said they would not top up."