Investment in stocks and shares ISAs set to impress

Legal & General, one of the UK's largest stocks and shares ISA providers, anticipates the run up to the end of the 2009/2010 tax year  is likely to show a marked return to stocks and shares ISA investment by individual savers.

Claire Evans, Legal & General Unit Trusts Marketing Director said: "Last year we saw a pick up in the FTSE 100 Index of around 17 per cent which, with the additional ISA allowances from 6 October 2009 for ISA savers aged over 50, stimulated ISA investment in the last quarter." 

The roll out of the increase in ISA allowances across all ages from April is likely to boost interest in ISA investment in 2010.  Legal & General's financial economists also believe interest rates will remain on hold throughout 2010, which will restrict the returns from cash savings.

Claire commented; "Inflation adjusted asset class returns provided by Datastream show that equities outperform other assets classes, such as cash, over the long term. Over the long term, savers who invest in the equity market can earn a potentially higher return than they may get by leaving their money on deposit. Savers may be missing out on equity market returns believing that these types of investment are only suitable for those with large sums to invest. However, even modest savers should consider investing in a stocks and shares ISA. Regular savers can take advantage of the potential for long-term growth in stocks and shares and benefit from tax savings by sheltering their money from Capital Gains Tax in an ISA. The attractiveness of investing in a stocks and shares ISA appears to be beginning to bite with retail investors. We've seen early signs that there may be a return to growth in equity ISA investing that would be impressive for the ISA season this year."

In September 2009 Legal & General estimated around one million investors age 50 and over would top up under the new ISA rules creating additional sales of stocks and shares ISAs of £2.85 billion in the 2009/2010 tax year.

Claire added "In 2009, retail investors invested around £2.5 million on average every day in our stocks and shares ISAs. We are expecting to see sales significantly higher than this in the coming months. In our experience retail investors tend to use their ISA allowance just before tax year end. We believe many savers have been holding back, possibly waiting to see whether investment markets show further signs of recovery."