Record ISA sales following higher allowances

A year since the ISA limit was raised, figures from the Investment Management Association show that investors have a renewed enthusiasm for investing in stocks and shares ISAs. This reinforces what investors themselves say.  According to new IMA research, around half (47%) of existing investors say that they would save even more if the annual allowance was raised further.  All types of people said the same thing, from empty nesters to couples who have yet to start a family.

In October last year the ISA allowance for the over-50s increased from £7,200 to £10,200.  That month's net ISA sales were the highest for any October since ISAs were first launched in 1999.  Since then gross ISA sales have averaged over £400 million a month, more than double the same period a year earlier, before the increase in the allowance.

There was also an increase in April 2010, when the ISA allowance went up to £10,200 for the under 50s, with net sales for April the highest since 2001.

The research also showed, that more than one in three (36%) of investors said they would invest more if long term savings incentives remained consistent, with a higher proportion (44%) saying they would invest more if there was a lifetime tax-free ISA allowance.  There was also some support for greater flexibility, with one in five (21%) saying they would invest more if there was some flexibility to move money in and out of pensions savings.  This figure was understandably higher amongst younger investors, with a third (32%) of couples yet to start a family saying this would encourage them to invest more.

Richard Saunders, Chief Executive of the IMA comments: "Our research shows that people are positive about incentives to save - with around half of existing investors saying they would invest more if the annual ISA allowance were raised. 

"The IMA's figures back this up, with ISA sales at the highest level for many years, following the recent increases in the annual allowance. The inflows we have seen since October last year are the highest since ISAs were first launched. There is a good chance that 2010 could be the best year ever for ISAs.