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ISA stands for Individual Savings Account.
Basically they're the government's way of encouraging you to save by giving you a tax incentive. Unlike bank or building society deposit accounts, unit trusts or similar investments, you don't have to tell the taxman about your ISA because there's no additional income tax or capital gains tax to pay.
You can use your ISA to invest in stocks and shares or simply as a risk free savings account where your interest comes tax free, or a bit of both.
ISAs give both novices and experts an easy way to invest in the stock market.
Your annual ISA savings allowance is £7,200. You can:
You can also transfer Cash ISA investments from this or previous tax years into a Stocks & Shares ISA without affecting your current tax year limit.
To split your investment between our different Stocks & Shares ISAs, or take out both a Cash ISA and a Stocks & Shares ISA click here.
Not if you like paying unnecessary tax on your savings.
But if you're a taxpayer thinking about savings and investments, the answer's yes.
At the very least a cash ISA will give you a better return than you'll get from your bank or building society savings account, because your interest comes tax free.
If you're thinking of investing money in stocks and shares through an ISA, we recommend you only invest money you can afford to tuck away for at least 5 years, to increase your chances of a good return. But remember, most stock market investments are considered medium to high risk and there is no guarantee you'll get back the full amount you invest. If you couldn't stand the thought that your savings might go down as well as up in value, the stock market probably isn't right for you.
If you've got a lump sum to invest, the golden rule is to invest it as soon as you can. If you haven't, you can save monthly.
Unless you've got a particular target in mind, simply save what you're comfortable with.
One of the biggest ironies of stock market investment is that when share prices are at their highest after many years of growth, this often attracts investors in greater numbers, even though you actually get fewer shares for your money. Yet when share prices have dropped, many investors avoid the stock market even though lower share prices would mean they'd get more for their money. At Virgin Money, we always stress that:
But remember, as share prices can go up and down, it's a good idea only to invest money you can afford to see dip in value.
To see the Simplifed Prospectus for the investment funds in a Virgin ISA click on the link below. (NB. There is no Simplified Prospectus for the cash part of an ISA.)
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Growth investors
Your returns will depend upon your choice of investments.
Income investors
If you had invested a single payment of £5,000 on 8 April 2008, you could expect to receive income of £108.82 every six months. This is based on the current yield of 4.40% after charges.
Cash investors
The interest rate on our Cash ISA is currently 4.25%, tax free*.
*The rate of interest is variable and correct as at
25 April 2008. As this interest is paid annually, the rate above is the annual equivalent rate. Withdrawals can be made at any time. Minimum investment £1.
The cash in your Virgin ISA goes into a personal deposit account with The Royal Bank of Scotland plc.
The Virgin Climate Change Fund has an annual management fee of 1.75%. There may also be a 20% performance related fee, which we only earn if we outperform agreed benchmarks.
For investments in our index tracking fund or our bond and gilt fund there's a single annual management charge of 1% of the value of your savings, and that's it. There are no other charges, and no charges at all on our Cash ISA.
It's not really a suitable place for your 'rainy day money' - cash you might need to take out again soon. Share prices do go up and down on a daily basis, and there's no guarantee you'll get back the full amount you invest. Also, occasional longer periods of stock market decline (known as 'bear markets') can even mean you have to wait a few years to see a decent return on your money.
But if you can afford to tuck money away for five years or more, that's when the stock market usually comes into its own. Over that sort of timespan few investments would normally give you a better return. The graph below shows how, despite the ups and downs, the overall trend has always been one of steady upward growth, making it the No.1 place for professional investors.
If you're not comfortable investing in stock market shares then our Bond and Gilt ISA might be a better bet. It should give you a higher return than a building society savings account, without significantly increasing your risk.
Remember, a deposit account is a risk-free investment. Your capital is at risk in stock market type investments, and you should only invest for the long term.
Source: Morningstar Workstation, All-Share Index, basic rate tax payer, income reinvested, 613.44% growth from 1.1.88 to 1.1.08.
Yes, whether it's an ISA from a previous tax year or one you're paying into this tax year, you can transfer it to Virgin.
If you're interested in transferring an ISA to us, click here or call us on 08456 10 20 20.
You can call and ask us questions any time. And if you need advice we'll put you in touch with an independent financial advice helpline.
Stock and shares aren’t a good place to put cash you might need in a hurry. While you can withdraw your money any time, share prices go up and down on a daily basis so you could invest today and get back less tomorrow. Also longer stock market downturns (often called ‘bear markets’) can sometimes mean you have to wait a few years to see a decent return. It’s not risk-free like a deposit account and there are no guarantees about your returns.
But if you’re:
That’s when stock market investments really come into their own. Over longer timespans few other investments can match them for potential returns. That’s why they remain the No.1 place for investors looking to grow their money. And if you’re looking for an investment that can benefit the planet as well as yourself, the Virgin Climate Change Fund could be the perfect choice for you.
To compare the potential risks and returns of this fund with our other funds, click on 'Compare all 3 funds' on the left hand menu.
Don’t invest if you are:
If you think shares might not be right for you, ask us about our less volatile bond and gilt fund. Or about a risk-free Virgin Deposit Account, or Virgin Cash ISA where your money will earn interest tax-free.
We do. We’ve got over £2.3 billion of our customers’ money invested in index tracking funds and our tracker fund has increased in value by 184.84% since its launch. An index tracking fund gives a great foundation to any investor’s portfolio. They’re a low-cost, straightforward way to invest in a wide range of shares. The wider the range of shares you can invest in, the more you spread your risk. That’s why we chose the FTSE All-Share Index for our tracker fund. It’s also why we’ve based the Virgin Climate Change Fund on a broad range of shares from European and global markets, building in diversification across the widest possible range of regions and industry sectors. While higher risk than our tracker fund, it has the potential for more upside.
On its own, or as a complement to an existing tracker fund, the Virgin Climate Change Fund offers a powerful way to diversify risk and achieve above average returns, while helping the planet into the bargain.
Research shows the majority of non-index tracking funds struggle to beat the stock market with any degree of consistency. Active fees are only worth paying if you are confident the fund manager has the ability to consistently out-perform stock markets. If you can find a wide-based actively managed fund with a genuine expectation of better than average market returns, they’re a great way to diversify your investment portfolio.
GLG, our partners in the Virgin Climate Change Fund, are a fund manager with a long track record of out-performing stock markets, winning numerous major industry awards for outstanding performance.
Founded over 10 years ago, GLG are one of the largest investment fund managers in Europe, managing over twenty billion dollars worth of investments across approximately 40 funds.
They typically manage investments for wealthy individuals, families and businesses. Access to their specialist, high performing funds isn’t normally available to anyone outside the ultra high net worth bracket. But in a UK first, we’re teaming up with them to make their expertise available to every investor in the UK.
Performance fees are there to incentivise fund managers to give you better returns. Often fund managers charge a whole raft of higher fees for their expertise, whether they deliver superior returns or not. With the Virgin Climate Change Fund there’s no initial fee, no bid-offer spread, a single annual management charge to cover our business expenses, and a performance linked fee which only kicks in if we out-perform our stated benchmarks. We think this is fair. We only earn a bonus if we perform.
Wouldn’t it be nice if the taxman, the telephone company and the car mechanic had similar performance related charges too?
Sir Richard Branson is a passionate advocate of ethical and environmental ways of doing business. He gives a lead to over 200 Virgin businesses worldwide, and has drawn up a code of conduct to which Virgin companies, our partners and suppliers subscribe.
Sir Richard has personally launched many environmental initiatives, including proposals to cut aviation emissions at Virgin Atlantic and other airlines. He recently launched a new company, Virgin Fuels, which will invest $ 400 million over the next three years in renewable energy initiatives. Virgin Fuels will invest in technologies producing environmentally friendly fuels like ethanol, plus wind and wave power. He has also pledged $3 billion to help combat global warming.
At Virgin Money specifically, our brochures, mailers and marketing materials are printed on paper from sustainable and recycled sources that only use energy-efficient and eco-friendly paper mills and transport. Plus our Norwich based offices were recently renovated with more energy efficient materials, and we recycle everything from paper, cardboard, plastic cups and bottles, to mobile phones and printer cartridges.
Customers growing their savings in our index tracking fund since it launched in March 1995 have received an average return of 7.37% a year.
An investment of £3000 in March 1995 would have increased in value to £7,601.99 on 1.4.08 - a total return of more than 153.4%.
Source: Morningstar Workstation, 6.3.95 - 1.4.08, buying to selling unit prices, basic rate tax with income reinvested. If you had invested £3000 on the 6.3.95 it would be worth £7,601.99 after charges on the 1.4.08.
Due to the well publicised stock market doldrums it's not done as well over the last five years as in most previous five year periods, but it did return to growth in 2003.
| Virgin UK Index Tracking Trust performance over the last 5 years | ||||
|---|---|---|---|---|
01/04/2003 to 01/04/2004 | 01/04/2004 to 01/04/2005 | 01/04/2005 to 03/04/2006 | 03/04/2006 to 02/04/2007 | 02/04/2007 to 01/04/2008 |
30.1% | 14.4% | 26.7% | 10.0% | -9.9% |
Source: Morningstar Workstation, year on year, 1.4.03 - 1.4.08, buying to selling unit prices, basic rate tax with income reinvested.
But, while these blips in performance do happen it's important to keep them in perspective by also looking at performance over the longer term. Remember, with stock market investments the value of your savings and the income you get from them can go down as well as up and you may not get back the full amount you invest. It's also worth remembering that past performance of a fund isn't a guide to how well it might do in the future.
Stocks and shares should be seen as long term investments, so we suggest keeping your money tucked away for at least five years, preferably longer, to increase your chances of a good return.
You can, however, get at your money any time you need to.
Investing in stock market shares is not without its risks. They can rise spectacularly in value over many years, go into periods of decline, or fall suddenly in value, with no guarantee you'll get back the full amount you invest. The key thing to remember is, the longer you stay invested in the stock market the better you tend to do.
If you only invest in a handful of shares over the short term you'll certainly increase your risk. But by investing over many years and spreading your savings over a wide range of shares, you lessen that risk and actually increase your chances of getting a good return.
The risks of not investing in the stock market are rarely spelled out, but are just as real. For instance, you probably think your bank or building society savings are safe, but did you know their real value can actually fall over time. It's to do with inflation. If your deposit account only earns 2% in interest but the cost of living goes up 2.5%, your savings aren't growing in real terms, they're shrinking. Now that is scary. Remember though, investing in an ISA is different to a deposit account, where your money is not at risk.
History shows that long-term investors shouldn't be too worried when the stock market falls. The people who lose out are those who panic and cash in their investment, instead of waiting for the market to rise again. For example, in 1987 the market actually finished higher than it started, despite falling 32% in the October 87 'crash'.
However, if the market goes into a longer fall (known as a 'bear market') it can sometimes be a few years before you start to see a decent return on your money. As ever, time is the key, and you should only consider investing money you can afford to tuck away for at least five years.
Not necessarily. How closely a fund tracks its chosen stock market index (known as 'tracking error') can also have an impact on your returns. Some trackers don't invest in all the shares on an index. Instead they select a 'sample' of shares to invest in, which is really active management by the back door, and will affect your returns. A 'fully replicated' tracker which buys shares in every company on the index will track the index closer.
Also, always check charges carefully. Some companies advertise what appears to be the lowest charging tracker, but there are often strings attached, or other charges that can bump up the cost.
Customers growing their savings in our bond and gilt fund since it launched in October 1995 have enjoyed an average return of over 5.01% a year, turning a £5,000 investment into £9,208.94.
Source: Morningstar Workstation, 2.10.95 - 1.4.08, buying to selling unit prices, basic rate taxpayer.
| This table shows the annual return in the last five years | ||||
|---|---|---|---|---|
01/04/2003 to 01/04/2004 | 01/04/2004 to 01/04/2005 | 01/04/2005 to 03/04/2006 | 03/04/2006 to 02/04/2007 | 02/04/2007 to 01/04/2008 |
0.3% | 3.6% | 4.6% | -1.2% | 1.4% |
Source: Morningstar Workstation, year on year 01.4.03 - 01.4.08, buying to selling unit prices, basic rate tax with income reinvested.
Remember, with bonds and gilts the value of your fund and the interest that gets reinvested can go down as well as up on a daily basis, with no guarantees you'll get back the full amount you invest. To maximise your chances of a good return you should be looking to invest for at least five years.
It's also worth remembering that the past performance of an investment isn't always a guide to how well it may do in the future.
Our current cash interest rate is 4.25%, tax free.
If you want to invest more than £3,600 in cash, you can also open a Virgin Deposit Account and get the same interest rate.
The cash in your Virgin ISA goes into a personal deposit account with The Royal Bank of Scotland plc.
Our previous interest rate of 4.5% applied from 21 February 2008 to 24 April 2008.
Your money earns interest daily and we credit it to your ISA account once a year, on 5 April, or on the day you close your ISA.
We send you a six monthly statement every February and August, but you can also check the value of your ISA over the phone or internet any time.
