How to choose the right Isa

By DARREN BEHAR
Updated:

 

Many Isa investors have been caught in the technology share slump. They jumped into the latest investment craze just as it went wrong. These investors should stick tight and ride the low to benefit from long term gains. But how can you avoid a similar fate in the next investment fad. This is Money looks at what to consider when choosing which |sa to pick.

ONE

Do not invest in the current fad in the hope of short term gains. Only invest with the intention to keep your holdings for at least five years. This way you can ride the ups and downs of the market. The latest fad is unlikely to keep producing endless good returns. You should only invest in shares if you are prepared to think long term.

TWO

And whether you need a steady income or capital growth is more important than the latest fad. You should choose the right funds to suit your financial lifestyle.

THREE

The next thing to consider is your attitude to risk. This will determine where you should invest. Advisers say more risk averse you are the broader your portfolio should be. Consider investing in the UK, Europe or in an International fund like Fidelity International. Investors who want to take more risk may plump for a specialist fund, investing in emerging markets or techonlogy. These funds are less secure and will move up and down more often than the lower risk funds.

FOUR

First-time investors should look to create a sound portfolio base on which to build. Your first Isa investment should look for a balanced portfolio. Try the UK first and expand your holdings into other more risky areas as you go.

FIVE

Once you have a broad base, you can look at specialist areas that are likely to produce good returns over the long term. Talking to an adviser may make your decisions easier.

Most watched Money videos