Merryn Somerset Webb
Use your Isa and use it well
A few numbers for you. Let’s say you’d opened an individual savings account (Isa) in 1987. From then on, you used your full allowance every year and put the money into the same fund every year – a total contribution of £192,480. How much money do you think you would have now?
According to numbers from FundExpert.co.uk, if you had put it into the Fidelity Special Situations fund, you would have £1,160,000. If you had gone for a FTSE 100 tracker, you would have £514,000. If, on the other hand, you had put the money into Scottish Widows Japan Growth, you would now be sitting on a loss of more than £20,000.
There are two lessons here. First, use your Isa allowance (that million-odd quid the Fidelity investor would have made? It’s all tax free). And second, use it well.
The first is clearly a little easier than the second. But this year, there may be hope for anyone still holding Japan funds (we haven’t quite been recommending them since 1987, but most MoneyWeek staff have been holding something Japanese in their Isas for a few years now).
• Read the full editor’s letter here: Use your Isa and use it well.