You may be aware that the 2019/20 ISA deadline is just weeks away, but have you decided which type of ISA you’re going to put your precious sum into?

Before we get into ISAs though, let’s just remind ourselves of what’s been going on over the past few weeks, which may influence your decision.

The COVID-19 virus is doing its absolute best to bully everything that stands in its way, and its recent affliction to the global stock market is no exception.

Global travel is projected to slow down considerably which has caused oil prices to sink like a stone, leaving the stock market flapping its arms in an ocean of panic, with a tsunami of panic following in its wake.

Consequently, The Bank of England has plunged interest rates down to 0.25% in an attempt to lessen the cash flow stranglehold on UK businesses.

So how do this chain of events affect your 2020 ISA allowance?

Well, it actually changes quite a few things so listen up. Let’s review your main options.

Cash ISAs

Cash ISAs are basically regular savings accounts that allow you to earn tax-free interest. As with all ISAs, there is a maximum allowance of £20,000 that you can invest each year.

Historically cash ISAs have performed pretty poorly over recent years and now that the UK base rate has plummeted to a pitiful 0.25%, cash ISA returns are going to get even worse. Furthermore, when you consider inflation, a cash ISA could even be losing you money!

Ouch.

Stocks & Shares ISAs

When you invest in a stocks and shares ISA, your funds are diversified across many different investments including individual stocks and shares, investment funds and government and corporate bonds. But with the FTSE 100 on its knees, would you want to put your money anywhere near the global stock market?

Innovative Finance ISAs

Now, wouldn’t it be great if you could invest your allowance into an ISA that’s free from all this global uncertainty.

Well, you can.

Innovative Finance ISAs are property-backed which means your investment is secured against good old bricks and mortar, avoiding any stock market volatility and The Bank of England’s feeble base rate. What’s more, you can earn up to 7% p.a. on your investment tax-free.

There are 21.2 million adult ISA holders in the UK and at the end of 2017/18 the market value of adult ISA holdings was over £600 billion.

Cash ISA holdings account for 44% of the total amount, whilst stocks & shares ISAs account for 55% of the market value.

Investment in Innovative Finance ISAs has now exceeded £1 billion as more people learn of their benefits.

The top 3-year fixed rate cash ISA in the current 2019/20 tax year is 1.7%. The House Crowd’s property-backed ISA has target returns of 7% p.a. That’s 4.1 times more than a cash ISA.

So don’t delay use your ISA allowance today! If you don’t you’ll lose this years allowance! There’s no rolling over to the next tax year!

If you’d like to learn more about Innovative Finance ISAs and how they could play integral part in your overall investment portfolio this year, download our free copy of our 2020 ISA guide.

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