Index Tracker ISA Accounts- Things You Need To Know

Published on 17 July 2012 by Raffick Marday

Index TrackerISA Accounts- Things You Need To Know

Index tracker ISA accounts are basically special vehicles introduced by the British Government to encourage more investing and saving. The government does this by allowing capital and income gains on ISA investments to be free of taxes. This tax-free status can accumulate and lead to a big saving over the course of time, as compared to ordinary accounts or funds held outside an ISA. But opening an index tracker ISA account is always beneficial.

ISA account: A 'wrapper' of your investments:

There are people who have an ISA but they do not actually understand what an ISA means. An ISA, also refereed as an Individual Savings Account - is basically a wrapper in which you can keep your investments. For instance, you can hold bonds, stock market funds, cash and even shares of particular companies in ISAs. ISA ensures that both your gains and income are tax-free.

Use a tracker fund for your ISA account:

We know that most fund managers fail to beat the stock market over time. Moreover, they charge you heavy fees. Therefore, you should better put off your ISA allocation into an index-tracking Stocks and Shares ISA. This would ensure that you match the stock market's performance with nil fees. There are plenty of reputed firms offering index-tracker ISA accounts. You would find more marketing for managed fund ISA accounts from banks and financial institutions since they tend to make more money for them and not you so it is advisable to beware.

Every type of index tracker account is incorporated with it own pros and cons. Also, different market conditions would be favoring different approaches to index tracker isa accounts. As an investor, you can always have an amalgamation of indexing styles in your portfolio.

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