Understanding the Mini Cash ISA

April 29, 2010 - PRLog -- In the simplest of terms, a mini cash ISA is designed as an investment instrument for purposes of investment and savings accommodating a positive tax status allowing the investor to earn a specific amount of interest tax-free.  ISA stands for Individual Saving Account and are widely available throughout the United Kingdom as an investment instrument.

As with other popular investment and retirement instruments popular in other countries, like the 401K plan or Roth IRA plans available to Americans to plan for retirement, the ISA is a tool in which the investor contributes a cash component of up to £3,600 annually.  Obviously, the interest rate is the primary consideration in opening a mini cash ISA.  An ISA manager will provide various options for setting up and paying into the account.  Typical investment amounts are usually done in either a lump sum amount or monthly contribution pre-calculated so as not to exceed the maximum allowable investment per year.  

An ISA can contain two components, a cash component and a stocks and shares component.  Most commonly the cash component is the easiest option and is similar to other ordinary UK savings accounts aside from the associated tax advantages provided by the ISA.  The second component consists of any combination of qualifying stock market equity investment or government or corporate bonds.

Additionally, it is possible to transfer from one ISA Manger to another; however there are some points to consider before doing so.  One of the most important factors is that the transfer must be conducted between the ISA managers.  Should the investor attempt a manual transfer, it will be considered a withdrawal and they will not be able to re-invest in an ISA if the subscription limit has been reached.  Another important factor, transfers from the current tax year must be in full/total.  Partial transfers are only allowed on ISAs from previous tax years.  

The UK tax year runs from 6 April to 5April the following year, http://www.economywatch.com/investment/isa-individual-sav...

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