Brave the big freeze and take out an ISA

With just under three weeks to go until the end of the tax year, the deadline for using up your individual savings account (ISA) allowance is almost here. But as 5 April approaches, many of us seem frightened about investing in equities, given the poor state of the stock market and the threat of war.

With just under three weeks to go until the end of the tax year, the deadline for using up your individual savings account (ISA) allowance is almost here. But as 5 April approaches, many of us seem frightened about investing in equities, given the poor state of the stock market and the threat of war.

Sales of ISAs have been slow. Internet bank Intelligent Finance may be predicting that 5.85 million people are set for a last-minute rush, but other observers are more pessimistic. In fact, Find.co.uk, a financial website, says interest in equity ISAs has all but completely collapsed. Traffic in stocks and shares ISAs was down 80 per cent in January and February compared with the same period last year.

But by not investing in an ISA, you miss out. The annual ISA allowance, £7,000 per person, is lost for ever if you don't invest it by the end of the fiscal year. And given that returns are free from tax, not taking advantage of it seems rather foolish.

If you haven't used up this year's allowance yet, there's not much time left. If you are scared of investing in the stock market, there are ways of doing so while minimising the risk – by "phasing" your money – or saving costs as far as you can by using a fund supermarket.

Alternatively, you could simply avoid equities altogether and opt for a mini cash ISA, which offers higher returns than regular savings accounts – even before you allow for the fact that it is tax-free – while keeping your money safe.