ISA Flight To Safety As Savers Squeezed

    NORWICH, ENGLAND, February 25, 2009 /24-7PressRelease/ -- Virgin Money is urging savers to take advantage of ISA allowances of up to GBP7,200 before the end of the tax year and believes bond and gilts funds offer a halfway house for people worried by low interest rates and sliding stock markets.

Data from the Investment Management Association shows GBP1.6 billion net outflows from shares ISAs in 2008 while the Building Societies Association says GBP212 million was withdrawn from cash ISAs in December last year.

The bright spot for investment ISAs was bond funds which were the biggest sellers of 2008 as investors chased the combination of potentially high returns and lower risk.

And Virgin Money says its own Bond and Gilts ISA demonstrates the attraction - savers have benefited from average annual returns of 4.92 per cent since launch in October 1995.

It has returned 6.4 per cent in the past three months making it the best performer in the Strategic Bond sector. Over the past five years it has outperformed its benchmark sector average by nearly seven per cent - returns have been 2.79 per cent compared with -4.15 per cent for the Strategic Bond Sector.

Virgin Money is urging savers worried by falling stock markets and interest rates not to miss out on their ISA allowance and to look to corporate bonds as a way to beat the investment squeeze.

Grant Bather of Virgin Money said: "Savers can be forgiven for not knowing where to turn. They can claim to be caught between a rock and a hard place with low rates on deposit accounts and the risks of equity ISAs.

"The temptation is to do nothing but there is a cost for inertia. If you do nothing you miss out on a tax-free allowance of up to GBP7,200 this tax year. If you don't use it you lose it.

"The market for corporate bonds is booming with record levels of uptake in January as investors chase the high yields on offer in contrast to the stock market. A corporate bond ISA offers a halfway house between average low rates in cash ISAs and a perceived rollercoaster ride down in equity ISAs."

The Virgin Money Bond & Gilts ISA invests half of savers' cash in Government gilts and half in top-rated corporate bonds in firms. Savers can pay in lump sums or make regular monthly payments from as little as GBP1.

There is no notice period enabling savers to get at their cash when they want. Interest is paid six-monthly and can be reinvested for growth or taken as income.

About Virgin Money

Virgin Money is Virgin's financial services arm and was established in 1995.

Virgin Money has over two million customers and offers a wide range of financial products across lending (e.g. credit cards and personal loans), savings (e.g. deposits, investments and pensions) and protection (e.g. life insurance, home insurance and car insurance) to the UK market.

Virgin Money Personal Financial Service Ltd is authorised and regulated by the Financial Services Authority (FSA). Registered Office: Discovery House, Whiting Road, Norwich NR4 6EJ. Registered in England no. 3072766. Entered on the Financial Services Register (www.fsa.gov.uk/register), Register Number: 179271

Source: Virgin Money
Website: http://uk.virginmoney.com/virgin/isa/

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