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When searching for the best fixed rate ISAs available today, the temptation to place your money into funds with such attractive terms can be overwhelming. After all, these plans offer a guaranteed yield over a set period of time with all income and growth completely free of tax, but if you are not aware of the pitfalls of such an investment then you could make a costly mistake. Whether you are a standard rate tax payer or subject to a higher levy, the tax incentives offered by the ISA make these accounts one of the most effective ways to save for the future. And with a fixed rate product your rate of return is guaranteed, no matter how the stock market performs, which is ideal in times of economic instability. However if you are intending to invest, make sure you are aware of the implications of entering into such an agreement. If you can fully comply with all terms placed on the product then the rewards can be outstanding, but if you feel unable to fully commit your funds, then don’t rush into the investment, consider all the implications fully and make the decision that is right for you. Though the fixed rate ISA is an incredibly attractive proposition to anyone who can willingly lock in funds for an average of two to five years, if you do try to withdraw even a small part of your capital early without prior agreement you could be liable for significant penalties which may negate the benefit of entering into such an investment in the first place. If you feel that you cannot fully commit your funds for the full length of term, ensure that any fixed rate ISA you choose has facilities built in that allow you to withdraw a proportion of your capital without penalty, thereby providing the flexibility you need to stay within the terms of the agreement and fully enjoy the benefits that such a product can offer. In a similar vein, many of the best fixed products provide outstanding returns for the term of the guarantee but after this initial period expires you may find that your rate of return reverts to a much lower level which can be significantly less than that of other more competitive products available in the market. To ensure you can continue to make the most of your investment, keep up to date with the options that are open to you after the guarantee period has expired and choose a product that is not going to tie you in for any length of time after your fixed term has been completed. Set a reminder for a couple of weeks before your guarantee expires so that you can start searching for the most attractive ISA rates available in preparation for transferring your funds as soon as your commitment is fulfilled. Simply by following these general guidelines and making sure you are aware of the terms within the product you choose, you can take advantage of the best fixed rate ISA accounts available and enjoy significant growth, all completely tax free.
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