Gold bullion investment service hits out at ISAs

Investing in cash ISAs to beat the taxman is a false economy and investors should put their money where it can earn a better return, it is claimed.

According to the UK’s leading gold investment service the ‘Best Buy’ label should only be used for products beating the rate of inflation and investors should consider gold bullion ownership as an alternative way to save.

Bullion Vault believes that private investors should put their money where it will produce the highest rate of return, not where it will do the most damage to the taxman and at a time when both the ‘Best Buy’ easy access and two year fixed cash ISAs are only offering rates well below the current rate of inflation, putting spare savings into a cash ISA may be a false economy.

It says there is a better alternative available for anyone who actually wants to see their savings grow.

‘At this time of year, there is the usual clamour from financial institutions to convince people that they have to maximise their annual tax free ISA allowance before it’s too late.  But when you are actually going to lose money owing to the below rate of inflation rates on offer, any canny investor ought to be looking for alternative investments,’ said BullionVault’s head of research Adrian Ash.

'One such alternative is gold bullion. Over the last one, three and five years gold has outperformed cash ISAs by 10.3%, 26.6% and 50% respectively (in RPI adjusted real terms) even when the gold investor pays the maximum level of Capital Gains Tax (CGT) on those profits,’ he explained.

He pointed out that the label ‘Best buy’ can be misleading if the product does not deliver a rate that beats inflation. ‘If you already have a cash ISA from previous tax years, there is little benefit to pouring more of your money into it when it does not deliver a return, even if it is tax free,’ added Ash.

While acknowledging that gold investment is more risky than cash, Ash said; ‘Gold’s volatility is actually lower than the stock market and with real interest rates below zero, savers are already being forced to take risks if they do not want to lose purchasing power’.

He also pointed out that gold also performs well against equity ISAs. Compared to Morning Star’s list of top 4,000 equity funds gold is in the top 4% of funds for last year, the top 2% of funds over three years and second overall in terms of five-year returns (before any CGT is taken into account).

Bullion Vault is the secure, low-cost gold and silver exchange for private investors. It enables investors to buy and sell professional grade bullion at live prices online, storing the physical property in market accredited, non-bank vaults in London, New York and Zurich.