ISAs (Individual Savings Accounts): Introduced on 6^th April 1999 as a replacement to Personal Equity Plans (PEPs). An ISA is a product that can invest directly into Stocks and Shares on a regular monthly basis or a lump sum. In addition there are tax advantages with ISAs in that there is no Income Tax or Capital Gains Tax paid on either the fund invested or the proceeds that are received when you either elect to take a regular income or withdraw the funds completely.

The fund manager can also reclaim the 10% tax paid on any dividends received by the shares invested within the fund. This will continue to be the case until the 5^th April 2004.

There are two versions of an ISA. They are a Maxi ISA and a Mini ISA.

A Maxi ISA offers access to the Stock Market. £7000 can be invested until 5th April 2006. Only one such ISA can be invested per tax year and it must be with a single provider.

You can only invest the full £7000 if you have not invested in a Mini ISA. Some clients have invested in a building society cash ISA where up to £3000 can be invested. This means that they can only have three mini components and are not eligible for a Maxi ISA.

Mini ISA’s can contain some or all of:-

Up to £3000 in a Mini Stocks and Shares ISA

Up to £3000 in a Mini Cash ISA

Up to £1000 in a Mini Insurance ISA

There are also "TESSA only ISA"s whereby the proceeds can be transferred to an ISA without restricting the above mentioned subscription levels. This transfer of capital (not interest) must take place within 6 months of the Tessa maturing.

Some ISA’s are "CAT standard" (Charges, Access and Terms), which meet Government specified charges. The aim is to provide a simplified 1% charge agreed by the Government.

Lots of ISA’s sold are NOT "CAT standard". The charges on these can be very high. This may be acceptable if you want to invest in something with an exceptional growth, but if you want to invest in a fund that just tracks one of the common indexes there are "CAT standard" tracker ISA’s available.

PEPs (Personal Equity Plans): Now replaced by ISA’s these allow individuals to invest in companies listed on the stock exchange and to enjoy the growth tax free in the hands of the investor. Existing PEPs can still be maintained and enjoy the same tax efficient benefits as ISAs.

TESSAs (Tax Exempt Special Savings Arrangement): Now replaced by cash ISA’s these allowed saving in banks and building societies to have the interest credited tax free as long as they were held for 5 years. A maximum of £9000 was able to be invested over the 5 years.

Bonds: There are many different types of bonds with different charging structures. The most common ones are Insurance Company Bonds, which will invest, in a similar range of investments to unit trusts but there are also National Savings Bonds and other fixed interest types of bond. Some bonds are termed "junk bonds". These are likely to pay a high income but the capital may not be very safe. They are popular in the USA.

Unit Trusts: These are collective investment schemes where shares in companies are held by the Unit Trust and individuals buy units in that unit trust. If the value of the shares goes up or down the value of the units goes up or down. They allow private investors to spread the risk of investing in the stock market between lots of companies. It is possible to save monthly amounts as low as £50 and to have a good spread of investments in the stock market.

Special unit trusts will invest in specialist types of investments such as property, technology, small companies or overseas companies.

Open Ended Investment Companies (OEICs)are single priced investments which are variations of unit trusts with slightly different operating restrictions. Many unit trusts have now re-registered themselves as OEIC’s. They do not have to have a final close date when the trust must be wound up and the assets sold.

Investment Trust: A limited liability company quoted on the London Stock Exchange, whose sole business is investing in securities – The value of its own shares tends to reflect the underlying value of its portfolio of investments.

Ethical Investment: Many investors are concerned that their money is invested in companies that do not exploit the third world or harm the planet. An ethical investment fund will carry out research into companies it invests in to make sure they cannot invest in unacceptable companies.

In July 2001 the FTSE International announced that the start of their index of ethical companies.

Companies likely to be included would have to avoid investments in tobacco or armaments and would have to have environmentally friendly policies and fair treatment of their workforces across the globe.

Many pension and insurance funds have specific "green" or "ethical" funds. Historically they have performed well since the other companies have been under pressure and also as the trend has become more established to invest in ethical funds those companies seen as particularly "green" have been included in more and more portfolio's which has copied them and most companies have some sort of ethical fund.

The inclusion in this list does not imply they are suitable investment vehicles or that they would meet your own definition of an ethical fund.

You should be aware that investments can go down as well as up and past performance is no guarantee as to future performance.

For advice on ethical funds, click here.