Taking AIM for success: small cap investing opens up for ISA investors
ISAs, savings and investments
In these tough economic times, it’s difficult not to be reminded of Tesco’s long-standing advertising slogan: every little helps. And that’s because for those of us looking to fine tune our personal spending, then it is very much an era in which we don’t habitually reach for the same products or take special offers at face value if we’re on a budget. We look at what the market is offering and vote with our wallets. This is one of the reasons that no frills brands like EasyJet seem to do so well – they catered for the price conscious customer even when there was a bit of extra money in folk’s pockets. So when the squeeze started its squeezing thing, people traded down from other operators to fly with them.
All of which goes to explain why sites like Martin Lewis’s Money Saving expert are encouraging the use of Individual Savings Accounts (ISAs). It’s because the ‘every little helps’ factor here is to do with tax – and the fact that cash ISAs let people save up to a certain amount cash free, with tax-protected stocks and shares ISAs also offering a break from tax. For a full explanation of ISAs and their tax benefits, check out this guide.
The AIM and ISAs
Recently the government announced that stocks and shares from the Alternative Investment Market (AIM) will soon be allowed for inclusion in the stocks/shares ISA wrapper. The AIM (part of the London Stock Exchange) is, according to its website is the “world’s most successful growth market”.
The move has been widely welcomed in most quarters of the financial press and is seen as a widening of consumer choice. It is also, of course, intended to widen access to the AIM and as a result help smaller business as well as the wider economy.
However, for those looking to invest in the AIM it’s obviously extremely important to get researching the differences between the AIM and the main market, as well as the various funds that themselves invest in it.
The AIM has a different regulatory framework in place as compared to the main market, in order to make the market accessible for smaller companies, and this has been described as ‘less stringent’ than the main market, which of course adds to level of risk to be considered when buying shares.
One of the big opportunities with smaller companies is their room for growth. And industry experts point to the success of online fashion retailer ASOS (an AIM listed company), whose shares more than tripled in value over the space of just a few years. But of course, not every AIM story is one of success, and the AIM itself is still at a points level far below its spike at the turn of the millennium.
As with all things investments, though, blog posts and pundit’s columns are for information only, so if you need advice on your investements, seek out a professional, qualified independent financial adviser.
C Foley is an investments blogger. Catch up with him on Google+.