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ISA best share and stockmarket buys for 2008

Best buy ISAs for April 2008

Search: The best performing ISA funds

- Is an Isa right for you?
- Best savings for your children

ISA tips provided by Hargreaves Lansdown, one of the UK's leading independent stockbrokers and financial advisors

Let's make one thing clear, putting money into a stocks and shares ISA is a long-term investment. You shouldn't expect to make money overnight, or indeed after several years necessarily (although, of course, both are possible), in fact you shouldn't 'expect' to make money at all as stockmarket based investments are a calculated gamble.

However, if you'd invested in the stockmarket over most periods of five years or more during the last 100 years you would almost certainly have made a good return.

For longer-term planning

Many people have decided to use ISAs to pay off their mortgage, or part of it, or to help towards school fees, and these are events which can be 20 years or more away.

The potential is compelling: A £7,000 ISA growing at a rate of 8% a year would lead to a capital gain of £41,000 after 25 years, of which you could deduct your capital gains allowance of £8,800, leaving a taxable sum of £32,200. If you'd made the investment outside of the ISA 'wrapper', and assuming capital gains tax stays at its current rate of 40%, you would have to give the taxman £12,880. But as ISAs are tax-free, you'd keep that sum for yourself.

You can see that if you're wealthy enough and can afford to put aside the full ISA entitlement each year, your eventual tax savings could be enormous.

Here are three share funds that the experts at leading stockbroker and financial adviser Hargreaves Lansdown have picked out as providing outstanding opportunities at the current time:

Invesco Perpetual Monthly Income Plus Fund

If you are looking for a high income with the potential for capital growth and can invest for the long term we believe you should definitely look at this fund.

First, it currently offers a yield of 7.5% gross (variable and not guaranteed). Within an ISA the income is completely tax-free, and you can either withdraw it monthly or roll it up with the fund enhancing growth.

Secondly, all the signals indicate that this could be one of the best times to invest in fixed interest for almost ten years. The last time bonds were this attractive was the turn of the millennium.

Today yields are at a similar level to February 2000, but valuations are even lower. This means investors who act now have the opportunity to benefit from these income levels and if valuations rise there is also the potential for capital growth. Please remember though that all funds can fall in value as well as rise.

Finally, the fund can invest throughout the market, from investment grade to the higher risk, higher yield bonds and it is managed by one of the best fixed interest teams in the UK. What's more the 15-20% of this fund invested in sharesis managed by the highly regarded Neil Woodford. It is rare to see bond fund managers excited about their fund; they are at the moment.

In summary, we believe this is an opportunity we might not see again for many years and we commend the Invesco Perpetual Monthly Income Plus Fund to you.

Jupiter Emerging European Opportunities

Eastern Europe is developing at a phenomenal pace. So much so that many eastern Europeans who emigrated to the UK are now returning home.

What a difference a decade makes. In 1998 Russia suffered a financial crisis and was bailed out by the IMF. Ten years on and Russia's foreign exchange reserves total over US$600 billion. Russia is rich in oil, gas and other natural resources. The banking sector is thriving and they haven't even heard of the sub-prime mortgage market.

Wealth is cascading through the Russian economy. Russians remain largely debt free, they have moved up from 10th to 6th in a European league table of household spending, and a growing middle class is keen to buy luxury goods.

Eastern European markets currently look excellent value compared to many western markets, so you get more bang for your rouble! Sectors sensitive to the domestic economy, where a number of companies are expected to grow their profits by more than 40% per year between 2007 and 2009, look particularly exciting. Of course, as with all emerging economies, they are also higher risk, therefore good stock picking is essential.

If you are sophisticated investor comfortable with the risks we believe that Jupiter Emerging European Opportunities Fund is one the best ways to gain exposure to this sector. Currently, more than 66% of the fund is invested in Russia, and the manager is free to invest throughout the entire region. Given the risks involved, volatility must be expected, but if you can take a long term view we believe the prospects for this fund are compelling.

Allianz RCM BRIC Stars

Brazil, Russia, India and China (BRIC) are among the world's fastest growing economies. They have sustainable growth rates and huge populations fuelling growth. With this growth however comes volatility and as such, investment in these regions is higher risk.

There could be 2.7 billion reasons why BRICs are the future. This is the combined population figure of the BRIC nations. They make up 42% of the world's total and their growing middle classes are propelling a consumer boom in these countries.

Each of the BRIC countries has unique strengths. Brazil is home to the world's largest iron ore producer which is benefiting from increased global demand. Russia is profiting from the global shortage of energy with its large oil and gas reserves. India's economy is prospering on the back of global firms outsourcing to its highly skilled workforce. China's growth is driven by its flourishing manufacturing sector.

The BRIC countries are uniting in trade and in our view the synergies between the countries are creating outstanding investment opportunities. This specialist area requires the skills of a properly resourced team like Allianz.

Up to one third of this fund can also be invested in other countries if there are compelling opportunities. The managers will however maintain a somewhat concentrated portfolio of currently around 80 holdings, which further increases risk.

The fund has delivered excellent returns since its launch in February 2006 however past performance is not a reliable guide to the future and it will fall in value as well as rise. We are still in the early years of a long term growth cycle in the BRIC economies and this fund offers a great way to capture the growth although a long term view is essential.

ISA tips provided by Hargreaves Lansdown, one of the UK's leading independent stockbrokers and financial advisors

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