The majority of active investors are either undecided or will not be investing in an individual savings account (ISA) before 6 April 2008.

According to research from New Star Investment Funds, 62 per cent would forfeit their ISA allowance this year while only 38 per cent of investors are considering taking out an ISA before the end of the tax year.

Richard Wilson, marketing director at New Star, says, ‘The opportunity cost to investors over the long term from both a tax and investment perspective could be significant. The survey suggests that the majority of investors may be relinquishing the opportunity to protect up to £7,000 from the clutches of the taxman.’

Market turmoil and the general economy were given as reasons why investors won’t be taking out an ISA this year.

The research revealed cash ISAs are the most popular choice, with 44 per cent of those surveyed admitting that they would opt for these products if they were to invest. A further 11 per cent would opt for a UK equity growth ISA and eight per cent for a UK equity income ISA.

Wilson says, ‘While 44 per cent of investors would consider a cash ISA this year, they should consider the fact that over the past 20 years cash has returned 308.5 per cent compared to 581.1 per cent and 417.8 per cent from direct UK commercial property, UK equities and bonds respectively.

‘Long-term investors need to ask themselves this – if they look back in 20 years' time, will they regret a missed opportunity and past short-term pessimism.’