ISAs are a type of savings account which the government have launched in order to encourage people to save regularly. A cash ISA - which operates much like a standard savings account with an interest rate set by the bank - enables you to store away £3,600 a year into an account where you can earn interest without paying any tax.

Obviously this leads to better net interest rates than standard accounts as you are not paying your interest back to the government, and you should certainly ensure that if you have money to save the first £3,600 a year is put into your cash ISA. By not making use of your ISA allowance you are simply throwing money away.

However, the government also allow you an additional £3,600 allowance which can be put into a stocks and shares ISA (or, should you wish, you may put the whole £7,200 allowance into a stocks and shares ISA - but you can only put £3,600 a year into a cash ISA).

Here the distinction is not as clear cut, as the return on your investment will always be subject to the market, and should the stocks and shares in your ISA fall you may end up with less in your account than you started with. It is important to understand you are making an investment, not just a deposit in a savings account.

Since the financial markets have been extremely unpredictable in the last few months we would strongly advise seeking professional financial advice before making any investments. Most banks offer a range of stocks and shares ISAs targetting different areas of industry and you may feel there is an opportunity to benefit from one area even as other areas are falling in value - however we are not in a position to give any advice or predictions as to where best to invest your money.