There is much heated debate about why people in the UK do not save more of their money. This debate is a pertinent one because whether it be ordinary cash savings accounts, or pensions, the fact remains that we are poor savers and over 25% of people have no savings at all.

The Government has tried to do something about this lack of saving sense and in 1999 launched the ISA account, basically a way of saving tax-free that lets you roll over your money year-on-year without the people from Her Majesty’s Revenue & Customs getting their hands on it, as they do on interest earned on ordinary savings accounts.

The rules around ISA saving and ISA investment are pretty detailed and complex, but in essence an ISA account can be one of two things - cash or stocks and shares. Cash ISAs, and these include even the best ISA accounts, are savings accounts around which the ISA sits like a ‘wrapper’ protecting it from tax. The limit on cash ISAs is £3,000 a year.

Stocks and shares ISAs, where your money is put into investment vehicles like unit trusts and open-ended investment companies (Oeics), have a more generous maximum savings allowance of £7,000 a year.

These are affected by people’s feelings about the stock market and sales of stocks and shares ISAs have been increasing in recent times because of the booming markets. The Investment Management Association (IMA) records that stocks and shares ISAs hit £2bn in tax year 2005-06, 13% up on the previous year but still well down on 2003’s £3.6bn.

For all this, however, many savers see the stock market as too risky and cash ISAs by far outsell their stocks and shares counterparts, even when these are the best ISA to have in terms of their returns.

But whatever the pros and cons of the ISA debate, you should take one out only after carefully considering your ISA investment and researching the market for the product that best suits you.