With share prices plummeting I'm frightened that the savings I am ploughing into my ISA will soon be worthless. It obviously isn't the time to cash in but I am considering stopping putting any further money in and using the cash to overpay on my mortgage instead. Is this a stupid idea?

Hi -- It's a good idea and one which I would use in preference, provided there are no penalty charges then overpaying your mortgage, by reducing it quicker will also reduce the overall interest payable on your mortgage at a greater rate compared to the interest earned in a poor performing ISA.

Paying off borrowed money which is usually charged at a higher rate of interest is more efficient than saving at a lower rate. The only wise thing you need to maintain is a healthy reserve of funds in case of emergency that you can easily access should the need arise.

Some people might argue that now is the best time to be saving into an ISA as when the stock markets are performing poorly you get more units with your money so when things start to improve you should benefit. Assuming this is a unit trust ISA.

The ABC of the good saver says that you should pay your debts first and only then you can start saving. As mentioned above, early mortgage repayment fees need to be considered. As for ISAs, they are still a good option for savers. I am not an expert, I don't invest in the stock market and I certainly won't start now!!! Given the circumstances, I would go for a fixed rate ISA (the Bank of England will probably cut the interest rate next month) and look for some high interest accounts (8-8.5%) like Alliance&Leicester and Abbey. This means you can save around 8.5K at ca 6% NET interest!

Thanks for the responses. At least I know I'm not completely wide of the mark. Good point about the emergency fund although I could still withdraw the money from the existing ISA if I was suddenly in need of cash.