A: The advantage of ISAs is that they provide a life-long shelter from which tax-free income and capital withdrawals can be made. It is possible to invest in a range of assets including cash deposits, UK and overseas equity (share-based) funds, property funds and fixed interest securities. The capital values of equity, property and fixed interest-based funds will fluctuate, however, so cannot be guaranteed.
With an offset mortgage, the borrower pays interest only on the difference between the mortgage debt and the level of cash in the linked offset savings accounts. This, in effect, provides a 'guaranteed' net return on any money held in the offset savings accounts and, in some cases, the returns can be competitive.
For example, based on a mortgage rate of 3.5 per cent net, the gross rate of interest that would need to be achieved by a 40 per cent taxpayer in a conventional savings account would be about 5.8 per cent.
Where savings are likely to be required in the short term (for example, to meet tax bills), it would be prudent to hold them in cash/near-cash type investments to protect against market volatility.
But without knowing a lot more about your personal circumstances, objectives and attitude to risk, a categorical answer to your question is not possible
I would recommend getting more advice from your financial adviser regarding this matter.