The new ISA (NISA) has arrived allowing individuals to save £15,000 tax-free every year. For senior doctors wary of triggering harsh tax penalties from contributions to their pension pots, the NISA is now an attractive way to boost retirement savings to complement the NHS pension.

While savers have been dismayed to find banks have cut cash ISA interest rates by up to a tenth, investment ISAs are proving popular for those keen to take a long-term view. Reports suggest up to £4billion has been held back in the last few months by savers intent on making the most of the new increased allowances.

The NISA means that there is effectively now only one allowance that can hold both cash and investments. Investors can also transfer money between the two in both directions, whereas previously transfers were limited from cash to investment ISAs only. This added flexibility is good news for those whose needs may change over time.

However, it is important to remember not to simply withdraw your money from any existing investment or cash ISA to contribute to the NISA as doing so will cancel the tax-free benefits.

The choice of what type of investments to include in the NISA will vary depending on your personal circumstances. You should consider the ideal split between shares, fixed interest and cash to match your attitude to risk and your financial objectives. An over concentration in any of the three (cash, shares or fixed interest) will usually be sub optimal for a number of reasons.

With the new allowances a couple investing the maximum ISA contribution of £30,000 per year for 20 years, achieving a three per cent real return (after charges and inflation), could achieve a fund value of £1million.

This is a great target to have but there can be many pitfalls along the way for the unwary. The lessons from prominent professors of behavioural finance contend that we are likely to be our own worst enemies when it comes to investing. We suffer from inherent human biases and can become very emotional, particularly when times are bad. Adopting a long-term outlook is easier when you have a coherent strategy and someone responsible for making sure you have a good investment experience.

If you have an existing ISA portfolio that needs a second opinion, or you think you should be taking advantage of the new allowances, we can help. Call one of our specialist advisers at Cavendish Medical on 020 7636 7006.