Whatever the dangers, lay back and think of your tax-free allowance

Only the bravest private investors will play the Isa equity market this year, according to a new survey from top accountants KPMG.

It finds a "nervous public" is playing safe with cash, with savings accounts rated before any investing in stocks and shares, or housing.

The YouGov research shows 64% would invest in the bank or building society if they had a lump sum. This compares with 22% who would buy property, and just 9% opting for equities, even though 53% of those interviewed already have some exposure to stock market assets.

The survey found that 2% is so distrustful of financial institutions, they would prefer to keep cash under their bed.

Isas are not a magic route to riches, so look at any purchase in the light of other investments and commitments. But one leading adviser believes Isa investors should not give up their tax- free opportunity without rational reasons.

"Isas are still the best way most people have of investing in a tax-free manner," says John Spiers at IFA BestInvest. "There are good reasons to overlook them, but investors should not ignore the other side of the coin."

Worried about the stockmarket? You could miss out on a market bounce-back. Or you could go for the safety of bond funds.

Job security concerns? Aim for the security of gilt or top-rated corporate bond funds.

Lack of confidence in financial services? Many have burnt fingers from a seemingly endless stream of scandals and set-backs. You can move the odds into your favour by sticking to funds with a good past record and avoiding recommendations from banks and "mailshot" IFAs who effectively give no advice.

Disinterested due to the lack of tax relief? From April 2004, there will be no tax advantages on equity Isas for basic rate taxpayers other than the tiny minority who pay capital gains tax. And the tax breaks for higher rate taxpayers will fall. But there will still be good tax savings for bond investors. Additionally, buying a unit trust through an Isa scheme can often be cheaper than other purchase methods. But Mr Spiers believes that stock market linked Isas are not right for everyone. "There are some very good reasons for ignoring the Isa sales season," he says. These include:

You have a mortgage: Home loan payers are likely to be much better off reducing their debt rather than investing. Even if equities manage to return 8% on average over a long period - and that's an optimistic view - this is less than many will pay for loan interest once tax is taken into account. It makes even less sense to put cash into a low return bond Isa, and debt repayment applies even more if you have higher cost borrowing such as credit card or personal loan.

You have a future need for cash: Stock market Isa investment is for the long term. So don't tie up money you might need soon.

You do not have an adequate cash reserve: A rainy day fund is paramount - use a cash Isa instead.

But Peter Moores of online broker Self Trade UK has no doubts. "We believe that there will be the usual rush to invest money into Isas coming up towards the end of this tax year. But it is likely to be more diversified and spread out in a combination of cash, shares and funds Isas."