What is a stocks and shares ISA?
Nowadays, UK residents have a wide choice when it comes to savings and investments accounts. Stock and Shares ISAs are one of the most popular kinds of fund. It is indeed a particular kind of Individual Savings Account which have been designed to help people save and invest money in a tax efficient way. By opening this specific type of ISA you’ll in fact be able to invest in a great range of fields such asstocks, shares, bonds, properties, real estate, land and more. Opening a stocks and shares ISA might be a really good idea for first-time investors who want to embark a new economic path. When investing, it’s important to always take into account how risky the whole process is. As a matter of fact, even though investments represent a good way to make capital grow, it could also lead to potential losses. When opening an Individual Savings Account, you may also consider to seek for the help of a financial counselor or rely on a stocks and shares isa calculator. If you are planning to open a new savings or investment account keep reading: in the next paragraphs we’ll show you the most common types of ISAs available in the UK to help you choose the right one for your economic situation.
How many types of ISAs are there?
Stocks and shares ISA is not the only type of Individual Savings Account available for UK residents. As a matter of fact, there are many different accounts in order to meet the needs of as many people as possible. Cash ISA is one the most popular one, for it’s really similar to a regular savings account. By opening one, you’ll be able to save money in a tax efficient way. Lifetime ISA has been designed for people who want to save money for life related purchases, such as buying a new house, child marriage and other things like that. New investors who want to invest in peer-to-peer lending can choose an Innovative Finance ISA. Another really popular Individual Savings Account is the Junior ISA, which has been intended for parents or legal guardians who want to put money aside for their underage children, who will be able to access it when they turn 18. When opening any ISA, you should always keep in mind that all investments are constantly subject to the market’s volatility. This means that your money might grow but you might also end up getting a lower amount than expected.
How do ISAs work?
As already seen, UK residents can choose between many accounts. Whichever account you decide to open, you’ll always be able to save or invest while always being protected from UK tax. Today, any UK resident over the age of 16 is eligible to open an ISAaccording to the type of account chosen. All of these accounts come with a restriction on the amount of funds that can be deposited in a year. As a matter of fact, you’ll be able to put up to £20,000 per year on any ISA except for the Junior ISA, whose annual allowance is set at £9,000. Individual Savings Account represent the new frontier of saving and investing, because they grant the holder the freedom to act according to his needs and preferences in a tax efficient way. That’s one of the main reasons for the great popularity of ISAs.