Stocks and Shares ISA Summary

It’s a common problem everywhere, you earn and government takes away a large chunk of your hard-earned money as tax. Under such a situation, we look for alternatives to save as much as we can. ISA or individual Savings Account is a place where you can reserve your money while earning interest without paying tax on it. This tax efficient saving account is designed to encourage individuals to plan for their requirements and financial future.

It is wrong to think that ISA is an investment that you make. ISA is not an investment but a wrapper, which helps you investing in different ways, i.e.:

Cash Deposits, also Known as Cash ISA

Stocks and Shares ISA

Life assurance

Below is a list of few benefits of investing your hard-earned money within the ISA wrapper:

o Fights Inflation: Inflation is on the rise and the major contributing factor to this is the gradual ascent of commercial rate of interest. Under such a condition, Cash ISAs are the best option for an individual as they are exempted from tax.

o Attractive offers on cash ISAs: for individuals striving to save some money Cash ISAs may be a good option. Cash ISAs offer a fairly humble tax-free savings of about 3,600 pounds. Moreover, bankers, in their effort to get more customers, try to make cash ISAs as attractive as possible by offering them attractive rates of interest on their invested money.

o Secured savings: investing in Cash ISA is very safe as your savings are secured. Cash ISAs return the amount invested to the customers along with the interest earned at the end of the year. The investor also has the option of withdrawing the amount invested at any point of time. But this may call for imposing penalty on the investor by deducting the interest from the principal amount. To avoid such withdrawals, many a times, banks offer bonuses to investors, provided they don’t withdraw their money or any part of it during the year.

o Cumulative benefits: the benefits on Cash ISA can grow with time. At the time of investing, your yearly allowance is 3,600 pounds but at the end of the year, all your invested money can stay and you may be given an added allowance of 3,600 pounds.

o You can change your ISA provider when needed: cash ISAs are purchased either with variable rate of interest based on the changes in the Bank of England base rate or with a determined rate of interest at the outset. Investing in Cash ISA gives you the advantage of changing your ISA provider according to your convenience, when needed.

o Equity ISA/ Stocks and shares ISA: an investor can opt for Stocks and share ISA where the returns are in the form of dividends and is entirely based on the range of stocks and shares the ISA provider has and their quality of performance.

Now that you have a fair idea about ISA, it is about time that you start investing in it. Do your necessary researches on how you want to go about investing your money within the ISA wrapper and you would be surprised to see your savings grow considerably over a year.