Individual Savings Accounts (ISAs)

When investing is is important to remember that your investments can go down as well as up.

ISAs: At a Glance

ISAs represent a great way to save without paying tax on the interest you earn. With the current allowance you can put up to £15,240 into cash or stocks and shares ISAs for each tax year.

  • Fixed rate Cash ISA offers a fixed rate of interest over a set period of time and usually offer higher rates of interest
  • Variable rate Cash ISAs are more flexible, often have no limits on withdrawals but offer lower rates of interest
  • Stock and Shares ISAs have the best return potential but also have a higher risk

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  • Cash ISAs
  • Stocks and Shares ISAs

Types of Cash ISA

In simple terms a Cash ISA is a savings account on which the interest is not taxed. They are available to all UK residents over the age of 16. There is the option to either choose a fixed-rate or a variable rate ISA, with advantages to both depending on whether you require the ability to withdraw funds at any time or are happy to leave your money until the end of a fixed rate term.

Key Facts

  • You can open a new Cash ISA every year, and save up to that year’s limit
  • There is no limit to the number of ISAs you can hold as long as they are each started in a new tax year
  • The interest earned on each individual ISA remains tax free until that ISA is closed
  • Many variable rate cash ISA allow you to withdraw money at any time without losing your tax benefits
  • Some ISA schemes allow you to transfer balances from poorly performing ISAs into a new ISA
  • We search the market to source the best performing ISAs and always recommend products that suit our clients financial circumstances and goals

How Stocks and Shares ISAs Work

Like Cash ISAs, Stocks and Shares ISAs offer a tax-efficient savings vehicle. Where they differ is Stocks and Shares ISAs offer access to a range of investments including funds, bonds and trusts. Investing in a stocks and shares ISA has greater potential for growth, though there also the greater risk that the investment could go down as well as up. They are also considered longer-term investments with most recommended at a minimum of 5 years.

Key Facts

  • Before recommending products we take into consideration the range of investments available based on your financial circumstances and goals
  • Most investment ISAs have charges associated with them, such as set up, share-trading and management costs
  • You can split your ISA allowance between cash and stocks and shares with the ratio up to you. You can also transfer your investment ISA into a cash ISA
  • Good investment advice is invaluable. Speak to Approachable Finance before deciding on your investments and avoid a level of risk you may be uncomfortable with