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Feb 2020

What is a Stocks and Shares ISA?

What is a Stocks and Shares ISA?

Money put into Stocks and Shares ISAs is invested – which is why they're also known as investment ISAs. They're a useful way for first-timers to get involved in the stock market, and also make the most of their tax-free annual ISA allowance. But what are they?

There are various kinds of ISAs which can hold your savings or investments in a tax-free "wrapper." They include Property ISAs, Lifetime ISAs, Fund Supermarket ISAs and Ethical ISAs. A Stocks and Shares ISA is another ISA option - but one which offers better rates of return than the low rates available on Cash ISA deposits. .

“Stocks” and “shares” are generally interchangeable terms, though they have slightly different meanings:

  • “shares” can refer to owning part of one particular company (“I own shares in Unilever”)
  • “stocks” can refer to shares in a number of different companies (“I own stocks in the renewable energy industry”)

Where do I get Stocks and Shares ISAs from?

The structure for Individual Savings Accounts (ISAs) was set up by the UK government as a way of encouraging savings and investments, by allowing British taxpayers to earn up to a specified amount from them each year, tax-free.

The ISAs themselves are offered by a wide number of banks and financial services companies. You can open Stocks and Shares ISAs with:

  • Online “fund supermarkets” (select and manage your funds yourself)
  • “Robo-advisers” (an online investment service uses algorithms to manage a portfolio)
  • Banks
  • Stockbrokers
  • Wealth managers

What KINDS of Stocks and Shares ISAs are there?

A Stocks and Shares ISA lets you invest in:

  • Shares in companies (you directly own a share of the company and its profits – or losses)
  • Funds (your money is pooled with other investors’ money in a fund which then invests it in a variety of places: you own “units” of the fund)
  • Investment trusts (you buy shares in a company which has a fixed number of shares; the company does the investing)
  • Bonds traded on the bond market: either government bonds also known as “gilts” (you own part of a government’s borrowing on the financial market), or corporate bonds (you own part of a company’s borrowing)

You can also hold cash in your Stocks & Shares ISA.

How can I make money with Stocks and Shares ISAs?

Savings and investments in ISAs are covered by the government’s Financial Services Compensation Scheme (FSCS). The government will compensate you for up to £50,000 if the company you invest with goes under.

But you’re not protected for an investment that just performs badly.

The stock market can go down as well as up.

Everyone will advise you that you should invest in Stocks and Shares ISAs for at least five years, to allow for the normal fluctuations of the stock market.

But you will also need to be prepared to move your investment elsewhere if your ISA is performing consistently under-performing.

Read more on the best Investment ISAs, to find the best rate for you.

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Fidelity

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 4,000 investment options, including one of the widest fund ranges in the UK, plus shares, investment trusts and exchange-traded funds. There’s also expert guidance to help with your investment decisions, which includes a selection of tools and insights from Fidelity’s experts. Capital at risk. Tax and ISA rules apply.
  • Invest From: £25 through regular savings or £1,000 lump sum

Why we like it: Fidelity has lots of investment options, plus an extensive range of guidance tools to help you decide what to invest in. Their award-winning ISA is easy to start and offers great value, their a typical service fee of just 0.35%. Other ongoing charges apply. On top of that, everything is backed by Fidelity’s 50 years of investment experience.

Important: The value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Tax treatment depends on individual circumstances and all tax rules may change in the future.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

High Income ISAs

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Cash ISAs

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Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

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