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29th
Jul 2020
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Is An Investment ISA a Good Idea?

Is An Investment ISA a Good Idea?

If you're new to investing you will have come across the term "Investment ISA" or "Stocks and Shares ISA" which are ISA accounts designed specifically designed to maximise tax-free returns on your investments. But are these a good idea? 

An Investment ISA (also known as a Stocks and Shares ISA) is a great way to start for both first-time investors and seasoned investors alike. 

An Individual Savings Account (ISA) is a tax-efficient way of making your savings work for you in the best way possible. There are lots of different kinds of ISAs, but for the sake of this blog we will be focussing on Investment ISAs (also known as a Stocks and Shares ISA).

So…how do they work?

An Investment ISA does what it says on the tin: your money will be put to work in an investment (as the name would suggest). 

Those investments should put your money into various stocks and shares, which should garner returns for you. 

And - because it is an ISA, Government legislation means that any returns earned on your investments are tax-free.

You can choose between having an actively managed fund or a passively managed fund, depending on your preference.

What are the benefits of an Investment ISA?

Here are a few reasons why we think that getting an Investment ISA is a good idea: 

They're tax-free

The main benefit to an Investment ISA is that it is tax-free. 

If you're wanting to get into Investments, then you should really consider opening an ISA as it is the most tax-efficient way of investing. 

Each year, every British adult has a set amount legislated by the Government which allows each individual to put £20,000 into an ISA. You could choose to either put this total amount into an Investment ISA, or spread it across the other kinds of ISAs. 

Variety

There is also a lot of variety with an Investment ISA - there is a wide variety of platforms, and within them, lots of different funds which you can choose from. A few example of different types of Investment ISAs include:

Widely Available 

They're also widely available from many different platforms. You can get an Investment ISA from: 

  • Banks
  • Building societies
  • Financial Services Companies
  • Credit Unions
  • Friendly societies
  • Peer to peer lending services
  • Crowdfunding companies

But remember...

...because it is an investment, the stock market could go down as well as up, so you could end up losing money on your investment. 

There are some Investment ISAs which are much lower risk than others, but these tend to produce lower yields. It’s important to evaluate your attitude towards risk before opening an Investment ISA. 

If you are very risk-averse, then you might want to consider opening a Cash ISA instead. These tend to have lower returns, however are far lower risk. 

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Interactive Investor

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Access 40,000+ UK, US and international shares on 17 global exchanges. Choose from over 3,000 funds or select a ready made portfolio. Investment trusts, ETFs, Bonds & Gilts. Option to invest in 6 low cost funds selected by experts to get you started. Capital at risk. Tax & ISA rules apply
  • Invest From: £25 a month or any lump sum

Why we like it: An award-winning ISA that gives you complete control. The second largest platform in the UK with the widest choice of investment options in the market including funds, investment trusts, ETF’s and more. Strong ethical investment proposition with more than 140 investment options. Open online in less than 10 minutes. Access to expert independent ideas and analysis. Low cost fees and trading.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Stocks & Shares ISA

from Hargreaves Lansdown

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 2,500 funds, shares, investment trusts and more to build your portfolio. UK and overseas shares. Corporate and government bonds. Exchange Traded Funds (ETFs). Ready-made portfolios to suit your goals and attitude to risk from £1,000. Expert research to help make your decisions. Investment trusts and much more. Capital at risk.Tax & ISA rules apply
  • Invest From: £25 pm or from £100 lump sum

Why we like it: Choose your own funds or alternatively a ready made portfolio. Market-beating savings and discounts of up to 5.5%. No charge to buy and sell funds. Low, tiered annual charges for holding funds, with a maximum of just 0.45% per annum. Free fund updates and analysis from experienced research team. Invest with a financially secure, FTSE 100 company.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

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

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

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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ISA.co.uk is a trading style of Fair Investment Company.

We've been comparing and recommending ISAs for many years so you can trust you're in good hands.

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