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Jul 2020

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. 


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:

  1. Index Tracker ISAs
  2. Fund Supermarket ISAs
  3. Ethical ISAs
  4. ETF ISAs
  5. High Income ISAs

Widely Available 

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

  1. Banks
  2. Building societies
  3. Financial Services Companies
  4. Credit Unions
  5. Friendly societies
  6. Peer to peer lending services
  7. 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. 

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.

Lifetime ISAs

Save for your first home and retirement

Compare Lifetime ISAs

Junior ISAs

Invest for your child’s future

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Stocks & Shares ISAs

Invest tax-free in stocks and shares 

Compare 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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