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14th
Oct 2020
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Our How-To Guide on ISAs for Beginners

Our How-To Guide on ISAs for Beginners

So you've heard opening an ISA is a good idea, but you've no idea where to begin. You don't know your LISAs from your JISAs, and the plethora of choice available on the market is fairly overwhelming. Luckily for you, we've broken down everything you need to know about ISAs and all the different kinds of ISAs on offer - so you can make an informed choice that is right for you. 

So…what exactly is an ISA?

An ISA is a tax-efficient way for you to make your money work; by putting your money into an ISA tax-free wrapper, you will enjoy returns which are safe from the tax man.

For this tax year, you are able to put in a maximum of £20,000 into an ISA.

Different types of ISAs include:

Within these categories, there are also sub-categories such as Ethical ISAs, Fund Supermarkets and High Income ISAs. For more information on these, read our recent series of blogs.

What's an Instant Access Cash ISA?

An Instant Access Cash ISA is a savings account where the interest you gain is protected from the tax man. You can

This will suit you if...

  • You want to take last-minute advantage of your ISA allowance, but are wary of more high risk accounts
  • You know you'll need access to your funds

What's a Fixed Term ISA?

A fixed term Cash ISA is like an instant access Cash ISA, but your money will be locked away for a set period of time. This can be 1,2,3,5, or 7 years - and different providers will offer different time periods and rates.

This will suit you if...

  • You know you won't need to access your cash for a set amount of time
  • You want slightly higher rates than an Instant Access Cash ISA, but don't want the associated risks of a Stocks and Shares ISA.

What's a Stocks and Shares ISA?

With a Stocks and Shares ISA, your money is invested in - you guessed it - “Stocks” and “shares”. These are 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”)

With this ISA you will gain returns on your investment which will be tax free.

This will suit you if...

  • You are already an investor or want to be an investor - and you want your returns protected from the tax man
  • You want the higher returns rate offered by Investment ISAs
  • You want to put your money into specific investments, like Ethical Investment ISAs or Climate Change funds.

What's a Junior Isa?

A Junior ISA, or JISA, is an ISA account which is set up on behalf of a child by a parent or guardian. Family, friends and parents can then put money into that ISA. For this year, the limit you can put into a JISA account is a very generous £9000 for this tax year. 

This will suit you if...

  • You are a parent or guardian of a child and you want to put aside money for their financial future.

What's a Lifetime ISA?

A Lifetime ISA is an ISA with a very specific purpose - long term saving. You can but in up to £4000 per tax year (this is the allowance for 2020/2021). The government will then give you a 'bonus' of 25% of what you have put into this account: which means you can get a boost of up to £1000 each year. This money can only be used to help you buy your first home or as long-term retirement savings.

This will suit you if....

  • You are looking to buy your first home
  • You are saving for retirement

What's a Peer to Peer ISA?

A Peer to Peer ISA, otherwise known as Innovative ISAs, allow savers to lend their money to other borrowers directly - bypassing the middle-man and thus, benefiting from a better interest return.

This will suit you if...

  • You've invested before, and are familiar with the process
  • You're comfortable with the associated risks

Read more about our Cash ISA rates & Investment ISA rates. 

Junior ISAs

Junior Stocks and Shares ISA

from Hargreaves Lansdown

Regular Savings
  • Investment Options: Invest from £25 per month or deposits of £100.

Why we like it: Invest for your child from £25 pm tax free. A wide range of top performing funds to choose from. The annual charge for holding investments in a Hargreaves Lansdown Junior ISA is never more than 0.45%. Your dealing and other charges will depend on the investments you choose.

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.

Easy Access Cash ISAs

E-Cash ISA 2

from Scottish Widows Bank

Interest Rate (AER) 0.35%
  • Term: Instant Access

Scottish Widows E-Cash ISA 2 offers a winning combination of quick access and tax free savings.

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.

  • No bonus included in the rate
  • No notice period or loss of interest for withdrawals
  • Transfers accepted
  • Minimum balance £10
  • Access - Online, telephone and post
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Must be 16 or older
  • Annual interest
  • Variable interest rate

Calculate your interest with this plan

Your savings:
£
You could gain:
£0.00 (per tax year)
Share Dealing ISAs

Share Dealing ISA

from AJ Bell

  • Trade From (frequent trader rate): £4.95
  • Trade From (standard trader rate): £9.95

Why we like it: Voted ‘Best Execution Only Broker 2020’ in the ADVFN International financial Awards. Place 10 deals or more per month and pay only £4.95 per online deal in the next month. Deal from £1.50 and never pay more than £9.95 per online trade. AJ Bell is one of the UK’s largest online investment platforms with £48.3 billion in assets under administration for 262,000 customers.

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.

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Fidelity

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: 2,000+ Funds
  • Invest From: £50pm

Why we like it: Invest from as little as £50 a month or with a £1,000 lump sum. Investment choice from over 100 fund providers, giving you access to 2,000+ funds. One low-cost service fee of 0.35%*. Great service – from investment guidance on website through to UK-based phones team. PathFinder, Select 50, Investment Finder - investing tools for beginners to advanced investors. 24/7 access via online Account Management system.

* depending on how much you have invested

Special offer:

Invest and get £25 cashback » 

Build your savings with an ISA and receive £25. Exclusions, T&Cs apply.

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.

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

Our Top Picks for Technology Stocks and Shares ISAs

19th January 2021

The tech industry has been booming for the past fifteen years; and it seems to be a rollercoaster that only goes up. The tech bubble has yet to burst, with companies coming out with more and more technological developments and consumer demand is certainly not slowing down. So, for the tech-savvy investor who wants to put their pennies behind this strong growing industry, we’ve put together our top three picks for Technology Stocks and Shares ISAs. 

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