Structured growth ISAs allow you to invest your ISA allowance in a structured investment product which offers the potential for growth returns, without paying tax on any returns. Structured growth ISAs offer options for those willing to accept a higher level of risk for potentially higher returns, as well as for those looking for low risk or fixed returns.
What is a structured growth ISA?
While a standard cash ISA allows you to simply earn tax-free interest on your savings, a growth ISA lets you invest your savings, giving you a chance to earn a higher return. Depending on which type of growth ISA you choose, your initial deposit may be at risk if the value of your investments go down. Alternatively, your deposit may be protected, meaning you will simply earn no return if your investments lose value.
A structured growth ISA is a specific type of growth product where, instead of buying individual stocks and shares, or having a fund manager do this for you, your investment is linked to the stock market as a whole. In the UK, this will usually be the FTSE 100 index. Your investment will then pay out depending on whether the index as a whole moves up or down.
This approach is often considered easier and less risky than investing in individual shares, as the overall market is usually more stable and predictable than the stocks of a single company or handful of companies. However, the likely rewards may be lower as individual shares usually have the potential to move faster and further than the market as a whole.
Structured growth products are usually offered over 3 to 6 years, so are best suited to people who are willing to lock their savings away for a reasonable period of time in order to see potentially attractive rewards.
Types of structured growth ISA
There are various different kinds of structured ISAs which offer index-linked investment opportunities. Which you choose will likely depend on how much risk you are willing to take with your money and what level of return you are hoping to see.
Structured deposits – Offer reasonably returns and your deposit is protected, even if the index moves down over the lifetime of the product.
Structured investments – Have the potential to pay higher returns, but your deposit is at risk. This means if the index is at a lower level on your payout date than when the product started, you could lose some of your deposit.
Kick out structured growth ISAs – Have a chance to pay out early if certain conditions are met. This usually means that if the index is up by a pre-agreed percentage or more on certain dates (usually each yearly anniversary of the product start date) the fund will mature early.
Compare structured growth ISAs
Getting the right investment product for you can be a challenge when there are so many different options and providers to choose from. Using our ISA comparison tool at the top of the page, you can see leading ISA deals from across the market, allowing you to quickly and easily pick the best product for your finances and the level of return you would like to see.