There are two types of ISA. Cash ISAs allow you to save without the interest being subject to tax.
The second type of ISA is a stocks and shares ISA, also known as an investment ISA.
From 6th April each year, every eligible person gets an ISA allowance.
You can only have one ISA in each financial year, so research your options carefully. Whether you choose a cash or investment ISA, give some thought to your savings goals beforehand to determine what the right ISA is for you.
You can't carry your tax-free allowance over from one financial year to the next so, if you've got enough cash to hit your limit, think about maximising your ISA allowance. The cash ISA allowance for the financial year 2018/19 is £20,000.
An ISA is a great way to save for a specific event like a deposit for buying a home, a wedding, holiday, or starting a family
An ISA can help you to build up an emergency fund - the money in a cash ISA can be withdrawn at any time, provided that the ISA manager you choose offers these terms. This lets you stash money away for a rainy day without paying tax on any interest you earn.
Stocks and shares ISAs are an easy way to invest in the stock market without having to pay capital gains tax on your earnings.
An ISA can help you save for the cost of higher education for yourself or your children - you can put money away to help your children with university expenses, which are increasing year on year and look set to continue in this vein. Or perhaps you're looking to go back into education yourself?
While it usually makes financial sense to take advantage of a student loan rather than paying tuition fees upfront, it's very useful to have some money saved up for non-tuition expenses such as textbooks, rent and food.
In addition to the peace of mind that comes with having funds to help with education, you can also enjoy the tax benefits that come with saving money in an ISA.
An ISA can be a good way to build up a nest egg for retirement - many investors are moving away from traditional pensions and investing more money in ISAs.
But why? Firstly, ISAs offer more flexibility than pensions, allowing you to customise your savings to your specific needs. Secondly, the money in an ISA can be withdrawn prior to retirement age, without penalty, if it becomes necessary.
Choosing between a fixed rate ISA and an Instant Access ISA can be tough.
Picking the best Stocks and Shares ISA can be daunting, there are plenty to choose from so it can be a little daunting. Particularly for people who are new to investing.
Providers are constantly making it easier for people new to investing or people who are too busy to manage their funds.
A Stocks and Shares ISA is a tax-efficient way to invest. Despite the name, you can invest in many things besides Stocks and Shares, all with varying levels of risk.
As well as shares you can also invest in:
Check for account management fees and transactions charges.
Junior Cash ISAs offer each eligible child a tax-free savings account. They are a way for parents, family or friends can contribute funds to help save for the child's future. Junior ISAs first become available in November 2011 to replace the now-defunct Child Trust Fund
Learning about ISAs before you open your first account will not only ensure that you're complying with all tax regulations, it will also enable you to reap the maximum benefit from your ISA savings or investments.
There are many ways to use your ISA allowance, whether you invest for the short term or over the long term. With so many options for your money, it's no wonder this savings vehicle is so widely recommended by financial experts today. As always, it's best to seek independent financial advice before taking out any savings or investment product.
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.
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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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