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Stocks and Shares ISA

 

The term ISA (Individual Savings Account) is one that has come to the forefront of adverts and articles in recent years but does everyone fully understand the saving options available, particularly the Stocks and Shares ISA

 

The Cash ISA might be the most common savings account as they are well advertised by the banks. You are entitled to save the current tax years ISA limit (£15,240) and in return you will receive a rate of interest. An example rate offered by Halifax for instance is 0.35%. This is a very low return on your capital; however, this is to be expected as per the current economic environment of low interest rates.

 

An alternative to the Cash ISA is the Stocks and Shares ISA. The annual limit remains the same as do the tax-free savings benefits. The big difference with the Stocks and Shares ISA is that the investment element has a greater potential of achieving higher returns than that of a Cash ISA. Unlike the name might suggest, a Stocks and Shares ISA does not require you to personally trade your capital on the stock exchange floor.

 

As previously mentioned, there are greater potential advantages of the Stocks and Shares ISA but the level of risk you are willing to take determines the underlying investments. There are vast ranges of investment options available that can be tailored to any individual, from cautious all the way up to the more adventurous risk profile.

 

As you can tell, the different types of Stocks and Shares ISAs come with different amounts of risk. Unlike with a Cash ISA, it is entirely possible that your savings will be volatile. For this reason, it is important above all else not to panic. While it can be tempting to keep checking your ISA to see how it’s doing, you are generally advised to give it at least five years to make a profit. If you panic and retrieve your money as soon as it decreases below your initial investment, you don’t get the chance to possibly see it increase again later, and benefit from investment returns over the long term.

 

So how does opening a Stocks and Shares ISA work? It’s not that different from opening a Cash ISA. Our experienced IFA will take you through the process from the start and then throughout. Whether you are looking to transfer your existing cash ISAs to a Stocks and Shares ISA or aiming to make use of the current years ISA limit into a new Stocks and Shares ISA, we will carry out all relevant research to ensure you are best positioned to achieve your objectives. Contact us to discuss your options.