There are so many ways you can invest your money over the medium to long-term. One way – which is tax advantageous – is through a stocks and shares ISA.
Unlike other investment vehicles, stocks and shares ISAs allow your money to grow free of tax. Ultimately, this could help boost your investment pot even further and make a difference to your financial future.
Let’s say you used your full stocks and shares ISA allowance each year since 2002. The following table looks at how much money you would have placed into an ISA over this period, and using an assumed growth rate of 4% which is not guaranteed – how much tax-free growth you might have achieved.
A stocks and shares ISA is basically a wrapper that holds a portion of your investments within a tax efficient environment. Each tax year you’ll have an annual allowance – which can also be used for money held within a cash ISA, or both, if you wish.So how do stocks and shares ISAs work?
From April, the allowance rises from £15,240 to £20,000 for the 2017/18 tax year, meaning you can invest even more of your money in a tax efficient way.
To make the most of your ISA allowance:
You need to make sure you use the full amount within each tax year. Any amount you have left at the end of the year will be lost as it can’t be carried over.
The difference between cash and stocks and shares ISAs
While cash ISAs are suitable for short-term goals, a stocks and shares ISA could be a more appropriate option if you’re saving over the medium to longer-term.
Unlike cash ISAs, there is an initial set-up fee and annual fees involved. It will also involve your capital being exposed to risk – so it could fall as well as rise – and you should aim to invest for at least five years. But stocks and shares ISAs have the potential to generate stronger returns than cash ISAs over the long run – and potentially provide more chance of achieving your future goals.
Cash Lifetime ISA
If you want to find out more information about our new Cash Lifetime ISA product, please click here.
Here to help you make the most of your ISA allowance
Through a personalised, face-to-face financial review, we’ll look at how you can maximise the tax-efficiency of your investments through a stocks and shares ISA – so you don’t miss out on any valuable opportunities and have more chance of achieving your goals.
For more information on how we can help or if you’d like to know more about stocks and shares ISAs, call us today on 0800 731 5342.
For your short-term savings…
For information on our range of cash ISAs, click here. You can also find out how you can transfer your existing cash ISA to us, if you wish.
By speaking to us now, we can talk through the options we have available and how you can choose one that’s right for your needs. Click here for more information.
Stock market-based investments are not like building society savings accounts as your capital is at risk and you may get back less than you invested. The value of your investments and any income from them may fall as well as rise. The tax treatment of your investments depends on your individual circumstances and may change in the future.