Stocks and Shares ISAs

How is a stocks & shares ISA different to a cash ISA?

Instead of saving cash, you invest in stocks and shares in various companies. Usually, this takes the form of investing in a fund, where a fund manager will choose a selection of shares for you based on certain criteria. The amount you’ll get back depends on the performance of the fund, and you’ll need to pay an annual fee for the management of the fund.

Alternatively, you could choose the shares yourself in a self-select ISA, but the fees you’ll pay for each trade might cost you more. Investing in an ISA like this means that you won’t have to pay capital gains tax on profits from selling the shares, and also you can reclaim the tax on bonds.

Savings tools

Getting into the savings habit can often be the hardest part, as it can often mean you have to tighten your belt or stick to a stricter budget. To help you work out where you can make some changes to your spending we have developed a handy cost calculator so you can work out quickly and easily just where your money goes each month to help you decide where you could spend less to help you save more.

Cost Calculator Tool

If you have got a savings goal in mind, or would like to know just how long it will take you to reach your target, we have a savings calculator that can help. You can see just how much you need to save each month and how much interest you will earn.

Savings Calculator

Deciding on exactly which savings account to use can be tricky, there are fixed accounts, ISAs, easy access accounts - basically lots to choose from! To try and help you determine just where to put you money we have come up with a handy savings tree that shows you some of the places you can put your cash. This isn't financial advice, but rather a starting point for you to start thinking about what savings accounts are right for you.

Savings Accounts Decision Tree

Glossary

Fixed Term

If an account has a fixed term, this is the length of time for which you'll need to lock your money away to get the advertised rate. Some providers will allow you to withdraw some or all of your money before this term ends, but you'll usually be penalised with fees or a loss of interest.

ISA

An ISA is a type of account which allows you to save without paying tax on the interest you earn. There are several different types of ISA- the most common is a cash ISA, in which every adult over the age of 18 can save up to £5,760 each year. There are also investment ISAs- commonly known as stocks and shares ISAs- where you can save another £5,760 on top of your cash ISA allowance, or any amount up to the full total of £11,520 if you decide not to use your full cash ISA allowance. Finally, there are Junior ISAs which can be opened for children under the age of 18.

Lump Sum

A one off amount of money an individual wants to pay into an account. Most accounts with a fixed term will require you to pay in a lump sum and will not allow you to make any more deposits, whereas instant access accounts may allow you to make regular payments into the account.

Tax-Free Allowance

The amount allowed to be invested in an ISA account which is free of income tax. This is currently £5,760 in a cash ISA or £11,520 in an investment ISA.