An ISA is an individual savings account which has recently been renamed as the NISA. It is provided by the government and is available to UK residents. The benefits of the ISA are that savers can invest up to £15,000, without paying tax on the interest. It is a good form of investing for both short term and long term goals, as there are different types of ISA’s to suit alternative needs. If you are considering investing some of your money, it is worthwhile looking at ISA’s before other types of savings accounts. The benefits of the ISA will depend on what you are looking for and your overall expectations.
Types of ISA
There are a few different types of ISA to choose from and these will depend on your circumstances. The cash ISA is favourable for those who are looking for instant access to their funds. Cash ISA’s are available from most high street banks. There is also the option of stocks and shares ISA’s, which are most suited to those who are planning for the future. These are riskier than cash ISA’s, as you can lose money as well as gain it, but sometimes the possible returns will outweigh the potential risks. The stocks and shares ISA is available from brokers, investment management companies and sometimes, high street banks. The tax free ISA allowance currently stands at £15,000 for the stocks and shares and the cash ISA. There is also the option of the Junior ISA, which is ideal for younger savers, to get them in the habit of saving from an early age and investing for their future. The ISA allowance for the Junior ISA is currently at £4,000. These are available for those aged under the age of 18 years.
Consider professional help
No we don’t mean for your crippling emotional issues you’re bottling up, we’re talking about checking out the Stocks and Shares ISA offered by Nutmeg, if you haven’t heard of them we suggest checking out their services. They manage the investment element of your ISA according to the risk level and amount of investment you’re prepared to work with. A great solution for those of us (like me) who want to be part of the world of savvy investment strategies, but lack the time to become a master investor myself because I’m caught up in silly things like having a family and my 60 hours a week day job!
The Rules on Transfers
With the ISA, you have the freedom to transfer your account being providers, although there are some rules on this. The transfer must be completed within 15 days for the cash ISA and 30 days for other types. The transfer will also need to be completed by managers and you should also ensure that you only have one cash ISA and one stocks and shares at any given time. It is important to remember that providers will differ in their criteria when it comes to ISA’s and it is worth checking these before proceeding. You have the flexibility to transfer your cash ISA to a stocks and shares ISA and also from stocks and shares ISA to cash ISA, as your circumstances change. You will still have to adhere to the ISA allowance.
Who is it for?
There are no rules and regulations when it comes to who benefits more from the ISA. It is basically for all ages and circumstances. Younger people can invest with the cash ISA and it will allow them to start saving from an early age and benefit from the ISA allowance. Those who are looking towards the future will benefit more from the stocks and shares ISA, while everyone can enjoy the advantages of the instant access cash ISA.