ISAs – What they are and how they can benefit you

ISAs stands for Individual Savings Accounts and they are great investment tools.

10:29 09 July 2013

ISA or Individual Savings Account is a financial product that UK residents can take advantage of. An ISA is designed for the purpose of savings and investment with a favourable tax status. The money that you deposit in your ISA is not subjected to capital gains or income tax upon withdrawal or within holding.

Every adult in the UK is qualified to open an ISA with an allowance of £11,520 per year (this can increase or decrease in the future). This amount can be invested in stocks and shares. It can also be split up and you can put £5,760 into a cash ISA.

A stocks and shares ISA is recommended for people who will not be using their money for at least five years as the stock market can go down as well as up. If you need the money sooner, you may be forced to sell your stocks at a lower price and this could mean losing money.

If you don’t want to take any risks, stick with a Cash ISA. It is like a standard savings account but you don’t have to pay tax on the interest you earn.