Stocks and shares ISAs: Are they the best option?

Understand what stocks and shares ISAs are and know if they’re your best option in growing your wealth.

16:26 11 March 2013

Stocks and shares ISA (individual savings account) gives you the freedom to invest in stocks and shares listed on any recognized stock exchange. This option is best for those people who are investing for a longer period of time (by this, I mean several years) and understand the risk that comes with it. 

Unlike regular savings account, the money that you place in stocks and shares ISA are not guaranteed in any way. This means that should the price of the stocks or shares that you bought goes down or if the company that you invested in goes bankrupt, you risk losing not just the interest you’ve already earned, but also your capital.

 

However, as long as you invest in great companies with proven track records, and you invest for 10-20 years or more, you are most likely to earn from this option. 

 

For 2012-2013 tax year, the stocks and shares ISA limit is £11,520 less any amount that you have already put in your Cash ISA. This means that for this tax year, your total investment (cash + stocks and shares ISA) must not exceed £11,520. 

 

A stocks and shares ISA can include: shares and corporate bonds, gilt edged securities, unit trusts or open ended investment companies, shares and securities in investment trusts, etc.