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ISAs: Cash ISA Versus Stocks & Shares ISA

ISAs: Cash ISA versus Stocks & Shares ISA

Stocks & Shares ISAs are becoming more popular as people increasingly ditch their cash holdings as returns from the banks are so minimal. It is not a good idea to ditch cash altogether – everyone needs some easy access to emergency funds – but if you are holding most of your savings in cash ISAs you are missing a trick.

An ISA is an ‘individual savings account’ – a type of wrapper that allows you to take advantage of tax breaks while you save or invest. There are different ISA options available and finding the best one for you is important. Your goals, budget, risk tolerance and capacity for loss are all important factors when considering your best ISA option and should be discussed with a financial adviser.

You have a £20,000 allowance that can be spread over a number of different ISA vehicles.

A Stocks & Shares ISA might be preferable if:

  • you already have an emergency fund
  • you have long-term goals and can wait for results
  • you won’t need to access your money for at least three years
  • you are willing to accept short-term losses for the chance of greater long-term growth

 To help you here is a basic comparison:

Cash ISA Stocks & Shares ISA
Who can open an ISA? 16+

UK residents


UK residents

How much do you need to get started? You can start saving with any amount of cash You need enough to diversify your investments
How much can you save tax-free? £20,000

In the 2019/2020 tax year


In the 2019/2020 tax year

What time period is it recommended for? 1–3 years

Over longer periods inflation could erode the value of your savings

3+ years

You need enough time to ride out market fluctuations

What is the potential for growth? Very low

Low-interest rates mean you will get back about what you put in

Low–very high

Different strategies have different growth potential

What is the level of risk? Very low

You will only really lose money to fees or value to inflation

Low–very high

There is always a risk you could get back less than you put in

How quickly can you access your money? Instantly

Unless you lock money away in a fixed-rate ISA, usually for 1–5 years

Within 10–15 days

But withdrawing at the wrong time could mean you get back less than you put in

Redwood is one of the Souths’ leading Pensions, Investments, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning and Probate, we can advise on any situation. Join us at one of our Free Public Information Seminars: Book online Book Me A Place!Call us on 01489877 547 or Email to book a FREE Initial Meeting with us to review your financial planning needs.