Many savers are led to believe that Stocks & Shares ISAs are complicated and so some avoid them altogether. The truth is they are not complicated! Many of you will already believe us, but if you have friends or family members who don’t, or even if you need a little reminder yourself, I have put together the simple rules and “need to know” facts of Stocks & Shares ISAs.
- Your savings are tax-free
- You can only have one Stocks & Shares ISA with one provider, per tax year
- You can put £20,000 into this ISA per tax year
- The ISA year is the same as the tax year (April-April)
- You may pay fees for the investments held and for active management of the funds
- Your ISA will move in line with market movements
- You can have this ISA from the age of 18
- You can withdraw and replace funds in the same tax year
- Withdrawals may take longer than from Cash ISAs if funds need to be sold
- You can still switch providers if you wish
- Your ISA can pass to your spouse on your death
- There will be more risk involved than with a Cash ISA
- Returns have the potential to be greater as they are linked to market movements
- They are covered by the FSCS
As you can see, the rules for Stocks & Shares ISAs are almost identical to those for Cash ISAs!
One of the main benefits of a Stocks & Shares ISA is the level of returns. If you have a Cash ISA, you will know that they are not making any money and maybe working negatively for you, because the returns are below the inflation rate – meaning you are effectively losing money every single year! In fact a new client said to us only today I have cash ISA’s because I don’t like risk and I explained that actually, he is taking a guaranteed risk of loss every single year what he really meant to say was I don’t like volatility that is I don’t like to see my savings and investments fall or indeed in the case of a crash, plummet.
If you think you can tolerate the increased volatility/risk, it really is a no-brainer – you should have a Stocks & Shares ISA and certainly if you have more than just a small emergency fund sat on cash deposit whether that is in cash ISA’s or other cash deposits, premium bonds, National savings then perhaps it’s time to review them with us.
Missed last months blog on the subject of ISAs? Click here to catch up!
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