One of the most popular forms of investment worldwide still being investing in stocks and shares.
The reason lies in the fact that stocks generally provide a good return on investment over the long term. Of course, it is always recommended to consult a professional to clarify your own needs and the time you want to get a cash back.
That is why ISAs fit good for the needs of a great variety of people. But, first of all, it is necessary to understand what an ISA is and how it works. An individual savings account (ISA) allows to accumulate money in a savings account with tax-free management – and this one is probably the main reason about why it is so widely spread. As a matter of fact, it is allowed to withdraw funds from both cash and stocks and shares ISAs without incurring a penalty. However, it should be underlined that while investing in stocks and shares there’s no guarantee of positive results and economic growth, as the market is volatile, and the investor may also receive less than he had previously invested.
But how it is possible to find the ISA which best suit certain needs and goals? Foremost, we have to know them very well.
What is an ISA
As said, an ISA is an Individual Savings Account. It is essentially a savings or investment account on which you can never pay taxes – but with a limit about the amounts that can be charged in each accounts every year. For example, in the 2022 to 2023 tax year, it is possible to save a maximum of £ 20,000 in ISAs.
Then there is a distinction between Adults or Junior ISAs: the second one will allow a saving of £ 9,000 for all under 18. Following the UK government, ISAS are divided onto 4 types, depending on your needs and risk profile. That is how you can find the one that really fits for you:
– Cash ISAs;
– Stocks and Shares ISAs;
– Innovative Finance ISAs;
– Lifetime ISAs;
If you are looking for the best ISA rates for young people or the best cash isa rates for over 60s, it is strongly recommended to rely exclusively on experts in the field (brokers, banks, companies) to be able to get appropriate advice regarding your needs and which ISA to adopt among those made available by the British government.
Only through a correct analysis and the best evaluation of the costs and benefits associated with an opening of an ISA will it be possible to consequently evaluate what can be the best. It is in fact quite evident that an elderly person who can make the decision to buy an ISA can certainly have quite different motivations than a young worker who chooses to secure one.
Who can open an ISA
It is possible to get one if you are 16 years old or over for a cash ISA, 18 or over for a stocks and shares or innovative finance ISA, 18 or over but under 40 for a Lifetime ISA. It is strictly appropriate to remember that you must be resident in the UK, a Crown servant or their spouse or civil partner if you do not live in the UK. You cannot hold an ISA with or on behalf of someone else.
You can get a Junior ISA for children under 18, for example if you want to give one to your grandson a great gift for Christmas, and that is how it works in England. On the other hand, in Scotland applications need to be made to the Office of the Public Guardian in Scotland; and in Northern Ireland, applications need to be made to the Office of Care and Protection.