Posted 21st December 18
A number of different organizations and entities offer different types of ISAs for consumers, as well as IFISAs and similar products – but what are the benefits of choosing one over the other? Just has compiled this guide to some of the options potentially available to consumers considering their ISA options.
You can place all or part of your annual ISA allowance into a Cash ISA – commonly offered by banks and building societies, or credit unions. These accounts are often described as “easy access” or may be completely digital through banking apps and online banking. Other key terms to look out for are “notice accounts” or “fixed-rate bonds”.
The start and end of the tax year can be the best time to look at Cash ISAs, with providers offering more attractive rates to savers looking for areas in which to use their annual ISA allowance. However, even introductory offers are often at a relatively low rate as Cash ISAs have become less popular (and other savings schemes have taken their place).
These ISA options are low risk, and very easy to start and then maintain. Some require a small starting deposit or fee, but funds can be added or withdrawn at any time during the financial year up to the individual personal maximum.
Stocks & Shares ISAs
The second ‘traditional’ ISA option is the Stocks and Shares ISA. These products differ from Cash ISAs in that they allow you to choose how to invest your ISA allowance. You could choose to invest in individual company shares, trusts, investment funds, or government and corporate bonds among other potential options.
As ISAs, these investments are, depending on your individual financial situation, exempt from capital gains tax payments*. As these investments rest in the world of shares, bonds and funds, you must be willing to take risks with your investment before you consider investing your funds. Investment value, even with Stocks and Shares ISAs, can go down as well as up.
There are a number of different investment platforms available to anyone considering a Stocks and Shares ISA, including several high street banks such as Barclays and Halifax. Other options include investment companies such as Legal And General. This gives you a large range of products to potentially invest in, as well as easy comparisons between risks and rewards across the platforms.
Innovative Finance ISAs
An innovative finance ISA (or IFISA) is another type of ISA available to UK investors, and is specifically intended for you to use your tax free* ISA allowance to invest by way of loans through peer to peer lending and mini bonds. In both instances many lenders funds are lent to a variety of borrowers (in respect of peer to peer) or to a single businesses (in respect of mini-bonds), in both instances the borrower(s) then aim to pay back the amount lent with interest.
A comparatively new option for savers, IFISAs could be a great choice to ultimately invest in a range of different areas that may be unavailable to other ISA options. Capital is also at risk with these types of investments and you must be willing to take risks with your investment before you consider investing your ISA funds. The investment value can go down as well as up.
To start your journey with Just, follow these simple steps:
*Tax treatment depends on the individual circumstances of each investor and may be subject to change in future.