How do Stocks and Shares ISAs differ from Cash ISAs?
Whereas Cash ISAs allow you to earn interest on your money in the same way as a traditional savings account, Stocks and Shares ISAs give you the opportunity to invest your money through collective investments.
Any UK citizen over the age of 18 is allowed to invest into a combination of Stocks and Shares ISAs, Cash ISAs and Innovative Finance ISAs each tax year, up to a maximum of £15,240 for 2016/2017. This amount can be invested entirely in either type of ISA or shared between the two. How you choose to invest your ISA allowance will depend on which ISA best suits you. After recent rule changes it is also now much easier to transfer assets between ISAs. To find out more see our helpful guide to Transferring Your ISA.
The difference between the three main types of ISAs can be summed up in one phrase: ‘risk versus reward’. Stocks and Shares ISAs potentially offer greater rewards over the longer term than Cash ISAs but their value can go down as well as up and investors could get back less than they originally invested. With a Cash ISA you won’t receive less than you put in unless you make a withdrawal from a fixed term ISA and the penalty interest is more than the actual interest accrued.
Anyone putting money into a Stocks and Shares ISA is accepting more risk for the possibility of higher returns.
Ask for a personal review to see the bigger picture
We offer personalised financial advice aimed at helping you make the most of your ISA allowance.
Your Skipton financial adviser will look at your savings and investments, to provide recommendations that take your circumstances and goals into consideration. There is no fee to pay upfront for the initial financial review – you’ll only pay a fee for the advice if you choose to act on our recommendations.