Stock & Shares ISAs – what are ISAs; how many types of ISAs and their advantages and disadvantages; recommendation on what to look out for when choosing stock or shares ISA
The abbreviation ISA is also known as Individual Saving Account where you don’t need to pay an income tax but an easy interest will be surely guaranteed for you. The only catch here is the limit you have on how much you will put in the saving account in question. All this means that you are able to save a particular sum of money (up to £20,000 in the 2019/20 tax year) without having taxes on the returns. Moreover, the ISA allowance can be used both in a cash ISA or you can also invest in a stock and shares ISA or in Innovative finance ISA.
Let’s make some further explanations regarding the stock and shares ISAs which cannot be defined as fully tax-free. Of course, as we’ve already said, one of the advantages here is that no extra money for taxes is needed on the return but if any dividends were received- a dividend tax should be paid at the end which could be concluded as a disadvantage (i.e. your money will be at risk). It is a hundred percent sure that all your savings and income will be protected from a tax. A normal thing here is that such kind of ISA could be open only over the age of 18. When making the choice to invest in a stocks and shares ISA, you could either do it on your own or just use an adviser and conclude with a professional whether your investment is at risk or not.
Overall, we all know the uncertainty we face with when investing our money because of the various potential crisis which may appear in the future e.g. Brexit, recession, any kinds of trade wars, etc. That’s the reason why all the investors should be careful about the advantages and disadvantages which may appear afterward. Generally, one of the good things when putting your money into stocks is that they offer a strong opportunity and track of records, products which are diversified, durable to economic decrease and downturns, etc. However, all these great rewards are accompanied by an eventual risk since investing in stocks & shares may lead to some negative consequences of loosing some or even all of your money. On the other hand, you can receive lots of returns from shares which are divided into two types: Dividends and capital growth. The bigger and well-established the company is, the larger dividends would be at the end and vice verse, the smaller the business is the fewer dividends will be paid out at the end. Having in mind that you can make some more money if you sell out the shares in a higher price, will surely bring you to the conclusion that this will have a positive effect on the overall capital i.e. the invested money will grow if you sell the shares more expansive than you bought them at first. There are several factors which can influence on the prices of your shares to go up or down as for an example the economy growth and condition, investors’ quests, future prospects and market’s predictions, etc.
As we’ve already mentioned at the beginning of the article, the widely known method to invest and make your taxes more efficient or even avoid them is to invest in the Stocks and Shares ISA. It is an easy effort to make when opening an ISA because you only need an initial sum of money to create the new ISA, national insurance number, name, address, and your signature. Even more, you can put your money into stocks and shares ISA using an online investment platform that allows you to check how your money is doing and also add or withdraw at any time you want.
To conclude let’s say that no matter if you invest your money into Shares, Funds, Unit or Investment trusts, OEICs, Corporate bonds, etc., may cause you trouble moments, uncertain and tensed periods but also if everything turns upside down, you may gain a great advantages and lots of money in return. Therefore, our advice is for every one of you, the future investors, to be more confident, more educated and informed by the eventual beneficial or bad upshot indeed.