Should I Take Out a Stocks and Shares ISA?

What is an ISA?

An ISA is a savings account that allows you to save and invest your money, without paying Income Tax or Capital Gains Tax on the returns. There’s usually a limit or allowance on how much you can pay in for each tax year.

How do Stocks & Shares ISAs work?

While cash ISAs allow you to save your money, stocks and shares ISAs allow you to put your money into a variety of investments. You’ll still have a limit on how much you can invest per year.

Many ISAs allow you to spread your money across a variety of investments, helping you to balance risk. This is also known as portfolio diversification. You can also purchase individual company shares to include in your ISA. To make sure you’re getting the best option, you should speak to an independent financial adviser to help you.

This type of ISA is considered to be a medium to long-term investment, and it’s important to note that as with all investments, the value can go down as well as up. You may get back less than what you put in.

Should I take out a Stocks and Shares ISA?

There are plenty of benefits to taking out a Stocks and Shares ISA. One of the most well-known benefits is that they’re “tax-efficient”, meaning you won’t need to pay capital gains tax on any returns, or income tax on any dividends paid.

Another benefit to taking out a Stocks and Shares ISA is that it beats saving in the long run. Simply saving your money is always an option, but to beat inflation, it’s not enough on its own. With the help of an independent financial adviser, Stocks and Shares ISAs make it easier to invest those savings and reap the rewards.

An ISA is also an excellent opportunity to maximise your savings all in one place, without having to pay in a huge sum each year. Many ISA providers offer fairly low entry requirements, so if you’re just getting started, you don’t have to worry too much about having a huge amount of money to put away at once.

How can I get started?

With the current generous yearly allowance of £20,000 until April 2020, there’s no time like the present to consider getting started with a Stocks and Shares ISA. It’s also important to note that if you don’t use the full allowance in one year, you won’t be able to carry it over to the next one – so use it or lose it!

To learn more about how a Stocks and Shares ISA can help you reach your financial goals, talk to an independent financial adviser at KLO Financial Services.

We can point you in the right direction, and support you with any questions you may have. Call 01926 492406 or email enquiries@klofinancialservices.com to get started.