If you’ve ever considered saving your money for the future – whether that be for a house, wedding, or a car – you’ve probably heard the term ‘ISA’. ISA stands for ‘Individual Savings Account’ and is exactly what it says on the tin – a financial product designed to help individuals save.
It is important to fully understand the benefits and limitations of ISAs before you open one. You can read our blog to learn more about the benefits as well as the types of lifespan ISA laws available.
How does an ISA work?
ISAs can be thought of like savings accounts, but they offer additional benefits such as tax allowances or bonuses depending on which type you choose. An ISA product's main advantage is the annual tax allowance that you get for saving.
What is the difference between ISA types?
Banks and building societies often offer cash ISAs. These ISAs are similar to savings accounts but offer a fixed rate return on your contributions. However, Fixed Rate ISAs may have a penalty if you withdraw earlier than the period.
Stocks & Shares ISA
Stocks & Shares ISAs allow you to invest your money in shares of companies, investment funds, and cash. These ISAs are riskier than Cash ISAs because you may get less back than what you invested but have the potential for higher returns.