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Guide to ISAs

Different types of ISA's

There are two main types of ISA's;

  • Cash ISA's
  • Stocks & Shares ISA's
You are only permitted to pay into one cash ISA and/or one stocks and shares ISA in any one tax year.

Both types of ISA offer the same tax free benefits.

The main differences between the two types are the length of time you wish to invest your money for and how much risk you are prepared to take with your investment.

The Cash ISA provides the safest and most accessible option, whereas the Stocks & Shares ISA can provide good long term investment with potentially excellent returns.

ISA Type Investment Amount Risk Factor Accessibility
CASH
  • To open a Cash ISA you need to be a UK resident and 16 years of age or over.
  • You can open a cash ISA with as little as £1, however, better interest rates are often achieved when paying in larger amounts.
  • The maximum amount that one person can invest in a Cash ISA in any one tax year (April 6 - April 5) is currently set at £5,100
  • Money can be paid into the account in monthly payments or as a lump sum.
  • This is the safest type of ISA fund. There is no risk of losing the cash invested.
  • Cash ISA's are the best option for the cautious investor.
  • Most Cash ISA's allow instant access.
  • There are cash ISA's which require a notice period before any cash is available this could be a period of weeks or months. These commonly offer a higher rate of interest and are known as "Notice ISA's".
  • A "Fixed Rate" ISA is available at very competitive rates but as they require the funds to remain untouched for the agreed term this restricts the funds accessibility. 
STOCKS & SHARES
  • To open a Stocks and Shares ISA you need to be a UK resident and 18 years of age or over.
  • It is possible to to make monthly contributions into a stock and shares ISA or a one off lump sum.
  • The total amount that can be invested into this type of ISA is £10,200 in any one tax year (April 6 - April 5). This may be split and up to a maximum of £5,100 of the allowance can be invested into a cash ISA.
  • The risk factor for this type of ISA can vary from low to high risk. And should be discussed with your Financial adviser as the risk factor will effect your investment.
  • Money invested into this type of ISA tends to be more suitable for longer terms such as 5 years or more.
  • Drawing money out of the scheme involves selling some or all of the stocks and shares so this may take a little time.

PDF ISA Guide Download the ISA PDF Guide here - see our other free PDF guides here

Guide Contents

What is an ISA?
Different types of ISA's
Shopping around for the best ISA
Frequently asked questions about ISA's
Where to get further help and advice about ISA's

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