An investment ISA (Individual Savings Account) is a common financial vehicle that will enable one to invest his or her money into certain market sectors during the lifetime of the plan. The main point to appreciate is that within this period, no income or capital gains taxes will be paid on the profits that may result. One factor that is important to note is that customers can now shield up to fifteen thousand pounds from these taxes. This is nearly triple the amount that was allowed in the past.
The Types of Investment ISAs
The differences between investment ISAs will include the market sectors they invest in, the length of the plan and the expected returns. Besides these variables, an investment ISA can fall within two categories. The first type is a normal stocks-and-shares ISA. This is one that will place the money into sources such as unit trusts, fully listed shares and public debt securities (to name a few sectors).
A second type of investment ISA is known as a JISA (Junior Individual Savings Account). This is an instrument that can be opened by any adolescent over the age of sixteen. Younger children will need parental consent. They offer the same potential rewards as a traditional ISA and when the child turns eighteen years old, the investment limits will be expanded to reflect those of a full ISA.
Things to Take Into Consideration
It is essential to recall that as this type of ISA is an investment, it may very well be subject to market fluctuations. In other words, its intrinsic value can increase or decrease. It is for this reason that the customer should carefully examine where his or her money will be placed. The help of a financial adviser can prove quite valuable in this instance.
An investment ISA is not a liquid financial vehicle. As the investments will generally be held for a specific amount of time, it is critical that the client has enough money to support his or her lifestyle. Also, any management fees or early withdrawal penalties should be made clear before entering into a contractual agreement.
How to Encounter the Best Deal
It is always wise to choose well-known providers; they are likely to offer the highest returns and the most stability. A few other ways to find the best investment ISA include:
- Determining the reason for the investment.
- Choosing an ISA that suits one’s needs (high-risk, low-deposit or growth ISAs).
- Knowing which provider requires a lump-sum payment as opposed to monthly deposits.
If approached in the correct manner, an investment ISA can be a powerful tool to secure one’s financial future.