Bitesized Money

You are allowed to open 1 new Stocks and Shares ISA each tax year. If you opened a new one each year, then over your lifetime you could end up with lots of different ISA accounts with many different companies. It is important to understand though that you are only allowed to pay into one of these Stocks and Shares ISAs each Tax year. So if for example I have 2 Stocks and Shares ISA accounts, I can only pay into 1 of these each tax year. There are other types of ISAs too, such as Cash ISAs. You are allowed to pay into different types of ISAs within the same tax year, so I am allowed to put £2,000 into my Cash ISA, and £2,000 into my Stocks and Shares ISA for example.

No matter what type of Investment Account you are using, the actual Stocks, Funds or Bonds that you have purchased using that account can go up or down in value. It’s important to understand the difference between an investment account and assets you have invested in using that account. When you begin investing it is most common to use a General Investment Account (GIA) or a Stocks and Shares ISA (Individual Savings Account). Once you have opened an account with an investment company, then you can begin buying assets using that account. Typically people buy Stocks, Funds or Bonds, but other types are also available. Anything you purchase into an ISA account in the UK has huge Tax benefits (i.e. you don’t have to pay any!… here you can learn more about what a Stocks and Shares ISA is ) but you should never assume that the value if those assets will always go up. Have a look at British Airways (IAG) shares over the last 5 years, you can see that they have gone down in value by almost 70%

  The common definition of a recession in the UK is when the economy shrinks for two quarters in a row. So if the Gross Domestic Product (GDP, more on that in another article but it is basically how many goods and services UK workers have made during that time) shrank from January to March, and then again from April to June, then the UK would be considered to be in a recession. So it is always a bit of a measure of what has happened in the past, as it is looking back at months that have already happened. If we think of Suzy’s Lemonade Stand as a representation of the economy. Imagine if in the October to December quarter of the year she made and sold 200 cups of delicious lemonade, she was very happy! Then sadly over the New Year a few of her neighbours lost their jobs so they could only afford to buy Lemonade from Suzy occasionally. Because of this she only sold 180 cups of her Lemonade in the January to March quarter, then only 150 cups in the April to June quarter of the year. Times

  A Stocks and Shares ISA (also called an Investment ISA) is a type of Investment Account in the UK that means you don’t have to pay tax on any profits you make if your investments increase in value. If you held them in a General Investment Account you would have a pay Capital Gains tax when you sold them for a profit. So it’s basically a no brainer! There is a small catch that you can only invest (currently) £20K per year into an ISA, but that should be plenty for the average person. If you are married or have a partner it’s worth remembering that you can both have an ISA, so bumps that up to £40K per year if you have spare cash available. It’s worth noting that you are allowed to open new ISA accounts each tax year (both a Cash ISA which is just for cash, and a Stocks and Shares ISA for investments) with different companies but you should only pay into one of each of them per tax year. So if you already have an Stocks and Shares ISA but open a new one this tax year, you should just p