Skip to main content

What is a Stocks and Shares ISA?

 


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 pay into the new one.

Whenever you open an Investment Account with a UK company they will ask you which type of account you wish to open, a Stocks and Shares ISA or a General Investment Account. So as long as you are planning to Invest under £20K per year it is wise to opt for an ISA. If you are unsure or need clarity you can always speak to someone on their team and they can provide further information.

Comments

Popular posts from this blog

Why do Share prices go up and down?

  Shares are bought and sold on a Stock Market, and just like any market, prices can move around quite a lot. Imagine you are shopping for some of your favourite apples at the local Fruit Market. But sadly lots of other people like these apples too. The savvy Fruit Trader knows how delicious they are and realises he will have lots of buyers today, so he sets a high price. The first 5 sell out very quickly so he increases the price for the rest, pushing the price higher. This is the same for Shares. Through research or ‘gut feeling’ people will decide if they want to buy a particular apple Share. If they feel someone is selling them cheaply then they will buy them, pushing the price higher. If they think the particular Share looks expensive they will choose to buy something else, leaving the Trader to lower the price of his Shares so he can sell them. It is very difficult to work out what a Share is worth as there are many different things that can impact a price. This is why Shar

What are Dividends in Stocks and Shares?

A Dividend is simply a profit share. If you own Shares in a company, and the company is profitable, typically once a year they will transfer some money into your account, this is called a Dividend. This Dividend is your share of the company’s profits, and you can withdraw and spend it however you wish. Let’s imagine your neighbour Suzy wants to open a Lemonade Stand. She needs some investment to buy lemons, so being a shrewd investor, you offer to give her £100 in exchange for half her company (the Shares) and half of any profit she makes (the Dividend). Suzy has a busy week and sells lots of Lemonade, after buying enough Lemons for next week she is left with £20 of profit. She gives you £10 (the Dividend) and she keeps the other £10. You still own half her company, and you will keep receiving half of the profits every week. In large companies the Directors may decide not to pay all their profits in Dividends, instead choosing to reinvest to buy new machinery, or grow the business. B

What is a Bull Market in Stock and Shares?

A Bull market is when Stock Markets increase in value over a sustained period. You often hear people talk about a Bull Market or a Bear Market, and these are similar but opposite terms. A Bull Market is when Stock Market prices increase by around 20% or more over a sustained period. This can happen when the economy is growing strongly. A recent Bull Market occurred after the Global Financial Crisis in the late 2000s. Low interest rates and other government stimulus caused stocks to grow continuously for an extended period. But why is it called a Bull Market? When Bulls attack with there horns they swipe upwards. This compares to the Stock Market moving upwards in a Bull Market. You can see a Bull statues famously on Wall Street in New York, but other financial institutions also use them. They are typically seen as a symbol of good economic performance.