Putting money away is always a good idea, giving you something to fall back on and helping to build up savings for things you really want. But if you want to give your money even more potential, it could be worth thinking about investing in a Stocks and Shares ISA.
You could make the most of tax -free investments
Each tax year, thanks to the government, you have an annual allowance that you don’t have to pay income or capital gains tax on. In the 2022/23 tax year you could squirrel away up to £20,000 in an ISA tax-free. The beauty of this is that all the gains you make remain yours. In the long-term this can really pay off and the benefits of an ISA really shine through. Because, if you reinvest your profits, the amount you have to invest could potentially grow as time goes on. The sooner you start saving, the more years you have to take advantage of these allowances, but it’s important to note that these allowances don’t roll over. Every 5th of April, your ISA allowance runs out and a new one begins, which is great news if you maxed out your ISA last tax year.
You can still access your money
While investing is a long-term strategy, you never know what’s around the corner. If you come up against a big expense, then there’s nothing worse than having to pay a penalty to withdraw your money. With a Wealthify Stocks and Shares ISA that’s not a problem. You can withdraw your money when you need it, with no fees or charges to access your money. However, it’s important to note that taking money out of your Stocks and Shares ISA means your investments will be sold down and there’s a risk you could end up with less than you initially put in. Also, by withdrawing money, you’ll be waving goodbye to potential growth, so make sure you consider all of this before you do anything.
If you’ve decided to withdraw money, it could be worth shopping around to find an ISA provider that matches your requirements – one thing to keep in mind is that some providers may have fees attached to their withdrawals, so make sure you check beforehand.
You’re not tied to a single ISA provider
Another good thing about ISAs is that you’re not tied to a single provider. So, if their performance isn’t what you were expecting, or their standard of customer service drops, then it’s easy to transfer your ISA out. While the definition of an ISA is fairly rigid, providers offerings do tend to differ – some things to check are their fees, access to funds, types of investments, ease of use, and customer service.
It’s worth noting that you can only have one Stocks and Shares ISA and one Cash ISA open at any time. But, if you wanted to give your money more potential, you are able to transfer a Cash ISA into a Stocks and Shares ISA and carry over any previous years’ allowance.
Start with as little as you want
There’s a common misconception that you need to have thousands in order to invest, but that’s simply not true. For example, with Wealthify, you can be a serious investor with just £1. Feel like trying it out with £100? No problem, ready to put your whole £20,000 allowance in? That’s fine too.
Not all ISA providers are the same. Some have higher minimum starting costs, ranging from £50 all the way up into the thousands, while others may require larger contributions to be made if you want to add to your pot.
Choose how you want to invest
Investing isn’t all about adventurous high-risk, high-reward investments. You could take a much more cautious approach that focuses on minimising losses or a confident balanced approach that looks to achieve good growth. It’s all about finding out what’s right for you and investing in a style that suits your needs.
With a Wealthify Stocks and Shares ISA you get to choose the style that you invest with, from Cautious to Adventurous or somewhere in between, keeping you in control of your finances. Our ISA investment projection tool can give you an idea of what to expect based on your investment, length of time and investment style. So, for example, if you were to invest on our Confident Plan with an initial amount of £500 and add £100 a month, after 10 years you could have £14,7542. But if you were to continue paying in £100 a month and invested for another 10 years your investments could be worth £35,570.3
Do good with your money through ethical investments
Being able to make a difference with your money may seem like a struggle, but with a Stocks and Shares ISA you’re able to do just that. What’s more, it doesn’t need to be a difficult thing to do either. With Wealthify, doing good with your money is as easy as flipping a toggle from original to ethical.
By choosing ethical investments, your money not only avoids ‘bad’ sectors like tobacco, firearms, gambling etc, but as we use actively managed ethical investments it can do so much more. By actively managing these investments, fund managers use their influence to do good by putting pressure on companies to make positive environmental and social changes and supporting those who are already committed.
Give your money more potential
Cash ISAs have had a rough ride for the last decade or so. Interest rates hit rock bottom in the 2008 financial crisis and it’s been a long and slow road to recovery. In fact, many Cash ISAs still aren’t offering interest rates that keep up with the rate of inflation, which jumped to 6.2%1 in February 2022. So, if your Cash ISA interest rate is less than this, you could essentially be losing money. That’s because inflation increases the price of things, a clear example of this is the classic British chocolate bar, the Freddo. Back in the 90s, these little bars of joy cost just 10p, by 2015 the price had increased to 25p. While this isn’t strictly in line with inflation, as the true inflation rate would have seen a Freddo costing just 15p, it does show the impact of increasing costs.4
The beauty of investing is that the aim is to give your money the potential to beat inflation. But it can also give you the potential to increase the overall value of your investments as well. Obviously, there’s always a risk you could lose money and end up with less than you initially invested. But over the long-term, investing could provide higher returns.
Ready to get started? You can open a Wealthify ISA in just a few taps. Choose how much you want to invest, pick an investment style that suits your needs and our team of experts will do the rest.
References:
1: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/january2020
2: This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £12,204. If markets perform better, your return could be £17,774. Values correct as of 07/04/2022.
3: This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £27,133. If markets perform better, your return could be £47,045. Values correct as of 07/04/2022.
Past performance isn’t a reliable indicator of future performance.
With investing your capital is at risk and you may get back less than you put in.
Tax treatment will depend on your individual circumstances and may be subject to change in the future.
