Individual Savings Accounts

ISAs (Individual Savings Accounts) are not products in their own right but are ‘wrappers’, designed to protect your investment from Capital Gains Tax, and also provide the opportunity for tax advantages on the income generated.

There are two different types of ISA: a Stocks & Shares ISA and a Cash ISA. You can put your maximum tax allowance for each tax year in a Stocks & Shares ISA, a Cash ISA or a mixture of the two.

Remember, as with any investment, the value of your fund can go up or down and may be worth less than you paid in.

Investments for Growth

Investing for growth means investing in assets that are expected to increase in value over time, with the end goal being growth of your capital rather than generating a regular income. For example, your goal could be to grow a £10,000 pot into a £15,000 pot. As with any investment, return is not guaranteed, and there is a risk that you could lose some or all of your original investment.

Portfolios aiming to achieve capital growth tend to consist mainly of equities (stocks and shares), as these have the potential to generate higher returns than some other asset classes – although they are also more volatile.

The exact combination of assets you choose will depend on your circumstances, investment goals and attitude to risk, and you should always take financial advice if you’re unsure. Investing for capital growth should be considered a medium- to long-term commitment of at least five to ten years, to give your capital time to recover from short-term dips in the market. You may want to combine investing for growth with investing for income as part of a wider strategy.

Investments for Income

When you invest for income, you put your money into a fund that is designed to pay out an income at regular intervals (for example, monthly or quarterly). Investing in an income fund has the potential to provide a higher level of income than is currently available from bank and building society accounts. However, it’s important to remember that they do not offer the same level of security and accessibility.

There are a number of different options for investors looking for a regular income to consider, specifically the types of fund and what they invest in.

As always, it’s important to make sure that your investment strategy is compatible with your goals, circumstances and attitude to risk. There is no ‘right’ way to invest, but different strategies will produce different results.

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