![]() ![]() Tax rules for Isas may change in the future, and their tax advantages depend on an individual’s circumstances.Ī saver can choose to keep any savings in cash and in return receive interest payments, just like a bank account. Anyone over the age of 18 can save up to £20,000 a year into a stocks & shares Isa or from age 16 for a cash Isa and withdraw the proceeds, at any time, although fees and charges may apply. It is a tax-efficient account, for instance it is sheltered from personal income tax and capital gains tax. ‘Isa’ stands for Individual Savings Account. That is an increase of £552 or 50% over the growth of a cash Isa. The same investment in a stocks and shares Isa (light blue bars) could now be worth £1,667, an annual return of 2.9%. We have also assumed a 1.5% management cost for the stocks and shares Isa*, although investors might pay less.Īs the chart below shows, £1,000 saved into a cash Isa (dark blue bars) in 1999 might now be worth £1,115, a return of 0.6% per year. Returns for both the cash Isa and the stocks and shares Isa have been adjusted for inflation. For stocks and shares Isa returns we used the MSCI World Total Return index, which includes dividend payments, with returns calculated in sterling. To calculate the cash Isa returns we used the average rate of interest, according to Bank of England data, between each tax year over the last two decades. Schroders data tracked the performance of two separate investments of £1,000, one in a cash Isa and one in a stocks and shares Isa, between 1999, when Isas were first introduced, and 2018. ![]() If you are not sure as to the right investment for you, speak to a financial adviser. ![]() You can of course invest in both a cash Isa and stocks and shares Isa to help spread your risk. The stocks and shares Isa carries more risk and is subject to greater volatility than the cash Isa, which also provides far greater protection for your investment. Saving money into a stocks and shares Isa over the last 19 years would have returned two-thirds more than a cash Isa, according to calculations by Schroders. ![]()
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