Fixed savings rates may be showing signs of improvement, but it can't be denied that keeping your money in cash isn't exactly profitable at the moment. After all, once inflation at 2.3% is taken into account, there's only one bond that can match it, with negative interest being a reality for many. That's why investment ISAs are becoming increasingly appealing.
Investment ISAs, otherwise known as stocks & shares ISAs, are a way of investing in stock market funds while maintaining tax efficiency. You invest through an ISA wrapper to ensure any returns are tax-free, but rather than saving in cash, you're actively investing in the stock market, and therefore have the potential to secure far higher returns than in the cash ISA sector.
However, you're also exposed to higher risk, which means the value of your investment could go down as well as up. There's no guarantee that you'll end up with positive returns and you may even end up with less than you put in, but because of the potential for growth, many investors find it a worthwhile trade off. You can find out more about stocks & shares ISAs, together with both their risks and reasons for investing, here, and you'll also want to seek independent advice to make sure it's the right decision.
There are many things to think about when choosing an investment ISA, and the list above is in no way exhaustive. It's a risky undertaking that should only ever be considered by those who are comfortable with risk and are happy to take specialist financial advice, so make sure to speak to an independent adviser before you go any further.
However, if it's something you're considering, it's worth knowing the kind of options you could choose from. Below is just a taster of the kind of investment ISAs and wrappers available, to give you a feel of what's out there. You can find more options by heading to our stocks & shares ISA page, or if you want more details on the funds listed below, click on the relevant links.
Prudential Stocks & Shares ISA
Nutmeg Stocks and Shares ISA
Barclays Stocks & Shares ISA
MoneyFarm Stocks and Shares ISA
All these ISA providers are authorised and regulated by the Financial Conduct Authority and investments are protected by the Financial Services Compensation Scheme up to a maximum of £50,000. Remember, with any fund, the value of an investment can go down as well as up, so you may not get back what you put in. Tax rules may change in the future, and will depend on your individual circumstances.
Find out more about investment ISAs
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.