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Your Simple Introduction to ISAs

    Begin saving this month at Plan with Neil, as your reliable and self-confessed boring
    financial advisor gives us a jargon free guide to the ISA.

    What is an ISA?

    The definition of ISA is Individual Savings Account. Anyone over the age of 18 in the UK can open an ISA account. There are various types of ISAs available to you.

    The two main types of ISA in the UK you need to know about are:

    • The Cash ISA
    • The Stocks and Shares ISA, otherwise known as the Investment ISA.

    The Cash ISA is your standard savings account, your rainy day fund. You add your money, receive some interest and over time, this accumulates. However, Cash ISAs are unlikely to keep up with inflation rates meaning your buying power may erode over time.

    However, with your Stocks and Shares ISA, your money can be invested into two or three companies, or even into thousands of companies, across the globe. The areas in which you could potentially invest your money include the great companies of the world, commercial property, government bonds and corporate bonds.

    The value of a Stocks and Share ISA is however, less static; you might invest one hundred pounds and receive eighty back, or in theory, lose all of the investment. However, investments can potentially grow higher than the rate of inflation too. The Stocks and Shares ISAs could therefore perform better than a cash ISA over a longer time e.g. twenty-year period.

    What are the key advantages of an ISA?

    They are accessible. As opposed to money stored in a pension, of which you cannot access until a later stage, an ISA is accessible to you at any age if needed. Example; if you decide to open a business and want to invest a portion of your savings into it at a given time, an ISA will allow you to do so.

     An ISA is also a tax efficient way to save and accumulate wealth and savings, drip feeding your cash in the background and allowing your wealth pot to grow over time. You don’t pay any tax on the growth in ISAs or pay any tax when you withdraw it.

     “It is the tortoise rather than the hare that wins these races, so drip feeding money is the way to go with these things, rather than trying to or rather aiming to get the perfect timing instead its regular contributions and building these pots up to build up your wealth.” Neil Young

    What steps do I take to open an ISA?

    A bank or building society will provide a Cash ISA. Usually people are looking for:

    • The fixed rate ISA that suits you i.e. how long do you want to invest in an ISA for?


    •  The highest interest rate that the bank can offer you at that fixed rate.

    Here is where your financial advisor can guide you as you decide what your rates are, as well as the right ISA for you.

    Your key takeaways regarding therefore ISAs are:

    •  The two main ISAs in the UK are the Cash ISA and the Stocks and Shares ISA.
    • The Tortoise and the Hare -it is a drip feed of regular contributions over time to build your pot of savings.
    • It is primarily about your personal objectives and goals when it comes to managing your money and deciding on your ISA.

    At Plan with Neil, your financial wellbeing is the number one priority. The aim of the service is to deliver peace of mind by providing you, the client, with the options and flexibility needed for you to be financially secure and feel you can achieve your longer-term goals and financial ambitions.