Which ISA could be best for me?

15th January 2019

What is an ISA?

Well, some of you may have heard of an ISA before, and others may not have. In today’s society, ISAs are everywhere and have been for some time. Whilst ISAs have maintained somewhat of an omnipresence over the years, a lot of us may not be aware of what they do and the benefits that they could offer savers and investors.

We’re going to start with the basics. ISA stands for ‘Individual Savings Account’. It allows people to save their cash and earn tax-free* interest. ISAs can be offered by anyone who is a registered ISA manager with HMRC. These can be entities such as banks, building societies.

There are many different types of ISAs which may allow you to pick an ISA that could benefit you the most whether this is to do with your age, saving aspirations or risk preference.

Why do people use ISAs?

ISAs may grant you the flexibility of choice, with each ISA potentially catering to the different needs and requirements of each person. Here is a brief overview of an ISA:

    • Allows you to transfer your funds between ISA Managers without losing any value from your existing ISA
    • May help you to diversify your portfolio
    • Often free of charge to set up
    • You can save/earn interest tax-free*

Different types of ISA

With so many ISAs on the market and each potentially offering the saver/investor different benefits, having a solid understanding of each ISA type and what they could bring to the table may help you on your way.

Cash ISAs

A cash ISA is similar to a traditional savings account. The main difference with a cash ISA is that there is a limit to the maximum amount of cash that you can transfer into your Individual Savings Account per year.

As with most things, you may want to consider which Cash ISA is best suited to your needs. The great thing with Cash ISAs is that there’s a lot of choice so it may be easy to find one that could potentially suit you.

Help to Buy ISA

A help to buy ISA is a relatively new kid on the block and it is mainly aimed at first time buyers, specifically designed to help them get on the property ladder. With a help to buy ISA, the government boost your savings by 25%. You may save up to £200 a month into your Help to Buy ISA, and the maximum government bonus you can receive in total is £3,000.
Lifetime ISA

A lifetime ISA is the newest type of ISA that is available to those who are under the age of 40. This ISA can be used towards saving for a first house, or to save for later life.

A lifetime ISA gives you the option to leave funds and let it grow until the age of 60, and you can then withdraw the money completely tax-free* with the aim of being just in time for retirement.

Stocks and shares ISA

Similar to the other ISAs that have been mentioned, the stocks and shares ISA allows you to protect your capital gains from tax*. They may offer the possibility of a higher return but with this comes a higher level of risk as you will be investing, rather than the three ISA’s above which are savings accounts.

Stocks and shares ISAs allows the investor to invest into a range of different investments, including government bonds, corporate bonds, shares and trusts. One of the main factors to keep in mind with this ISA is that while it could prove to be lucrative, it could also go down in value.

Innovative Finance ISA

So now you have some knowledge about traditional ISAs, lets add some knowledge about Innovative Finance ISAs. If, before reading this blog, you never knew what an ISA was, then you most likely won’t know what an Innovative Finance ISA is.

Innovative Finance ISAs are another new kid on the block. In 2016, the IFISA was introduced by the government, giving you the opportunity to invest up to £20,000 tax-free* per year. The underlying investments that IFISA’s facilitate will either be Peer to Peer loans or mini-bonds.

Innovative Finance ISAs often offer high-interest rates, but this does come with a much higher level of risk than something like a savings ISA.

Fluid Bond

In 2018, Fluid saw a gap in the current lending arena and believe there is room for a highly professional, quality driven player, therefore introducing the offer of an investment into a bond through an Innovative Finance ISA. With a £20,000 tax-free* investment allowance, you could earn interest on your capital without having to fork out any extra cash to cover tax payments.

We are committed to delivering you an accessible, responsive and dependable service – maintaining strong communication links with all parties to ensure Fluid Bond process applications quickly and effectively.

Want to find out more?

Now may be a good time to be thinking about investing into a bond through an IFISA. An IFSA may be a good way to be able to plan this year’s allowances, and more importantly potentially make the most of your money for the 2018/2019 tax year.

Here at Fluid Bond we aim to be here every step of the way, constantly updating blogs regarding the Bond and Innovative Finance ISAs and what we can do to help you. If there is anything you’d be interested in hearing us cover, please don’t hesitate to contact us at: info@fluidtrust.com or get in touch via one of our social media channels.

Alternatively, if you’re ready to find out how The Fluid Bond could work for you, go and visit our main webpage for more information.

*Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.