The Best Pet Insurance

ISAs (Individual Savings Accounts) are effectively a tax break for UK-resident savers and investors. They allow you to put away up to £10,200 per year without having to pay any capital gains tax on the earnings from those investments. There are essentially two types of ISA available – Cash, and Equity/Stocks and Shares. Cash ISAs are effectively standard savings accounts, offering either a variable or a fixed rate of interest. You can save a maximum of £5,100 in a Cash ISA over the course of the tax year, which runs from the first of April to the thirty first of March. Equity ISAs, also known as Stocks and Shares ISAs, allow you to invest up to £10,200 in the stock market over the course of the tax year. The maximum amount of money you can protect from the taxman over the course of any one tax year is £10,200, so if you were to use up the full Cash ISA allowance, you would only be able to put £5,100 into an Equity ISA that same year.

The type of ISA that is best suited to your needs depends largely on your attitude towards risk. By far the least risky option is a fixed-rate Cash ISA. With one of these, you can be absolutely sure of the amount of money you will earn from the account, as the interest rate will neither rise nor fall. However, you can usually get a slightly higher rate of interest if you go for a variable rate ISA. The interest rate on this type of account will rise and fall over time, roughly in accordance with changes to the Bank of England base rate. So if interest rates rise, you will earn more money, but if they fall, then you could end up earning less than if you had a fixed rate ISA. Neither type is particularly risky, however, as there is no way in which you can lose money with a Cash ISA. However, if inflation were to climb steeply, and the interest rate did not change accordingly, your money would lose relative value.

Equity ISAs are a lot riskier than Cash ISAs, in that your investment can fall in value as well as rise. Most Equity ISAs are invested in stock market funds that contain several different types of stocks and shares. Some of these funds are riskier than others, but the riskier ones also offer the best returns. While the stock market has proven itself to be a fairly volatile beast in recent years, over longer periods it has consistently proven itself to be the most profitable way to invest your money. Therefore, Equity ISAs are best viewed as a slightly risky long-term investment. If you think that you will need access to the money in the short to medium term, you would probably be better putting it in a Cash ISA. For more detailed information on the various types of Equity ISA that are available, go to the Legal & General website.