As we continue to recover from the effects of the pandemic, the spectre of rising of inflation looms large and it is ever more important for investors to consider ways to maintain the buying power of their savings.
Financial planning is vital at the best of times and the desire to devote some time to it right now most likely rings true to many of us, especially those who have been negatively impacted by Covid-19.
If you are looking at a more secure way of protecting your savings, an ISA may be the solution. Find out more in the sections below about how an ISA may help you, plus an overview from Carl McHugh, Tudor’s ISA specialist.
How does an ISA work?
An ISA is somewhere to house your savings where they are very unlikely to be impacted by the impact of rising interest rates and high inflation. You can invest up to £20,000 per tax year into an ISA, tax free, with most ISAs offering access to your funds at any time.
There are different types of ISA available, such as a Cash ISA that operates very much like a traditional bank account, to a Stocks and Shares ISA where your money is invested in assets such as shares, bonds and commodities. There are also options for Junior ISAs. Savings can be spread across most mixes of ISA but cannot exceed a total of £20,000 per financial year.
From our expert:
Carl McHugh, one of our Wealth Specialists, is our in-house expert on ISAs and investment bonds.
Carl strongly recommends considering ISAs as your main savings account. He says “A Cash ISA is exempt from income tax, whereas with a standard savings account, you would pay income tax on any interest earned over £1,000.
“Tax must be paid on the income and profits made from investments in the stock market. Stocks and Shares ISAs, however, serve as a form of ‘wrapper’ to protect savings from tax. This allows individuals to invest in a range of tax efficient savings and investments and pay no personal tax at all on the income and/or profits received.”
Is an ISA the right way forward for you?
If you would like to discuss ISA options in a little more detail, Carl, our Leeds based investment specialist, would be delighted to take you through everything you need to know so contact us today to book an appointment.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.