Stocks and shares ISAs
Stocks and shares ISAs are also commonly referred to as 'equity ISAs'. This type of ISA can contain an investment fund (or funds), or be comprised of individual stocks and shares.
The growth of equity ISA investments is reliant on the stock market rising (or on individual stocks performing well). These ISAs should be viewed as a longer-term investment due to short-term volatility of the money markets.
ISA rules allow for either £5,100 to be held in cash ISAs plus £5,100 in equities, or the full £10,200 to be held in equities alone. Depending on your individual circumstances and the risks you are prepared to take will dictate the proportion of equity to cash investment ratio.
Individuals requiring access to their funds may find that a cash ISA offers more convenience and flexibility in accessing money.
Fund supermarkets allow investors to choose from a range of funds from different providers whist charging relatively low fees. Fund supermarkets can be accessed in several ways: directly, through a broker, or via an independent financial advisor (IFA).
Those investors who prefer not to invest in funds can opt for so called 'self-select ISAs'. These allow for individual stocks to be purchased by the investor. As with all share trades, brokerage fees will be charged for each transaction on top of any fees to maintain the account. Self-select ISAs allow up to £10,200 to be invested in shares whilst remaining free of tax liability.
So is it time to invest in an equities ISA?