Compare stocks and shares ISAs

Should I choose an Investment ISA?

Investment ISAs are a good way to build up long term investment funds. With an investment ISA, all capital gains and income made from your investments won’t be taxed, as long as you remain within your tax year allowance.

A Stocks & Shares ISA can help you earn better returns on your money over the long term, and potentially protect your investments from the effects of inflation. However, the value of investments can go up or down, so your returns are not guaranteed.

Unlike a Cash ISA, you will most likely have to pay a fee to a broker or platform to hold and manage your Investment ISA. Finding the most competitive deal for an Investment ISA is very important because you want to make sure as much of your money as possible is going into your Investment ISA.

Some Investment ISAs have a minimum monthly amount that you need to contribute each month, or a minimum lump sum. This can range from £10 to £50 a month. By investing regularly you can ride out some of the ups and downs of the market, instead of trying to time the best point at which to invest via a lump sum.

What are the benefits of an Investment ISA?

An Investment ISA protects your growing money from Capital Gains Tax, which is a tax you pay when you sell an asset that has risen in value. It also protects your money from Income Tax, which is a tax paid on the money or interest that your investments generate.

You won't pay tax on any dividends (cash payouts by companies) that are made to your Investment ISA account either. One real advantage of ISAs is that the government cannot retrospectively claim back tax from your ISA account, even if they change the rules on how much you can save in the future or how much tax relief you will receive.

So your Investment ISA is a very effective tax wrapper to help your money grow.

Is an Investment ISA too risky?

Holding shares is more risky than holding cash, but offers the opportunity for greater growth over the long term. If the stock market goes up, you can earn much more than the interest from a simple Cash ISA. If the value of the stocks you own falls, you will lose money. Therefore it is important to buy and hold investments for the long term and try to ride out any dips, rather than selling out if your shares falls.

Should I put money in an Investment ISA?

Many Investment ISAs lost value in 2020, because stock markets were unstable due to the uncertainty around COVID-19 and the worldwide effects of coronavirus. Now that the markets have stabilised, and have in many cases rebounded, many Investment ISAs are showing significant gains again.

If you have spare money to invest and you want to focus on long term growth, then an Investment ISA could be a good option for you. Don't invest money that you cannot afford to lose, that you need for household essentials, or that you might need in a hurry. However, there are other ways to save for the long term, for example with your workplace pension or personal pension.

Find out When should I start saving into a pension?

Pensions and ISAs are treated differently for tax purposes but both are a good way to save for the future. You could spread your risk by having both a pension and an ISA in order to maximise your tax allowances and protect your money from tax in the future.

Find the top ISAs to suit your needs

How do I choose what to invest in when I have a Stocks & Shares ISA?

When choosing an Investment ISA, look at how your money will be invested. Some Investment ISA providers give you almost full control while others decide how to invest your money for you. You can choose how much you want to be involved in picking shares for your Investment ISA.

If you want to spread your risk across a number of different shares, regions or assets, then you could choose a diversified investment fund and hold it within your Investment ISA wrapper. If you like to pick different stocks, you can buy individual companies and hold them within your Stocks & Shares ISA. Individual shares are more risky than funds with a large spread of investments.

Can I withdraw money from my Investment ISA?

When you withdraw money from your Investment ISA, you will only be able to reinvest it if it is within your ISA allowance. So, if you had already invested the maximum amount (£20,000) and withdrew £2,000, you would not be able to reinvest that £2,000 within the same tax year.

For this reason, it is better to keep your Investment ISA as a place for long term funds such as saving for retirement.

Which is the best savings account for you?

What is the best Investment ISA?

When you compare Investment ISAs you need to think about how long you want to invest your money for, how much risk you are prepared to take, and what savings goals you are trying to achieve.

An Investment ISA is a good idea if you are thinking of investing on a five-year time frame. If you will need your money within five years, you might be better to consider a less risky form of investment, like cash. This is particularly true if you cannot afford to lose any of your money, known as your capital. 

Read our useful guide to investments

Should I get an Investment ISA?

The main benefit of an Investment ISA over a Cash ISA is you could earn more interest. The current average interest on Cash ISAs is between 1 and 2%. In previous years, some investment ISAs have gained more than 10% in a year.

The downside is that your investment can go down in value. For example, you put £10,000 in an investment ISA today but it might only be worth £9,000 next year. The year after, it could go back up to £10,500. Share prices can change and the stock market can go up and down, which is known as volatility. The more volatile your investments, the more their price is likely to fluctuate in value.

How long should I hold an Investment ISA?

To get the most out of an Investment ISA, you may need to lock away your money for more than a year and preferably for five years. If you need to access your savings at short notice, or if you can’t afford to lose your investment, then you should consider stashing your savings somewhere safer.

Find the best Cash ISA rates

Who should get an investment ISA?

Anyone with decent savings could benefit from taking the time to compare stocks and shares ISAs. But the people who could potentially save the most money in tax are higher rate taxpayers who would otherwise have to pay income tax or capital gains tax on their investments.

You must be comfortable locking your savings a while and with the potential risk involved, regardless of your tax bracket.

Can I have more than one Investment ISA?

You can deposit a maximum of £20,000 in your ISAs every tax year. You can spread this between different types of ISAs, but you cannot open more than one of each type per tax year. So you could split the ISA Allowance between a Cash ISA and a Stocks & Shares ISA if you wished.

You can open up a new ISA with a new provider each tax year, or you can add money to your existing ISA. You can add up to £20,000 for each new tax year.

Find out more about Investments and Tax with our guide

Learn the basics of investing with Uswitch

How can I find out more about ISAs?

For more information, read our in-depth stocks and shares ISA guide.

For something safer, consider putting your savings in a Cash ISAs or fixed-rate bond.

What does 'most popular' mean?

When we use the term ‘most popular’ on Uswitch in reference to credit cards, these cards are ranked by the number of clicks they have received on the site in the past 48 hours.

The most clicked on cards are at the top, with the least at the bottom. This reflects how popular they are with visitors to Uswitch.com. Consequently, this is a good table to look at if you’re interested in seeing which cards most people think are worth getting.