ISAs, SIPPs and saving for children
Individual Savings Accounts (ISAs)
ISAs are a tax-efficient way to save or invest up to £20,000 this tax year, with a huge range of investment options to choose from.
ISAs were launched in 1999 and have become one of the most popular ways to save. It’s easy to see why. ISAs allow your savings and/or your investments to grow free from tax. You pay no income or capital gains tax on the investments you hold in them and you don’t even have to declare the ISA on your tax return.
You can hold two main types of investments in ISAs:
This includes bank and building society savings accounts and National Savings. Cash ISAs provide a very safe home for your money but can offer limited income and growth prospects.
Stocks and shares
This includes shares and collective funds such as investment companies, unit trusts and other similar funds. Stocks and shares ISAs are more risky, but can offer the chance of better returns over the long term.
Self-Invested Personal Pensions (SIPPs)
Saving for your retirement could well be the biggest financial commitment you will ever make. As the name suggests, self-invested personal pensions (SIPPs) give you a high degree of freedom to choose the investments that go into your pension. SIPPs are generally for more experienced investors who have larger sums to invest. If you are less experienced, you may be better off with another type of pension, such as a Stakeholder Pension.