Money is an essential commodity, so the more you have of it, the easier life tends to be. This stuff doesn’t grow on trees, though, so what can you do when you want to increase your finances significantly?
One solution is to put your money into a stocks and shares ISA, rather than a cash one. It can be a risky move, given there’s a chance you might end up losing money. However, it’s also a smart decision for three excellent reasons.
It Offers Investment Practice
If you’ve never done it before, investing can be overwhelming, especially given the potential loss of money. However, as with most things, it gets easier the more experienced you are, and a stock and shares ISA can be ideal for giving you your start.
This isn’t actually an investment but rather a vehicle for them, so you have plenty of freedom to choose where your money goes. As you play around with this, you can start to get a feel for how various investments behave and what ones are right for you. What you learn from here, you can then apply to investments outside of an ISA, which may come with a greater risk.
It Doesn’t Charge Capital Gains Tax
Tax is often the bane of people’s existence, which is why ISAs make for such great accounts. When you put money in here, you don’t have to worry about paying income tax, which is a sweet relief for many people.
What’s great about stocks and shares ISAs is that you also don’t have to deal with capital gains tax on the profits you make from your investments. So, if you’re smart with where you put your money, you can end up boosting your finances quite a bit.
It helps if you choose a stocks and shares ISA that provides the right investment opportunities and benefits that suit you best. Luckily, Good Money Guide showcases the best ISAs that are currently available, so you can see which one is most tailored to your needs.
It Has Greater Potential For Growth
If you’re going to put your money into an ISA, a stocks and shares one is definitely preferable over a cash one. That’s because the potential for growth is larger due to the investment opportunities in stocks and shares, as well as the setbacks of cash ISAs.
The amount of interest you earn in a cash ISA is predetermined, and this generally doesn’t amount to much when the Bank of England base rate is low. If this means your interest doesn’t rise above inflation, then all you’ll actually do is lose money as time goes on.
Although a stocks and shares ISA also has the potential of losing money – more so than a cash ISA – you shouldn’t overlook the chances for growth.
Anyone who’s afraid of taking risks probably won’t cope well with a stocks and shares ISA. However, if you want a chance to grow your finances and get into the investment game, this is an excellent place to put your money.