Getting the most out of your ISAs
Helping our clients figure out the best financial plan for their families is something we do every day. Many people find that a mix of Stocks & Shares ISAs and Cash ISAs not only brings short- and medium-term stability, but also the long-term potential to create wealth for the future.
With that in mind, we’ve put together our most common ISA FAQs, ahead of tax year-end.
How long have you had your Cash ISAs?
If you’ve had any of your Cash ISAs for more than five years, cash might have snuck into your long-term planning. It’s a smart move if you’re keeping this money accessible for unexpected expenses or a rainy day. However, in the long term, you may not experience the same returns and growth that a Stocks & Shares ISA could potentially deliver.
So do I need my Cash ISAs?
Think about the significance of Cash ISAs in your broader financial strategy. You can put up to £20,000 into a Cash ISA each year, which is very tax-efficient and versatile. The £20,000 ISA allowance can be divided however you prefer among a Cash ISA, Stocks & Shares ISA and Lifetime ISA (up to £4,000), as long as you remain within the limit.
Keep an eye on the interest rates, though. If interest rates rise, the amount you can save in standard accounts before you start to pay tax on it will reduce.
Getting the mix right
To fully capitalise on the tax perks of ISAs, it’s usually best to invest in assets that have the potential to do better over the long run: stocks and shares. But even for experienced investors, investing more in a volatile stock market can feel daunting.
A Cash ISA can enhance your financial well-being and contribute to your family goals in the short to medium term. Simultaneously, a Stocks & Shares ISA, strategically invested for long-term growth, could be the ideal choice for your family’s future aspirations or your own retirement.
As the tax year concludes, it’s prudent to discuss your ISAs with us to ensure they align with your broader financial plans. We can assist in determining the optimal balance between cash and investments in stocks and shares, providing you with the best opportunity for both short- and long-term financial well-being.