When it comes to investments, there are several investment options available. If you prefer not to handle your finances in person, a stocks and share ISA might be your best bet!
Living in a country that is currently under the grip of heavy inflation, one of the biggest financial risks that you can take is to leave your money sitting idle in a conventional savings account at a bank.
Why? Because with an increasing rate of inflation, it can very well turn out into a scenario where the inflation rates catch up or even overtake the meager interest rates that a savings account provides. At that point of time, you might see the numbers your bank balance go up. But, in reality the buying power of your saved money will stay the same, or in worst cases, even diminish.
So what’s the easiest way to beat inflation and continue saving at the same time? Well investing it of course. Now when it comes to investments, there are several options open in front of you – yet if you are the sort that would rather not handle your finances in person, then going the route of stocks and shares ISA might just be your best bet, but make sure to find out how many ISAs you can have.
What is a Stocks and Share ISA?
Most of you are already pretty familiar with how a standard ISA works. But the main problem with them is that the money you put in there is left sitting in your account. And your money is not doing much other than earning a very slim amount as compound interest! This is where a stocks and share ISA comes in. It takes your savings and invests them into a varied portfolio so that you can benefit from the fluctuations of the stock market! And the best part about it is that you don’t need to have any trading knowledge at all. Once you have opened an account and deposited some money into it, the rest will be handled by experienced advisors who shall make sure that you get the most out of your investments without putting too much at risk!
What are the Benefits of a Stocks and Share ISA?
So other than the obvious reason of investing in an online ISA to help beat the increasing inflation rates, there are a few other reasons why stocks and share ISA is considered one of the best financial decisions you can make.
1. Tax Benefits
Investing in an RSA has multiple tax benefits. This includes not being subject to capital gains tax on the allowance that you earn from it. Now of course this has limit which is currently set at $2600, although earlier it used to be much more. Another benefit is that in a financial emergency you would need to liquidate all the money in your ISA, you wouldn’t be charged taxes on that either.
2. Securing a Nice Retirement Pension Plan
The revenue streams from the State or even company owned Retirement Plans might often prove to be too meagre for living a comfortable retirement lifestyle. This is where having a stocks and shares ISA steps in. Investing your saving on a long term basis into such an account basically guarantees that your money would have grown at least twice if not faster than what it does while staying in a normal savings account.
3. You Can Choose The Risk Factor
There are multiple types of online ISA that you can invest in. They vary in terms of the risk factors that they present. Presently we have 4 types of ISA namely cash, stocks and shares, Innovative Finance and Lifetime ISA. Now each one of them has their own risks and reward schemes with cash being one of the lowest risks so it grows the slowest while something like innovative finance has a much higher growth rate but of course comes with an increased risk of succumbing to market fluctuations.
And frankly that’s what having an online ISA is all about, it is about the freedom of choice from being able to choose where and how your money is being invested to eventually paving the way towards your own financial freedom where you do not have to work hard anymore. Instead you can have your money do all the heavy lifting for you while you sit back, relax and enjoy the success of your newfound financial freedom!