Let’s face facts; if you have accumulated any savings or financial wealth it is imperative that you make the most of these assets. This is far easier said than done, however, as there is a myriad of options available to citizens depending on their existing wealth, outlook and appetite for risk.
For the majority of us, however, it is an unwritten rule that any accumulated savings or investments should be secured in some iteration of ISA. This type of account is renowned for offering the highest rates of interest and ROI, while it also enables you to minimise the amount of tax that you are required to pay on your earnings.
Understanding your stocks and shares ISA Account: The key considerations
In some instances, you may find yourself focused on optimising returns and entertaining higher levels of risk. This will require you to seek out a more unusual type of ISA, and one that offers something slightly different in terms of risk and reward. Take a stocks and shares ISA, for example, which is a flexible vehicle through which you are able to commit financially to qualified investments such as cash, equities, company shares and government bonds.
There are alternative accounts of this type that offer even greater flexibility, and while these include a wider array of stock options they are decidedly more complex and should be avoided unless you have significant experience of certain markets.
Beyond the type of products available in a standard stocks and shares ISA, you will also need to consider your allowance as an investor. Regulations stipulate that you can invest your full ISA limit in a stocks and shares account, with the current maximum threshold for each financial year fixed at £15,240. This represents a sizable amount for most households and citizens in the current economic climate, while it also means that the precise make-up of your account will be dictated by your appetite for risk and desired ROI.
The bottom line
The flexibility of stocks and shares ISA accounts and their sizable allowance make them a popular investment vehicle in 2016, particularly for those with genuine disposable income and a desire to optimise their returns.
This type of ISA offers additional benefits to savers, as it delivers tax-free profits and fixed commission fees. These features help to optimise your returns as a novice investor, without placing your hard-earned capital at risk.
Ricky Willis is the original Skint Dad. A money-making enthusiast, father, and husband to Naomi. He is always looking for unique ways to earn a little extra.