What kind of ISA is right for you?

How to choose the best ISA for you

Like standard savings accounts, there are several types of ISAs on the market today. This guide takes a closer look at the different types along with the questions to consider when choosing the right ISA for you.

Why do you want to save?

The first step is to think about your motivation for saving. What are your goals? Are you saving for something short term or long term? Do you want to save money every month, every year or simply as a one-off? Think about whether you’ll need regular access to your money or whether you want to lock it away. If you’re saving up for something specific like a house deposit or your retirement, you’ll be pleased to know there’s an ISA specifically designed to help.

To find out more about ISAs, get a free copy of our Beginners Guide.

How comfortable are you with risk?

There are two main types of ISA: Cash ISAs and Stocks & Shares ISAs.

Cash ISAs work much the same as a savings account, whereas Stocks & Shares ISAs invest your money in a number of different assets with the aim of growing your money over the longer term. Unlike a Cash ISA your investment in a Stocks & Shares ISA could go down as well as up, however it can offer the potential for higher returns.

So, before you choose an ISA you need to decide whether you are looking to save or invest.

If you feel OK about balancing risk with the opportunity of growth you might want to consider investing in a Stocks and Shares ISA. If you don’t like this idea, you might prefer to save in a Cash ISA instead.

Find out whether you’re a risk-taker by taking our quiz or learn more about choosing between a Cash ISA and a Stocks and Shares ISA here.

What types of ISAs are available?

Cash ISA

  • What is a Cash ISA? A Cash ISA is the most basic kind of ISA in which you can deposit cash, and the interest is paid tax-free.
  • Who’s it for? Savers aged 16+ who prefer lower risk saving
  • How does it work? You can pay in up to £20,000 in the current 2018-19 tax year and the interest won’t be taxed.

Stocks and Shares ISA

  • What is a Stocks and Shares ISA? Also known as an Investment ISA, a Stocks & Shares ISA is an investment account where any returns you get will be free from tax.
  • Who’s it for? Savers over the age of 18 who are comfortable balancing risk with the opportunity for growth.
  • How does it work? You can put in a maximum of £20,000 in the current tax year. Instead of simply saving your money, you’re investing it in things like stocks and shares, bonds, gilts or commercial properties, to help your savings grow over several years. But depending on how the stock market performs, the value of your investment could go down as well as up and there’s a risk you may get back less than you put in.

Innovative Finance ISA

  • What is an innovative Finance ISA? This ISA lets you use the money in your ISA to invest in the peer-to-peer lending market.
  • Who’s it for? Savers over 18 who are comfortable balancing peer to peer investment risk with the opportunity for better growth.
  • How does it work? Peer-to-peer lending brings borrowers and lenders together. Because there are no bank fees you could get higher returns but individuals aren’t regulated in the same way as financial institutions so the risks can be higher. The IFISA contributes towards your current 2018/19 £20,000 ISA allowance.

Different types of ISAs have also been created to help you save for specific things.

Lifetime ISA – saving towards your first home or retirement

  • What is a Lifetime ISA? This ISA is designed to help you save towards purchasing your first home, or to save towards your retirement, with government help.
  • Who’s it for? For people aged between 18 and 39 who are saving for their first home, which costs less than £450,000, or who are saving towards their retirement from aged 60.
  • How does it work? You can currently put up to £4,000 into a Lifetime ISA each year, then the government tops up your savings with 25% of what you’ve saved that year (up to a total of £1,000). You can pay into a LISA up until your 50th birthday, and unless you are using the money as a deposit for your first home, you will need to wait until you’re 60 to access your savings. You are still able to cash it in for other reasons, but in most cases this would incur a 25% government charge, applied to the whole amount of your withdrawal.

Help to Buy ISA – saving towards your first home

  • What is a Help to Buy ISA? This ISA is designed to help you save for your first home and also has government help.
  • Who’s it for? People over the age of 16 saving for a home.
  • How does it work? You can use a Help to Buy ISA for any property, as long as it is worth less than £250,000 (£450,000 if the property is in London). The allowance works slightly differently in that you can save up to £1,200 in the first month when you open a Help to Buy ISA and up to £200 a month after that.
  • Similar to the Lifetime ISA, the Government adds a 25% top up on contributions, however there are minimum and maximum top up amounts available. You’ll need to save at least £1,600 to receive the minimum top up of £400, and £12,000 for the maximum £3,000 top up.
  • Help to Buy ISAs are available until December 2019, and the bonus will be applied as long as you purchase your first home by 2029.

Junior ISA – saving for your childs future

  • What is a Junior ISA? This ISA is designed to help families save for their children’s future.
  • Who’s it for? Children under 18 years old.
  • How does it work? You can pay up to £4,260 (in the current 2018/2019 tax year) into your child’s Junior ISA. The child can take control of a Junior ISA when they turn 16, but they cannot withdraw money from the account until they are 18.

Can I switch ISA providers?

As well as opening a new ISA, it’s also possible to transfer your existing ISAs to a new provider providing they accept transfers. Never withdraw the funds and transfer them yourself doing so will count towards your ISA allowance for the new tax year, speak to your new ISA provider about this.

To find out more about ISAs, get a free copy of our Beginners Guide.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

How to keep your resolutions going

It’s often all too easy to find a reason for ditching something that feels like hard work. But all is not lost – we speak to the experts about their tips and tricks for staying on track with your New Year resolutions.

No more excuses:

Talking yourself out of your good intentions with the same old excuses? Coaching Psychologist Jessica Chivers offers some positive answers to silence your inner cynic…

I haven’t got time!

When we say we haven’t got time what we’re really saying is that it’s not a priority. You need to work out what’s important and what you can let slide.

I can’t do it!

Confidence needs to be stretched and tested in situations that make us feel uncomfortable, so that it grows. It’s after doing something difficult that you look back with pride and think ‘I did that!’ And if you’re thinking ‘I can’t do it!’ because you’ve set yourself a big goal, it’s easier to break this into smaller actions that are more manageable. So, for example, if your goal is to become a writer, you could set yourself the task of writing a blog three times a week.

It won’t make any difference…

Instead, try adopting an attitude of ‘I won’t know unless I try’. Focus on what there is to gain from making the change and weighing that against what the downside might be (writing these thoughts down may be helpful).

A little kindness never goes amiss

You’re more likely to keep your resolutions going if you’re not too hard on yourself. Psychologist and life coach Cliff Arnall recommends patience, if you fail to stick to your resolution see it as a blip rather than a relapse. Remember that it can take two or three years to give up a habit such as smoking. What’s more, ‘giving up’ something can cause feelings of loss. It’s really important to replace it with something that’s good for you.

Add an incentive

Introducing a reward for sticking to a resolution can help get you back on track. For example, if you’ve decided to give something up such as smoking, your daily latte habit or the Friday night takeaway, save the money instead of frittering it.

Or, if it works better for you the other way round, try a self-imposed fine every time you arrive somewhere late or fail to go to the gym – whatever it is that you’re trying to do/not to do.

This way, you could also develop a regular savings habit and transform your finances. For example, imagine if you cut back on your daily latte habit and could then save £25 a month – that’s £300 a year, or £3,000 over 10 years!

Want to make next year the year you get savings savvy? Take a look at our 12 easy money saving tips for the coming year.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.

You should also be aware that in some investment conditions and depending on the product you have chosen, you may get back less than you have paid in.

ISAs – What are they and how do ISAs work?

What is an Individual Savings Account (ISA)?

An ISA, or Individual Savings Account, is a savings account that you never pay any tax on. It does come with one restriction, which is the amount of money you can save or invest in an ISA in a single tax year – also known as your annual ISA allowance. Currently for the 2019/2020 tax year this allowance is £20,000.

It helps to think of an ISA as a protective box: the things you put inside are protected from tax and there are two basic types of ISA to choose from – Cash ISAs and Stocks & Shares ISAs.

What is a Cash ISA?

Cash ISAs are more like an ordinary savings account: you pay cash in and it earns interest, tax free.

What is a Stocks & Shares ISA?

The ISA for investments is called a Stocks and Shares ISA: rather than simply saving, you are investing in things like stocks and shares, bonds, gilts or commercial properties to help your savings grow over time and any interest or returns you get are tax free.

Stocks and Shares ISAs may have the potential for quicker or greater growth, but because they are based on the stock market there’s always a risk the amount of money in your ISA could go down as well as up.

ISAs come in different shapes and sizes

In addition to the basic Cash ISA and Stocks & Shares ISA, different types have been created, to help people save for different things such as:

  • Lifetime ISA – to help you save towards your first home or your retirement
  • Help to Buy ISA – to help you save towards your first home
  • Junior ISA – to help you save for you children

To help you compare the different ISAs and choose the right kind, read our blog on choosing the best ISA for you.

How do ISAs work?

If you live in the UK and are over 16 years old, you’re entitled to save a certain amount of money in an ISA every year. This is called your ‘ISA allowance’ and the exact amount can change from year to year. For example, in the 2017/18 tax year the annual ISA allowance was increased from £15,240 to £20,000.

Once your money is in an ISA it can’t be taxed, no matter how many years you have it in there. Take a look at our ‘Frequently Asked ISA questions’ blog for more details on how ISAs work.

What are the benefits of an ISA?

  • Your money will grow tax free
  • The annual allowance for 2019/2020 is £20,000
  • Your annual allowance starts afresh each new tax year
  • You can transfer existing ISAs into your new ISA
  • Children aged between 16 and 18 can hold both a Junior and a standard Cash ISA
  • Specific ISAs are available to help when saving towards your first home or retirement.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

Are you a risk taker? Take our quiz

When it comes to taking risks, do you like to play it safe or do you throw caution to the wind? Well, did you know that your attitude to risk can have an impact on the financial decisions you make? Take our short quiz to find out where you stand…

(We should point out here that this is a highly unscientific quiz designed to get you thinking about your attitude to risk, and should not be used to base any financial decisions on!)

It’s all a question of balance

Whether you play it safe or take a risk, you’ll probably admit that it sometimes pays to stick your neck out. If you decide to set up your own business, choose to learn a new language, or even opt for a savings and investment plan for your money, the more risk you’re prepared to take, the more reward you could potentially receive.

When it comes to savings and investments, a With Profits saving plan from Foresters Friendly Society offers a middle ground, sitting comfortably between lower-risk cash savings and higher-risk stocks and shares.

Find out more about saving with a Friendly Society.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

Savings basics: How working out a budget can help you save

Saving more money is one of our top five New Year’s resolutions (tussling with diet and fitness-related promises hold the number one spot)1.

If you’re serious about saving more, it can help to have a budget in mind and even if you think you know what you’re doing, going back to basics can re-ignite your savings enthusiasm.

While working out a budget might sound a bit too simple to bother with, or maybe a little too serious, think again. It is simply a way of determining how you use your money. And if you really want to save, it’s one of the first things you should do.

Your four-point budget plan

  1. Work out what money you have coming in each month. This could include income, pension, interest on savings, rent from a let property and so on.
  2. Add up all your essential monthly financial and household expenses such as your mortgage payments or rent, utilities, insurance, credit cards, savings and travel expenses. Where you have annual bills – for example your car’s road tax – divide this by 12 to get the monthly amount.
  3. Subtract your monthly expenses (2) from your income (1) to give you, hopefully, an amount for all the non-essentials such as clothes, holidays and going out.
  4. Fingers crossed you’re left with a healthy amount, but whether you are or not, it can pay to rebalance your budget. That may sound a bit too sophisticated for your needs, but it’s just a case of taking another look at your list of essentials to see where you can reduce bills. That way, you can boost your spending money or even save a little more each month.

Helpful resources for rebalancing your budget

There are plenty of tools to help. For example the Money Advice Service has two budget planner tools on its website to help you crunch the figures.

Plus you can easily shop around for cheaper deals on your utilities and insurance at websites such as MoneySuperMarket.com, uSwitch and comparethemarket.com.

Sticking to your budget

Once you’ve worked out what you can – and can’t – spend, it can take some serious willpower to stick to your budget, but we have some tips to help:

Set a goal
No one cuts back on their spending for fun, but setting a financial goal gives you a reason to be frugal. It’s amazing how effective this can be.

Use cash instead of cards
If you only draw out what you can afford to spend each week, you shouldn’t bust your budget.

Think before you buy
Is it really worth overspending for that little luxury? Give yourself a couple of days to mull it over – chances are, it is only an impulse buy.

Reward yourself
Allocate some of your budget for small treats along the way so you don’t feel deprived and will be more inclined to stick to your budget over the longer term.

Budget benefits

Having this sort of plan in place can be incredibly insightful. As well as showing you how much money you need each month, it’ll also highlight any financial weaknesses and areas where you could make savings.

As an example, take your daily cappuccino, tall skinny latte, or straight up americano. Its price tag, on average £2.452, may seem a small amount for the daily pleasure it delivers on your way to work. But, multiply that by 20 to get the average monthly spend, and it comes to a not-quite-so-palatable £49. Over a year, that’s almost £588!

And it’s not just about giving up the treats; even the essentials can be sources of savings. If you can shop around regularly for everything from the best phone deal to the cheapest electricity, it can save you hundreds of pounds a year — and it’s much easier to take this action when you know exactly what you’re spending.

Don’t forget to review your budget

A quick review every six months or when something changes, for example a pay rise or cheaper bills, will make sure you stay on track for a financially rewarding year.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.

Sources

  1. YouGov – New Year Resolutions: Britain resolves to be more healthy in 2017
  2. Think Money – The cost of Britain’s love of coffee shops

Let’s talk: how to talk about money

Talking money with your family can be a tricky topic, particularly when it’s about big issues like your end-of-life financial matters, but it doesn’t need to be as hard as you think. Here’s how to get started.

Our recent survey of Foresters Friendly Society members found that only 15% of respondents spoke to their families about money on a regular basis, while 62% spoke only occasionally.1 That’s still better than the rest of the UK; This is Money reports on how there often seems to be a barrier when it comes to talking about money, and that 22% of families only talk about money when ‘it becomes necessary’.2

“We need to talk…” are never words anyone wants to hear, but talking to your nearest and dearest about life’s big issues – particularly your finances – can be really important and, with our handy guide, it can be pain free.

“Asking for help is often difficult for most people, but talking about issues impacting your wellbeing can be beneficial. Given the high cost of living and recent poor wage growth, money is often one of the biggest worries for a lot of people. As personal finance can be such a sensitive subject, it’s important everyone feels comfortable when seeking guidance – from the practical decisions to someone listening to general concerns.”
Myles Edwards, Membership Director, Foresters Friendly Society

So pull up a chair, gather the family round and let’s get talking…

Step 1 – What do you need to talk about?

Before you start, it’s a good idea to work out where you stand. Make a list of the financial products you have and the details of them. It will be useful to provide your family with information such as which products you have – for example savings plans, investments and life insurance – and who you have taken these products out with. You don’t need to overload your family with information, but it’s important to let them know what exists.

Step 2 – Who do you need to talk to?

Once you know what you need to talk about, you can identify the people you need to tell. Should it be your partner or spouse, your adult children, a nephew or niece, or perhaps a close family friend? The people you choose can include the person you plan to make executor of your estate in your will, your next of kin, or the people you would like to benefit from your will.

Step 3 – How should you approach it?

Armed with a good knowledge of who you want to talk to, and what you want to talk about, broaching the subject of money will become much easier. Make sure you pick a location where everyone feels comfortable and keep your chat informal. It’s always a good idea to come at a money chat from a positive angle, and simply work through your list of points. If anyone has any questions, be sure to note them down, and remember that you don’t have to rush through everything in one go.

Step 4 – What should I do if something goes wrong?

If, for any reason, your money chat becomes confrontational or negative, take a step back from it to work out why tempers flared. Money can be a sensitive subject for many people, so you may need to give everyone a chance to cool off. Remember that your finances are your decision, but should a family conflict arise from it you could seek a third-party professional to act as an intermediary.

Step 5 – Do I need to do anything afterwards?

If any questions were raised during your discussion, make sure you find out the answers and get back to everyone. If any matters came up that need further thought or discussion, it’s a good idea to arrange a follow-up chat to clarify everything. Remember that your money talk doesn’t have to be a one-off, the more often you talk the better it can be, you could have annual, bi-annual or even monthly conversations if you feel you need to. Finances can change from year-to-year, so it’s good to keep everyone updated with what’s going on.

If you find yourself burying your head in the sand rather than organising your finances for later in life, take a look at our handy tips for facing up to your finances.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

Sources

  1. Based on the 2016 Foresters Magazine survey of 1126 people.
  2. This is Money – We need to talk about money: The financial conversations you aren’t having with your family but should be

Don’t be a piggy bank raider

Almost half of us dip into our savings. Find out how to resist temptation and carry on saving for the things that matter…

Frequently find yourself dipping into your hard-earned savings? Well you’re not alone. Almost half (48%) of Brit’s recently surveyed by VoucherCodes.co.uk admit to using a part of their savings every month to pay for regular expenses. In fact, of an average £2,045 being saved each year, £312 is taken out again to cover items such as household bills, increased food costs, running a car, debt and rises in rent.

If you’re trying to save for something big, say a cash lump sum for your child’s future, skimming off that 15% every month can make a real difference. So how can you make sure you’re not undoing all your good work? Take a look…

Save small regular amounts

Try using a savings plan that requires you to save small, more manageable amounts over a longer term, rather than one that takes large chunks out of your income.

“What drew me to the Foresters Tax Exempt Savings Plan was that the contributions are so manageable,” says Laura, 33, a Foresters Friendly Society account holder. “£25 might sound like a lot, but in reality it’s only the occasional takeaway at the weekend, so it’s easy enough to put by.”

Keep track

Most of us fall foul of extra spending when we get caught unawares by an unexpected expense. Draw up a monthly budget by keeping track of your spending. Simply carry a notebook with you, or make a note in your phone, and you might be able to spot problem patterns in your outgoings. Nip any nasty habits in the bud and make sure you know what’s coming up each month before you decide how much you can afford to save.

Put money out of reach

Using a savings account that limits your access to your money can be a good way to be strict with yourself.

“I found early on that it was difficult to resist dipping into the money if I knew it was there,” says Gemma, 35 from Southampton, who holds a Foresters Tax Exempt Savings Plan “I like a plan that keeps my money out of reach of any frivolous spending.”

Take care of the pennies

If you often find that you’re dipping into savings, or even your child’s own savings pots, to take care of small everyday items such as the window cleaner and the kid’s lunch money, why not start your own small change jar? If you’re often short on cash, pop a jar in the hall and add your loose change to it at the end of the day. Only dip into it when you really have to.

Set yourself a goal

Having a specific goal to save for can help you save more. Do you want to give your child a cash gift on their 21st birthday? Perhaps you’d like to help them buy a new car or put down a deposit on a house?

“When it comes to saving, what really worked for us was having a set financial goal. You need more than a rainy day fund or you might be tempted to cash your plan in,” say Foresters customers Nigel and Anne. “Take on something manageable that you can see building up and then keep striving towards your goals.”

Looking for a plan that will help to keep you on target? Take a look at our saving & investing options here.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.

You should also be aware that in some investment conditions and depending on the savings product you have chosen, you may get back less than you have paid in.

Source: dailystar – Britons dipping into savings

Big Banks v Friendly Societies – who’s taking care of your money?

Want an alternative home for your savings? Why not consider saving with a friendly society?

In a climate where only 32% of consumers trust retail banks, and that figure falls to just 15% for investment banks (as reported by PwC), the UK’s friendly societies have an important role to play when it comes to providing fair investment opportunities to enable you to save for your, and your family’s, future.

Friendly Societies’ origins date back to the days before the welfare state, when a group of people got together to contribute to a mutual fund that they could then receive social and financial support from in times of need. At Foresters Friendly Society, we’ve been looking after our members, and their finances, for over 180 years. The Society’s mission is to make saving for the future an attainable goal for as many people as possible.

No shareholders to pay

As a mutual, member-owned business, Foresters Friendly Society has no shareholders to pay. Instead, any profits made are used for the benefit of Foresters policyholders (referred to as members) in the form of policy payouts and a member benefits package, which focuses on healthcare, educational support and discretionary financial assistance, all at no extra cost.

Simple, affordable savings plans

Foresters takes a responsible, long-term approach to savings and investments and provides plans that are simple and affordable – such as tax-efficient savings and investment plans – with a return that has the potential for more growth than that offered by traditional interest-only cash savings accounts, but is less risky than direct investments into stocks and shares.

Interested in finding out more about how friendly societies came about and why they are unique? We’ve a great little video that explains it all.

See 7 reasons a friendly society could be the right place for your savings for more information.

Please note:

The membership benefits we provide aren’t regulated by the Financial Conduct Authority and the Prudential Regulation Authority and are regularly reviewed by us to ensure they are relevant to our members.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.

You should also be aware that in some investment conditions and depending on the savings product you have chosen, you may get back less than you have paid in.

Source

The PwC report: How financial services lost its mojo – and how to regain it, October 2014

How much can I save in an ISA? And other essential ISA rules

Interested in ISAs as a way to save money? Here are answers to some frequently asked questions…

“If you’ve got any savings, or investments, you should have an ISA – it’s as simple as that. The reason? You pay less tax (or no tax in the case of cash savings) and therefore increase your returns. It’s a no-brainer!” So says moneysavingexpert.com’s Martin Lewis*, a financial whizz who knows just about everything there is to know about making the most of your money.

So, how much can you save? Do you need a lump sum? How many ISAs can you have? What’s the ISA limit? Read on for answers to some common ISA queries…

Q: How much can I save?

Every tax year (which runs from April to April), you get an annual ISA allowance and this is the maximum that you can save or invest in these accounts during that year. This allowance isn’t rolled over if you don’t use it, but you get a new allowance with the next tax year.

For the 2015-2016 tax year (which runs up to 5 April 2016), the annual ISA allowance is £15,240 and you can choose whether to invest the whole amount into a Stocks and Shares ISA or a Cash ISA – or whether to save into both types of ISA.

The allowance has traditionally risen each year with inflation, however, it is set to stay the same for the 2016/17 tax year.

Q: What’s the main difference between Cash ISAs and Stocks and Shares ISAs?

In a nutshell, Cash ISAs have no investment risk and are more like an ordinary savings account, except unlike a savings account you don’t pay any tax on your interest. Stocks and Shares ISAs on the other hand provide an opportunity for better returns by investing your savings in different asset types such as stocks and shares. They are more suitable for long-term savings of five years or more and, depending on the performance of the Stock Market and any other asset types your money may be invested in, the value of your investments can fall as well as rise.

Q: What’s the difference between ISAs and NISAs?

There’s no difference at all – they were originally called ISAs, and when the government changed some of the ISA rules in the 2014 Budget, they called them the New ISAs, or NISAs. Providers use either name now.

Q: Do I need a lump sum to invest in an ISA?

No. You can open a cash ISA with just £1. With Stocks and Shares ISAs different providers have their own minimum requirements.

For example, Foresters Friendly Society’s Stocks and Shares NISA allows you to choose whether you invest regular amounts from £50 per month, or lump sums which requires a minimum £500 to open the NISA and then top-ups of at least £250.

Q: How many ISAs can you have?

Every UK resident can put money into one Cash ISA and one Stocks and Shares ISA in each tax year. The ISAs don’t have to be with the same provider, and you can transfer either or both ISAs to another provider at any time, but you can’t take out two Cash ISAs or two Stocks and Shares ISAs in the same tax year.

Q: How old do you need to be to open an ISA?

You have to be aged 16 or over to open a Cash ISA, or aged 18 or over to open a Stocks and Shares ISA.

Q: How easy is it to transfer money from one ISA to another?

You can transfer funds held in an ISA from one provider to another as long as they accept transfers – not all of them do, so make sure to check (Foresters Friendly Society does, and will arrange the transfer process for you). Money held in a Cash ISA can be transferred into another Cash ISA or into a Stocks and Shares ISA, and likewise, assets held in a Stocks and Shares ISA can be switched back into a Cash ISA should you wish.

The important thing is not to just withdraw the money, close the account and reinvest in another ISA – transferring is key. Withdrawing rather than transferring will mean you lose the tax-free advantages of saving in that way, and if you have several years’ worth of ISA savings in cash (i.e. more than £15,240), you can’t automatically put it all into a new ISA, unless you transfer the account itself.

Q: How do I get money out?

You can withdraw money much as you would with any other savings or investment plan, bearing in mind that as with savings accounts, different ISAs have different rules.

For example, you can withdraw money at any time from an instant access Cash ISA, but you may pay a penalty if you withdraw cash from a fixed rate or regular savings Cash ISA within a set period.

Some Stocks and Shares ISAs may set a minimum amount for withdrawals, although, as with Cash ISAs, you will always benefit from the tax advantages whenever you decide to withdraw your money.

So, now you’re up to speed with all the basic ISA rules, why not find out more about Cash ISAs and Stocks and Shares ISAs.

Please Note:

A Stocks and Shares ISA is intended to be a longer-term investment, which can potentially yield better returns than a Cash ISA. The Stocks & Shares ISA is available to anyone over 18 years old. You should be aware that you may not get back what you pay into a Stocks & Shares ISA dependent on the investment term and investment conditions on withdrawal.

Tax rules may change and depend on individual circumstances.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

Source

* Martin Lewis – MoneySavingExpert – Full ISA guide

We think Martin Lewis is great, but he does not endorse any Foresters products.

Cash ISAs v Stocks & Shares ISAs – What’s the best for me?

It’s a tough time to try and get a decent return on your savings – and that’s why Stocks and Shares ISAs deserve some serious consideration.

When thinking about saving for your or your child’s future, choosing what type of ISA to go for – Stocks and Shares or Cash – depends on a number of factors, and you can start by asking yourself some questions.

  • What’s your savings goal?
  • How long do you plan to save for?
  • How do you feel about balancing risk and reward?

Let’s start by taking a look at some Individual Savings Accounts (ISAs) basics:

What is an ISA?

  • ISAs are simply a type of savings account where you don’t pay tax on the interest on the money you keep in them, unlike standard savings accounts where tax is taken from the interest earned.
  • Is there a difference between ISAs and NISAs? They were originally called ISAs, and when the government changed some of the ISA rules in the 2014 Budget, they called them the New ISAs,
  • or NISAs. Providers use either name now.

Who are ISAs for and how much can I save?

  • Anyone over 16 can open a Cash ISA, and over 18s can open a Stocks and Shares ISA.
  • Each April, you have a fresh allowance (the amount you can save into an ISA) to use and, crucially, once money is in there, it stays tax-free, year after year. Someone who’d filled their ISA allowance every year since they started in 1999 could now have around £100,000, including interest protected from the taxman.*
  • You are only allowed to put money into one Cash ISA and one Stocks and Shares ISA in a tax year. You can put all your annual savings allowance into one type of ISA, or you can split it between the two types however you like.
  • You can pay in a lump sum, or save monthly; and you can top up your ISA through out the year too.
  • You can withdraw your money free of tax, although check with your provider for their rules on accessing your money as these can differ.

So, while many of the ISA rules and regulations are the same for all ISA products, there are some key differences between the two types of ISA – Cash, and Stocks and Shares.

What are cash ISAs and how do they work?

  • Works much the same as an ordinary savings account, but you don’t pay tax on any interest earned
  • Instant access, regular savings, and fixed term options available
  • No set up fees to pay
  • Suitable if you prefer to have lower investment risks

Stocks and Shares ISAs explained

  • Unlike a Cash ISA you are not just saving money, but investing it in different asset types such as stocks and shares, with a view to growing your savings over the longer term
  • You don’t pay tax on any income or capital gains made on your investments
  • Stocks and Shares ISAs provide an opportunity for a better return on your savings over the longer term, depending on the performance of the investment
  • You can withdraw your money at any time, although different providers have different rules and conditions, withdrawals cannot be replaced and replacement would count towards your annual ISA limit. Depending on how long you’ve had the plan and when you withdraw money, as with any investment linked to the stock market, you could end up getting back less than you put in.

Short or long term savings – which is best for me?

If you want to play it on the safer side, the conclusion is, put your money into a Cash ISA. If you’re happy to balance an element of risk with a greater opportunity for your funds to flourish over a longer period, then perhaps you should plump for a Stocks and Shares ISA – they come in different formats – some are ready made and others give you the option to choose which funds to invest in, and they also have varying levels of risk.

At Foresters, for example, because we are owned by and operated for our members (there are no shareholders to pay), we take a responsible, long-term approach to savings and investments. Our With Profits savings plans sit comfortably between lower-risk cash savings and higher-risk stocks and shares.

Please note:

Tax rules may change and depend on individual circumstances.

You should be aware that you may not get back what you pay into a Stocks & Shares ISA dependent on the investment term and investment conditions on withdrawal.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

*Source: Martin Lewis Six reasons why ISAs still beat other savings accounts