Issue #56: The Account You NEED

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I have to tell you that you’re in DIRE NEED of an ISA…

If you live in the UK and you’re not making the most of an ISA, you’re throwing money away.

ISAs are one of the best ways to grow your savings and investments tax-free. Whether you’re saving for the short-term, investing for the long run, or planning for your first home, there’s an ISA that can help.

Shall I expand? 😏

The Three Types of ISAs

1️⃣ Cash ISA – It works like a regular savings account, but you don’t pay tax on any interest earned.

• Best for: Emergency funds, short-term savings, or if you don’t want to invest.

• Interest rates vary depending on whether you choose an easy-access (withdraw anytime) or fixed-rate (locked away for a set period) option.

MY TOP 3 CASH ISAS (EASY ACCESS):

👉Trading 212*
- 4.9% interest
- £1 to open

👉Plum 
- 5.05% interest (when you sign up you get a 1.51% 12 month bonus, after one year interest drops to 3.54%
- £100 to open
- Maximum 3 withdrawals per year

👉Charter 
- 4.55% interest
- £1 to open

2️⃣ Stocks & Shares ISA – A tax-free investment account where you can buy stocks, funds, ETFs, and bonds.

• Best for: Long-term investing (think 5+ years, the longer the better).

• Everything you earn inside this ISA (capital gains, dividends, and interest) is completely tax-free.

• Your money is subject to market risk, so it can go up and down. Basically don’t invest anything you can’t afford to lose.

MY TOP S&S ISAS:

👉Vanguard is best traditional platform

👉Trading 212* is the best overall

👉Invest Engine* is the second best overall

👉Nutmeg* is the best robo investor

3️⃣ Lifetime ISA (LISA) – A special ISA mainly for first-time homebuyers but can also be used for retirement savings.

• You can put in a maximum of £4000 per tax year

• The government gives you a free 25% bonus on contributions up to a maximum of £1000 per tax year (e.g., put in £4,000, and they’ll add £1,000).

• You can only open one between the ages of 18-39

• You can only use the money to buy your first home (worth less than £425,000) or withdraw it at age 60. Early withdrawals come with a hefty penalty of 25% - make sure you take note of that before you put your money away!

This one is a bit more complicated as there are both CASH and STOCKS & SHARES LISAS…

so I’ve linked this here for you to find the best ones for your personal preference 🙂👇

Side note - the maximum you can put away is £20k across ALL your ISAs per tax year. So YES while you can have multiple ISAs, you must spread the 20k between them.

SECOND SIDE NOTEEEE:

ISAs aren’t just for adults. If you have kids you might want to consider opening them a junior ISA. Here’s what to consider:

• You can save up to 9k tax free per year

• Can be opened for any child under 18

• You can open either a cash or stocks and shares ISA (or both!)

• It’s controlled by parents until 16, but the child cannot withdraw any money until they turn 18

There’s actually a 4th type of ISA called the Innovative Finance ISA (IFISA) - but we won’t get into this one today (reply to this email if you want an explanation of this one - but also please don’t ahaha).

What To Do If You Max Out Your £20,000 ISA Allowance

So, you’ve hit the £20,000 ISA cap? First of all - amazing! Not many people can say they’ve done that!

Now, where should your extra cash go?

🏦 Pension Contributions – Pensions offer tax relief (free money from the government!) and employer contributions (free money from your employer!). You’ll get at least 20% extra added to your contributions, making it a great long-term option.

💳 Pay Off Debt – If you have high-interest debt (credit cards, personal loans), pay that off - it’s a guaranteed return on your money. Even lower-interest debts, like mortgages, could be worth overpaying to save on long-term interest.

🎟 Premium Bonds – If you want a cash-based option beyond an ISA, Premium Bonds from NS&I let you save tax-free while entering a monthly prize draw (instead of earning interest). Returns aren’t guaranteed, but your money is safe.

📈 General Investing Account – The same as a stocks and shares ISA, but your profits will be subject to capital gains tax which can be HEFTY

And that’s it for today friends. See you next week 😁

Got a question you’d like answered in next week’s newsletter? Just hit reply! Let me know your question and whether you’d like to stay anonymous.  

*Sponsored link. Remember that when investing, your capital is at risk and your investments may rise and fall. T&C’s apply.

^{DISCLAIMER: None of the above is financial advice. This newsletter is strictly education and should not be taken as investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and always do your own research.}