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Stocks & Shares ISA Account

Hey, before I begin it's worth knowing that I'm a complete novice when it comes to finance and personal banking, frankly I know diddly squat.

I'm hoping someone can explain to me what a stocks & shares ISA is and what makes it different to a normal ISA?

Cheers!





Posted from TSR Mobile
There are two types of ISA. Cash ISA and stocks and shares ISA (S&S ISA).

Cash ISA: You pay money into it and receive tax free interest (of pretty bad rates).

S&S ISA: It's a tax free wrapper for investments. You pay money into your S&S ISA and it will sit there probably earning no interest. You pick shares and funds to invest in, and buy them with money on your account. So it basically means you can buy and sell shares within an ISA, however if you withdraw money from the ISA account then you lose that bit of the tax free allowance.

For example, if you open an ISA with Hargreaves Lansdown, for example. You pay £1k from your bank account to your new ISA. You now have £14k tax free allowance left (you can put a max of £15k into an ISA) You pick some shares and funds to buy and buy them using the £1k in your account. 6 months later you decide you made a bad investment decision so can sell it. The proceeds are put back into your ISA for you to reinvest. If you wanted to then move £500 back to your bank account, then you'd have to sell some shares and transfer it out. You lose £500 of tax free savings as you still only have £14k left of your tax free bit.

It then gets confusing, because some companies offer 'Ready made S&S ISA's'. These (i think) are simply S&S ISA's but the shares and funds are already selected, so you don't actually pick them yourself.
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Avatar for Rakas21
Rakas21
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Original post by Baloney
Hey, before I begin it's worth knowing that I'm a complete novice when it comes to finance and personal banking, frankly I know diddly squat.

I'm hoping someone can explain to me what a stocks & shares ISA is and what makes it different to a normal ISA?

Cheers!

Posted from TSR Mobile


Pretty well explained above.

On the subject of those that are pre-selected vs you choose you can find those like the account below which basically track an index.

http://uk.virginmoney.com/virgin/isa/ftse/?bannercode=OMG-AFF-00003-00441

Occasionally, some similar accounts will offer a floor to entice customers whereby if you put your money away for 2 years, you'll get the 20% market gain but if the market falls 20%, you'll only absorb some of the loss.
In the case of Hargreaves Lansdown you will paying them a ridiculous amount of money to "manage your investment"

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