we may complain about the way that we believe modern technology has invaded our lives, but even the most old fashioned among us will have to admit that life is both easier and more fun with the internet around. We use it for so many things and can even keep abreast of our financial circumstances without setting foot out of the house. This is a good thing for those who are housebound as they keep a keep an eye on any stocks and shares ISA performance they have.
There are two types of ISA (individual savings account): cash ISAs and stocks and shares ISAs. The advantage of having an ISA is that it is tax-efficient. Savings and investments held outside an ISA wrapper are liable to income or capital gains tax.Share-based investments in various forms are ISA-able. Shares in individual companies may be placed inside what’s called a self-select ISA, which are usually managed by stockbrokers, but stocks and shares ISAs are usually held in collective investment vehicles like unit or investment trusts. These are pooled investments where a fund manager picks a selection of shares based on geographic or sector criteria and the value of the investment depends on the collective performance of the shares picked out.
Placing these investments inside a stocks and share ISA provides two tax advantages. First, any profits made from share price increases aren’t eligible for capital gains tax and second, it enables all the tax on bonds to be reclaimed. Every adult in the UK is allocated an ISA allowance each tax year. You can save up to 11,280 this tax year (which ends on 5 April 2013). You can invest the entire amount in a stocks and shares ISA or split it and put up to 5,640 in a cash ISA.
What is the difference between a cash ISA and a Stocks and Shares ISA?
Cash ISAs are like any other standard savings account, without paying tax on the interest you earn. Stocks and shares ISAs are a way of putting money into a wide range of investments without having to pay tax on the profits your make. Like with everything else when it comes to a stocks and shares ISA rules have to be followed and there are governing bodies which are in charge of regulating companies.
In today’s financial markets, the distinction between stocks and shares has been somewhat blurred. Generally, these words are used interchangeably to refer to the pieces of paper that denote ownership in a particular company, called stock certificates. However, the difference between the two words comes from the context in which they are used.For example, “stock” is a general term used to describe the ownership certificates of any company, and “shares” refers to a the ownership certificates of a particular company. Most people tend to invest a small portion of their money in an ISA and many people choose a stocks and shares ISA and then follow its performance on the internet regularly.