A stocks and shares ISA invests your money with the aim of growing it. As it’s a type of ISA, you don’t pay any tax no matter how much your money grows.
What’s an ISA?
An ISA is a savings or investment account.
- You get cash ISAs (saving accounts), which earn interest.
- And you get stocks and shares ISAs (investment accounts), which invest your money.
Whichever you choose, you won’t pay any tax when you take your money out, no matter how much it’s grown.
You pay up to £20,000 into ISAs in your name each tax year.
What’s a stocks and shares ISA?
A type of account that aims to grow your money by investing it.
When you pay into a stocks and shares ISA, also known as a S&S ISA or investment ISA, your money is grouped with other people’s money in what we can an investment fund.
You own a share of the fund.
The money in that fund is used to buy all sorts of things (known as “assets”), with the hope that the value of those assets will go up.
Assets can be things like property, company shares and bonds.
When the value does go up, the fund has more money. So, your share of that fund is worth more.
When you withdraw your money, you sell your share of the fund.
If you do this when the value is high, you make money. But if the value of the assets has gone down, your share of the fund will be worth less.
Still confused? Our shoes story might help…
Stocks and shares ISAs explained… with shoes
You’re browsing Vinted one day when you spot a pair of Adidas Taekwondo Mei “cow print” trainers, brand new, on sale for just £60.
You only have £30, so you quickly text your brother and ask if he wants to go halves with you.
You do the deal and a few days later the trainers arrive.
They’re stunning. But too big for you and too small for your brother. You both agree to sell them on.
But you’re busy people. The trainers get put in top of your wardrobe and you both immediately forget about them.
What you’ve just done, is invested.
Fast forward a year and you stumble across the trainers while packing for a holiday.
You log onto Vinted and find the exact same trainers are now selling for £120 – double what you paid!
You list them and are thrilled when they sell immediately.
The £120 lands in your account. Being the honest individual that you are, you send your brother his half and pocket the rest ready for your holiday.
You and your brother each made a 50% return on your investment. And this was only possible because you pooled your money.
That’s what happens when you invest in a stocks and shares ISA. Only on a bigger scale and generally not with footwear!
Open your OneFamily Stocks and shares ISA today
Invest up to £20,000 a year, tax free, with our award-winning stocks and shares ISA
Our Stocks and Shares ISA is an investment ISA. That means your money is invested in the stock market and the value can go both up and down. This is normal for this type of investment but it does mean there's a risk that you could get back less than you've paid in if you withdraw at a time when the value is lower.
