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Savings & Investments

5 reasons why you might invest in a Stocks & Shares ISA this tax year

Written by Tom Lamb on Jun 20th, 2022 Time to read: 3 minutes

Stocks & Shares ISAs are becoming increasingly popular. Around 13 million Adult ISA accounts were subscribed to in 2019 to 2020, which is an increase from 11.2 million in 2018 to 2019. This is no surprise as they come with many advantages.

What is a Stocks & Shares ISA?

A Stocks and Shares ISA is a tax-free investment account that lets you put money into a range of different investments, this can include shares, funds, bonds and trusts. Understanding the risk that your investments could go down in value as well as up is important with a stocks and shares ISA. If you’re new to ISAs or investing, it’s worth reading our guide to choosing the right ISA.

 Find out more here.

Why should I invest in a Stocks & Shares ISA?

1.   There are significant tax advantages

One of the main benefits when it comes to investing in a Stocks & Shares ISA is that you don’t pay Income Tax or Capital Gains Tax on the money inside your ISA, no matter how much it grows. Investments held outside of an ISA could be subject to capital gains tax on the profits made above the CGT exemption, which is £12,300 for the 2022/23 tax year.

2.   It’s an easy way to start investing

Even if you have never invested before, the process of opening a Stocks & Shares ISA shouldn’t be intimidating. Our Stocks & Shares ISA is designed to help you reach your financial goals, whether that means paying off your mortgage, covering school and university fees, or simply growing your wealth – this is one of the main reasons we are trusted by more than 112,000 investors!

When investing with True Potential we offer:

3.   Make the most of the ISA allowance this tax year

Investing in an ISA at the start of the tax year means you can really make the most of the 2022/23 tax allowance of £20,000 and won’t have to make any last-minute decisions when it comes to April 2023. You are able to invest your full £20,000 allowance in one go or add bits each month, whatever suits you! It’s important to note that if you don’t use the full allowance you cannot carry this over to the next tax year.

4.   Potential to do more with your money

Another benefit of a stocks and shares ISA, unlike a cash ISA which generally have low-interest rates currently, is that the potential for growth is typically higher than cash ISAs. Cash ISA interest rates are often below the inflation rate, meaning money saved in them loses buying power. Your returns in a stocks and shares ISA will depend on how much your investments are worth when you sell them. Due to the risks involved with investing, Stocks and Shares ISAs should be held for at least 5 years in order to ride out volatility in the market. Remember, your capital is at risk and you could lose money and end up with less than initially invested.

5.   You are in control of your investments

Once you have set up a stocks & shares ISA you are under no pressure to invest straight away, you can also decide whether to make a lump sum contribution or to gradually add money as and when – it’s totally up to you! As well as this, with our award-winning technology, you’ll be able to see the value of your investments with our mobile app and desktop site. This unrivalled view of your financial life puts you in control and empowers you to do more with your money.

How to open a Stocks & Shares ISA

Opening a Stocks & Shares ISA should be a straightforward process, you will be required to provide some personal details like your address, National Insurance Number and date of birth.

We understand that investing your money is one of the most important decisions you will make. Please feel free to contact us with any questions you have, and we’ll be happy to help.

With investing, your capital is at risk. Investments can fluctuate in value, and you may get back less than you invest. Past performance is not a guide to future performance. Tax rules can change at any time. The information contained in this publication does not constitute a personal recommendation and the investments referred to may not be suitable for all investors.

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With investing your capital is at risk. Investments can fluctuate in value, and you could get back less than you invest.

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