The most secure way to save up for your future if you are a UK resident is ISAs. The government has different kinds of Individual Savings Accounts or ISAs for the people. You get to save your money and receive interest in your savings. And these interests go tax-free, which is convenient at the time of crisis.
The ISAs were introduced back in 1999. There are mainly four kinds of ISAs in the UK: Cash ISAs, Investment ISAs, Innovative ISAs, and Lifetime ISAs. Each type has its particular terms, requirements, and benefits. The UK government offers these to any residents living in the country.
You can get a Cash ISA if you are a UK resident and over 16 years of age. It is almost like a traditional savings account. You get interested in your savings going tax-free. If your interest goes over 1000 pounds, you have to pay taxes. It is one of the safest ways to save up money. As cash ISAs UK interests don’t go up and down with the market, it is a good option for anyone with some good cash to set aside.
Investment ISAs allow you to invest money into stocks and shares. It has the possibility of the highest return, all without any income tax on it. Bank offers many stocks and shares in different Investment ISA packages for different periods.
The most profitable way to earn money with ISAs is by investing in the stock market in the long run. But keep in mind, it’s an investment that may or may not return the intended profit margin. It may even crush totally, but that’s unlikely to happen. After all the fees, all the interests cash into your account. So it is the best option if you are planning on a long term investment. Just note that you have to be 18 years of age or older to get an investment ISA.
Innovative ISAs are pretty new in the investment industry. It works as individual lenders willing to invest in businesses and individuals directly. As no bank is there as the middleman, there is no additional fee or charges. The interest return rate is higher than any other ISAs. But as there is no bank or any form of authority here, the lender sometimes finds them self empty-handed if the borrower fails to pay back. It comes with high profit and high risk at the same time. The lender cannot claim their investment as there is no Financial Service Compensation.
If you want to save up for your house or simple lifetime security, this would be the most suitable ISA. It pays up to 25% interest on your savings annually. While you can’t usually cash it before expiry, the tax-free interest gets credited monthly.
An additional ISA for your child’s future, Junior ISAs UK are an alternative to the Child Trust Fund. It is an excellent way to save up for your child’s future in a tax-efficient manner.