According to the research findings, the average return of stocks and shares ISA between March 2020 to March 2021 was 13.3%. March 2020 was also when the 0.1 per cent bank interest rate kicked in in the UK. It is still there at the time of writing. So, no wonder that more people are actively looking for ways to invest in stocks and shares ISA.
But isn’t investing a somewhat risky proposition? More importantly, should you follow the peck and invest in ISAs? It certainly depends on many variable factors such as your financial situation and goals, risk appetite and plans, etc. Anyhow, we have found out the three main reasons why you may find investing in stocks and shares ISA an appealing proposition. Let’s find out from below. Try also investing in crypto and check cryptolaun.ch to know about crypto investing like bitcoin, litecoin, Ethereum.
No Taxes on Capital Gains
The very nature of ISAs allows you to avoid paying capital gains taxes up to a certain amount of investments. For the tax year 2021-22, any adult individual in the UK can pay up to 20,000 pounds toward an ISA. Any gains you earn from that initial investment won’t incur any capital gains taxes. Isn’t that wonderful?
Suppose you put all your ISA investment toward stocks and shares ISA. If it returns even five per cent, you will gain 1,000 pounds in tax-free income! However, make sure you know what you are doing before making such a big financial decision. Otherwise, there may not be an income at all to pay tax for.
A Safer Bet for the Long Term
There is no denying that any investment comes with a risk. Investing in stocks via an ISA is no different to that. However, if you can take a long-term approach toward your investment, the chance of losing money isn’t that great.
To put things into perspective, between the years 2019-20, the investors lost money investing in stocks of ISA products. Yet, if you zoom out, you will see the average annual rate of gains from stocks and shares ISA has been around 5 per cent for more than the last 20 years. Moreover, share markets around the world seem to have a bias toward rising prices. So, if you can ride out any short term volatility, your chance of returning a tax-free profit is much higher.
Fintech Platforms with Inexpensive Fees
Thanks to the ongoing Fintech revolution, it is now easier than ever to invest in different ISAs. There are now online platforms with a range of offerings for tax-free investments. Some modern-day platforms charge no fees for the first year and charge relatively cheaper rates in the following years. They also offer the chance to track your investment via easy-to-use mobile apps and web platforms, making it an effortless activity.
Anyhow, if you want to invest in stocks and shares ISAs, make sure you find a reliable bank with all the latest technologies. Not all the platforms are the same or offer the same fees, after all!