Components
of an ISA
 Three distinct components of an ISA allow
you to invest your money in different ways. This gives you
a significant amount of flexibility that allows you to tailor
your ISA according to how you want to save your money, and
for how long you prefer to maintain your investment.
Cash ISA A Cash ISA allows you convenient and immediate
access to your funds, making this component ideal for short-term
borrowing.
Stocks and Shares ISA Stocks & Shares ISAs are ideal if
you prefer to keep your money in a long-term investment
(i.e. more than five years).
Given the normally volatile nature of the stocks and
shares market however, your ISA may fluctuate in value
and you may
end up taking a loss rather than a profit over the
duration of your investment. Earning from a Stocks & Shares
ISA is not guaranteed. That said, there are two common
types of
Stocks & Shares ISAs, the Tracker and Self-Select:
- Tracker
Your money is invested in the shares of one or more
indices on the stock market. This lets your ISA
Manager keep
track of how your investment performs by closely
monitoring the
stock market index. Generally, Tracker Stocks & Shares
ISAs are automatically traded, depending on immediate
movements in the
market.
- Self-Select
This lets you choose exactly which stocks and shares
to invest in. Normally, you will be furnished
by your ISA
Manager with
a list of approved stocks and shares to select
from. You can only choose from this list but it does
give
you a direct
involvement
in deciding which particular shares to invest
in.
Life Insurance ISA
Similar to Stocks & Shares ISAs, Life
Insurance ISAs come with the additional feature of life insurance
coverage. Just
like Stocks & Shares ISAs, there is no guarantee
that your long-term investment will yield a profit
and it is possible
to end up with less than what you initially invested
in your ISA. |
