Both types of ISA are tax free, so no matter which you choose, your money is sheltered from the taxman.
Plus, it doesn’t have to be ‘either or’. Every year you have an overall annual ISA allowance that you can use in whichever way suits your goals best. This could be saving or investing in one type of ISA, or splitting your ISA allowance across one of the many types, for example a Cash ISA and an Investment ISA.
Depending on how long you want to wait before accessing your money, and your attitude to risk, it’s possible that choosing just one type of ISA might suit you better. The handy checklist below compares some of the differences between a Cash ISA and Investment ISA.
- Could be right for you if you are saving for the short term
- Many Cash ISAs allow easy access to your money, some require notice and some fixed rate accounts may penalise you for withdrawing savings early
- You will always get back at least what you have paid in
- Low rates of interest could mean that the return on your money could struggle to outpace inflation
- Could be right for you if you are looking for medium to long term investing (min of 5 years to 10 or more)
- Investment ISAs offer greater potential for your money to grow
- Some products and providers may charge for withdrawals and exit fees may apply
- As with all investments, your capital is at risk and you could get back less than you pay in
At Scottish Friendly, we offer Investment ISAs. We have a selection of four Investment ISAs to choose from, with easy start options and products with a range of funds available, investments start from just £10 a month or more.