How to make the most of your ISAs

Investing in your Individual Savings Accounts (ISAs) are a good way to build your wealth effectively for the future – whether you pay into one or several ISAs each tax year.

However, opening an ISA is only one part of the process. There are many things you can do to ensure you make the most of your ISAs.

Read on, to learn how ISAs work and how you can make the most of them.

What is an ISA?

Before learning how to make the most of your ISA, it’s beneficial to know exactly how they work and how you can invest in them tax-efficiently.

ISAs are specific investment accounts that allow you to save money that’s sheltered from tax. Any investments made in these accounts are exempt from income tax and can be saved, as well as withdrawn, without any tax charges.

The amount of money you can save in your ISA each tax year is dependent on the annual ISA allowance for that year.

As of the 2023/2024 tax year, the annual ISA allowance is £20,000.

There are also four different types of ISA you can invest in – cash ISA, lifetime ISA, stocks and shares ISA, and innovative finance ISA.

When investing in multiple ISAs, your allowance is applied to the total of all your investments across each ISA type. You can also only open one of each ISA type every tax year.

How to make the most of your ISA?

There are various ways to make the most of your ISAs when investing. This includes, but is not limited to:

Ensure you use your full allowance

One of the best ways to utilise your ISAs fully is to make sure you use up your full ISA allowance every tax year.

ISA allowances are reset at the end of every tax year, so you’re not able to roll over your remaining allowance to use the next year.

Therefore, it’s important to try and invest the full £20,000 each tax year across one or several ISAs.

This can be a great way to grow your wealth towards your financial goals. Whether you’re saving for retirement, building your assets effectively, or wanting to leave an inheritance, this sum of money each tax year can help you achieve a successful outcome with your financial ambitions.

Explore different ISA options

Another way to make the most of your ISAs is to explore different options for your investments. There are four different types of ISA, and investing in more than one can help you optimise your savings and diversify your investment structure.

For example, cash ISAs help you save money, but stocks and shares ISAs allow you to invest this money in certain securities to benefit from potentially profitable returns.

It’s also important to note, that any growth you receive from these investments will be exempt from income and Capital Gains Tax, so this is an additional sum of tax-free money.

Seek financial advice

The last, but potentially most important way to make the most of your ISA, is to consult a financial adviser.

With any kind of investment, your adviser can help you make the right decisions for your finances, to achieve your goals efficiently.

Your adviser can help you invest the right amounts in certain ISAs, so you grow your wealth effectively, and in a way that suits your unique financial circumstance.

Contact your modern wealth manager to begin exploring your options for ISA investments, and to start devising your own tailored approach.

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Please note, the value of your investments can go down as well as up.