Today more and more people decide to embark on a new investment journey with the goal to give money the chance to grow. UK residents have a wide choice when it comes to choosing between the many investment accounts available. In fact, there are many different types of accounts in order to meet the needs and preferences of as many people as possible.
No matter what kind of account you’ll decide to open, you should never forget about the risk that comes with any type of investment. In fact, the market’s constant swings make the outcome of every investment unpredictable. That’s why you carefully evaluate your overall financial situation before deciding to start an investment journey.
As a matter of fact, if you don’t have enough money aside, or if you don’t have a stable economic situation, a wrong investment could have negative consequences. On the other hand, if you saved enough and you have extra money that you want to invest to make money, you can choose between two main types of accounts in the UK.
The first one is called ISA, which is more similar to regular a savings account. The second one is called GIA, which on the other hand is more suited for investors who want to invest and have more freedom when it comes to withdrawing and depositing money. Let’s have a look at the many features of ISAs and GIAs.
ISA: Individual Savings Account
ISA stands for Individual Savings Accounts, and it consists of a modern way to save or invest your capital in a tax efficient way. That’s basically the main reason behind the great popularity of this kind of account. As mentioned above, with an ISA you can decide whether save money or invest it in a great range of fields according to your needs.
In fact, you can invest in stocks, buy shares, bonds and so much more, or decide to open an account to put money aside for your life-related purchases.
In addition to that, you can open a special kind of ISA to save money for your underage children.
Whichever kind of ISA you’ll choose to open, you will always have to comply with the annual allowance, which refers to the maximum amount you can deposit on your fund in a tax year. This value is currently set at £20,000 per year for all ISAs and at £9,000 per year for Junior ISAs. You can also use some tools such as the stocks and shares isa calculator to make a forecast of the return on your investments.
GIA: General Investment Account
A GIA is a General Investment Accounts which gives the holder the freedom to invest in many fields outside of tax wrappers. In this case, a GIA doesn’t come with tax benefit. In fact, you’ll be required to pay contributions in accordance with your tax situation.
Thus, this kind of account has been specifically designed for people who want to invest and they are willing to face the risks related to the market’s volatility. In this case, there aren’t limit on the amount you can deposit in a year and the investor has more freedom when it comes to depositing or withdrawing.
ISA or GIA?
As we have seen, ISAs and GIAs are two very different types of account. ISAs are individual savings accounts which give you the freedom to choose whether to save or invest your money tax-free so you don’t need to start paying tax for that. On the other hand, GIAs have been designed for investors who want to have more freedom about how often and how much to invest. Thus, the choice will basically depend on the holder’s profile, financial situation and goals.