Investing for a profit

Mal Hughes of Newtown based GIFP looks at why Stocks and Shares ISAs may provide  a better return  on investments  than Cash ISAs.

The interest rates commonly available on Cash ISAs are not providing a good return for savers, although their tax-free status still provides an attraction to some, the rates are at an all time low. However, a Stocks and Shares ISA may provide the best of both worlds.

This is proper investing and means you'll be taking a risk with your capital.

With an investment ISA account you can hold stock market-type investments such as shares and funds. The investments held within the account, as with a Cash ISA, are allowed to grow tax-free.

You can also have corporate bonds and gilts (government bonds) in an ISA account. Bonds pay a fixed rate of interest and, if the company is sound, will pay the money back on a pre-agreed date. The interest paid by the bonds is free of income tax if  they are held in an ISA.

The aim is to pick funds, and/or individual shares and bonds that are likely to deliver high returns for the lowest risk - but that also carry low charges.

For the 2017/18 tax year, if you are aged 18 and over, you may invest up to £20,000.

Independent financial advisers can help pick these, but you will pay the full charges on funds in return for this advice (these fees are discounted by a fund supermarket). Some experts argue that novice investors should begin with index trackers, low-cost funds that mirror the stock market, or global investment trusts.

You may feel more comfortable  using an adviser to help you make your decision.

For more information contact Mal Hughes on: 01686 623975. Proprietor: Mat Hughes Dip PFS Email: gifp@gifp.co.uk or visit www.gifp.co.uk