Types of ISA

There are two types of ISA, the Mini (or cash) ISA and the Maxi ISA.

Components of a maxi ISA

A maxi ISA can have three components, a cash element (maximum £ 3,000 ) an investment component and an (life) insurance component.

The cash element is similar to investing your money in a bank or building society account, with the difference that you will not pay tax on the interest you earn, effectivley making the interest rates more attractive.

The investment element is typically invested in stocks and shares, typically through some type of fund. Similarly, you will not have to pay tax on any gains in the fund value, or on any dividends recieved by the fund.

Remember that the prices of shares can go down as well as up, so there is an element of risk.

Types of ISA

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