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Stocks & Shares ISAs

A Stocks & Shares ISA is a tax-efficient investment account that allows you to hold a variety of investments together and save tax. In a Stocks & Shares ISA, you can hold funds, shares, investment trusts, corporate bonds and more and protect them from tax. Unlike Cash ISAs, the value of your holdings in a Stocks & Shares ISA can go down as well as up so you could lose money. However, investing in a Stocks & Shares ISA offers the possibility of higher returns.

Choosing between a Cash ISA and a Stocks & Shares ISA

Cash ISAs are often more suitable for short term investing, typically less than 5 years, whereas a stocks and shares ISA is usually regarded as more suitable for longer term investing, typically for more than 5 years. Over the longer term investing can deliver significantly higher returns but is higher risk.


Funds offer an easy and convenient way to invest, and are popular with novice and experienced ISA investors alike. A fund pools together the money from many investors, and a professional fund manager invests in a broad range of assets on their behalf. The manager may invest in different asset types such as cash, bonds, equities and property – depending on the investment objective of the fund. Investors in the fund receive units which represent their proportion of the underlying portfolio.

The main benefit of investing in a fund is that a professional fund manager will make all the investment decisions. They will have the necessary expertise to continually research and analyse investments for the portfolio, and will quickly make changes when they feel it is necessary.


All the investors in the fund need to concern themselves with is that the manager is performing as expected. If there is a period of poor performance, or an investor’s objectives change, it is normally relatively simple to switch to a different fund, or to sell the fund and hold the proceeds as cash for a period of time.

The other main benefit of investing in a fund is cost. Investing in a portfolio of perhaps 50 to 100 shares is likely to incur considerably higher cost for an individual investor. Investing via a fund means these costs are shared by all investors in the fund. Investing in a fund can also provide access to shares listed on foreign stock markets, which may not be accessible to individual investors.


As with all stock market investments, funds can fall in value as well as rise so investors could get back less than they invest.

There are thousands of different investments available so investors can take as much risk as they are comfortable with and can switch between them whenever they choose, plus investors never have to worry about creating a capital gains tax liability when switching investments held in an ISA.

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