Before you think of holding the assets in a stock and shares ISA, you need to know about what this ISA really means.

 

ISA is considered as a financial product of UK where you can save and invest money with benefits of paying lesser amount of tax.  This financial product was launched in the year 1999-2000 tax years for the benefit of the common people providing tax saving solutions. The added advantage of ISA is, it generated tax free amount on the income generated by the product while allowing the savers to get access to the funds.

 

In UK, there are 2 types of ISA available; one is cash ISA and another is stock and shares ISA.

 

Stock and shares ISA are available for people above 18 years of age. Under this scheme certain list of assets comes that you can hold on to:-

  • Unit Trust – it is the most popular type of investment under ISA. Fund managers manages unit trust and tends to invest in corporate bonds, know as manual unit trusts. This has higher annual charge as compare to tracker funds, i.e. stock market index. Another type of unit trust includes additional performance charge along with annual charge. The best way to do comparative study of all these trusts is to compare their Total Expense ratio.  

 

  • Exchange Traded Funds (ETF) – ETF are usually bought by private investors. They are usually bought and sold like shares for which most of the buyer is not required to pay the stamp duty while purchasing it. ETF usually have lower annual charge as compare to Unit Trust. These are further divided into 2 types: - iShares and ETFS securities.

 

  • Overseas Investments – this scheme allows the investors to invest money overseas. If you are planning to buy overseas investments, you can invest it in different classes like, corporate bonds, government bonds, commercial property, etc.

 

  • Commercial Property Investment – this allows the buyer to buy shares in real estate companies. Under this scheme, there is high chance of capital growth for buying commercial property unit trusts.

 

  • Private Equity – the investment is usually done in privately owned companies.

 

  • Commodities and Precious metals – these two metals are highly beneficial as they have highest stock market value.

 

The above list can provide you more or less a clear picture about what this ISA is all about.