Helpful article

What are the Benefits of Stocks and shares ISAs?

A stocks and shares ISA can be a great way to make tax efficient investments.

Let’s talk about risk

The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested. Tax allowances and the benefits of tax-efficient accounts are subject to change and tax treatment depends upon your individual circumstances.

We believe that investing today is arguably more important than ever before, and we understand that maximising your available funds- whether you’re looking to grow a nest egg lump sum or boost your income- is key. One of our most popular products is the BMO ISA, which gives your money the best chance to grow by investing in one or more of our investment trust portfolios within your tax-free ISA allowance. But how do stocks and shares ISAs like this work?

 
 

Before we get into some of the most common questions about stocks and shares ISAs and BMO’s ISA, it’s important to understand the difference between a stocks and shares ISA and a cash ISA. While both types of ISA offer tax-efficient benefits, a cash ISA is a type of savings account where the interest is untaxed and savings are secure, whereas a stocks and shares ISA is a type of investment designed to reduce the impact of tax on your investments. If you’re unsure about which type of ISA suits your needs, we always recommend speaking to a financial adviser first before moving forward with an investment with us.

We’ve answered some of the most common questions about our stocks and shares ISA below to help you understand if this is the right plan for you.

1) What are the main benefits of a stocks and shares ISA?

A stocks and shares ISA can be a great way to make tax efficient investments. Any returns you make on your original investment with a stocks and shares ISA are free of capital gains tax, even if the returns take your investment amount over your ISA allowance for the current tax year. There is also no further income tax to pay on returns made from your ISA. This means that you could invest up to the full ISA allowance amount each year and build a strong investment over time.

2) Do I need to already know how to invest in the stocks and shares market?

Not at all! Our range of 10 Investment Trusts are looked after by professional Fund Managers who invest in a wide range of assets and companies on your behalf, making the BMO ISA a great option for investment beginners. Our Fund Managers will also regularly monitor the market and adjust the underlying investments with a view to maximising potential returns. However, you do need to understand the level of investment risk associated with your investment, which is why we suggest consulting a financial adviser if you’re unsure.

3) How much risk is involved in the BMO ISA?

As with any type of investment, it’s important to bear in mind that the value of your investment can go down as well as up and you may not get back the amount invested. Before investing, you should decide what level of risk you’re comfortable with, seeking financial advice if necessary. Once you’ve decided that, our investment trusts range from lower to higher risk, so you can choose as many trusts as you like to build a portfolio tailored to your needs.

4) How much can I invest in an ISA?

Our ISA has three flexible payment options for you to choose from, depending on the amount you would like to invest. The current investment limit is £20,000 per adult per tax year. You can choose to invest:

a) Via a lump sum only. The minimum lump sum for the ISA is £500 per investment trust.

b) With an initial lump sum followed by monthly top-up payments which can start from £50 per trust per month.

c) With no lump sum, using monthly savings from £50 per trust per month.

5) What do I do once I’ve decided to open an Investment Trust ISA?

If you’ve decided that the BMO ISA is the right plan for you, next you can decide whether you are investing for income or for growth – our investment trusts are designed to suit each aim, so you can choose trusts which are most likely to deliver on your objective from up-to-date factsheet, which can be found here.

If you’re ready to take the next step in saving for your financial future with an investment, you can call us on 0800 136 420 or email [email protected] for more information on how to open your account with us.

Find more detailed information about our stocks and shares investing options click here.

 
 
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Let’s talk about risk

The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested. Tax allowances and the benefits of tax-efficient accounts are subject to change and tax treatment depends upon your individual circumstances.

Glossary

Confused? Our handy glossary can help explain investing terms.

Invest with us

Whether you’re looking to invest for your next big adventure, a deposit for a house or you simply want to put money aside for a rainy day, our plans can offer you the chance to invest for your future in a tax-efficient way that gives access to the long-term potential of stock market investing.

This section of the website is directed at persons who are located in the UK. Please read our full terms and conditions and the relevant Key Information Documents (“KID”) before proceeding with any investment product referred to on this website. Nothing on this website is, or is intended to be, advice to buy or sell any investments. If you are at all unsure whether an investment product will meet your individual needs, please seek advice.