How to Find the Best ISA for You

When looking to save money, we all want our money to be generating interest so we can put our money to work. Opening an individual savings account (ISA) is often a great option to make a decent return on your savings. But which one should you choose? Therefore, I am going to give you some tips on what to look for in an ISA so it will best serve your needs.

What are you looking for in an ISA?

To start with, you need to understand what kind of saving goals you have in mind. Do you need a flexible ISA that you can assess regularly? Or are you happy to leave your pot of money to grow over long periods of time? These are the kinds of questions you need to ask yourself when you are trying to understand which kind of ISA will best benefit you.

There are all kinds of ISAs that provide specific benefits. The most popular ISA is a cash ISA and it is straightforward to understand and use. You put your money in, and you often get a fixed interest rate. You can also opt for an easy access account which allows you to get at your money whenever you need it but usually offer a worse interest rate on your money.

Stocks and Shares ISA

This kind of ISA allows you to invest in funds, share and bonds, and keep it all in a tax-free wrapper. Mean there will not be any capital gains tax to pay on any profits. You usually open a stocks and shares ISA via a fund management group, online broker or fund supermarket, although some will charge fees for operational costs and account creation.

This can be an attractive option for many, but do not forget this is an investment and carries financial risks. The value you purchased your stocks and shares at is not static, it goes up and down. So, take that into consideration when you consider this option. Do not pick up volatile stocks or shares if you cannot tolerate the potential loses. If you are risk-averse this probably is not the option for you.

Help to Buy ISA

On the other end of the spectrum, we have Help to Buy ISAs. These ISAs often have strict regulations surrounding them only allowing you to use the interest generated to go towards a deposit for a house. They are a popular choice for first-time buyers who are looking to get on the property ladder. They often have some attractive rates attached to them that are also tax-free. But each package is different. So make sure that you do your research before committing to an ISA.

The great thing about most ISAs is that they are extremely safe though. They are often the safest because they are backed by a government. With rates like the government topping up your savings by 25%, with a maximum of up to £3,000 can make this an exciting offer for those who are looking to get on the property ladder.

Ultimately, exploring the variety of ISA packages and sitting down with yourself and thinking about your financial goals will help you decide which account is right for you. If you are willing to save long-term but take on the risk a stocks and shares ISA might be worth opening. On the other hand, if you are looking to buy a home you might want to use a Help to Buy ISA, which is often seen as a safer option because it is government-backed.