ISAs (Individual Savings Accounts) have proved incredibly popular with savers since they were first launched in 1999, with hundreds of billions of pounds now squirrelled away in these tax-exempt accounts.
There are many different types of ISA, including Help to Buy, Lifetime and innovative finance ISAs. But the two main types are Cash ISAs and Stocks and Shares ISAs.
A Cash ISA is just like putting your money in a bank or building society account, except you don’t pay tax on any interest earned.
With a Stocks and Shares ISA, like those we offer at OpenMoney, your money is invested in companies and investment funds, and again you pay no tax on any profits.
Whichever kind of ISA you choose, you can only pay in up to £20,000 a year.
ISAs are a fantastic resource for savers, but, more recently, the economic climate has shifted and Cash ISA holders have seen their appeal start to fade. There is one big reason for this.
Interest rates were at a record low for a long time, so Cash ISAs weren’t earning very much money. 2017 was the worst year on record for Cash ISAs since they launched, with some accounts paying just a few pennies interest on savings of £1,000.
However, Stocks and Shares ISAs have bucked that trend. According to industry data from Lipper, the average Stocks and Shares ISA generated a return of 11.75% in 2017 - more than 10 times what the average Cash ISA earned.
It’s important to point out that last year’s strong performance is no guarantee of more growth in the future, and that a Stocks and Shares ISA could even lose money in any given year if the stock market performs particularly badly.
But, for those saving for the long term, a Stocks and Shares ISA can be a flexible and profitable option.
So, with so many people looking for alternatives to Cash ISAs that may offer a better return, we look to answer some of the burning questions they are asking about Stocks and Shares ISAs.
Is a Stocks and Shares ISA worth it?
Looking back on 2017, it’s hard not to conclude that a Stocks and Shares ISA represents good value for money, especially when compared with a Cash ISA or bank savings account, but it’s important to look at what charges are attached.
The costs of investing into a Stocks and Shares ISA varies from provider to provider, and most will either charge you a flat annual fee or a percentage of the total value of your investment.
At OpenMoney our charges are less than 0.53%, with no upfront fee, which could mean you keep more of your money than with other investments. Better still, this 0.53% fee covers everything, so there’s no hidden charges in the small print for you to worry about.
Is a Stocks and Shares ISA tax free?
In short – yes! You don't pay capital gains tax on gains made within a Stocks and Shares ISA, dividend income from stocks and shares held in this type of ISA is tax free and interest paid on corporate bonds or bond funds held in a Stocks and Shares ISA is tax free too.
Is a Stocks and Shares ISA safe?
Any investment in stocks and shares comes with risk. The value of stocks and shares can go up and down every day.
But, looking at the last 20 years, the value of the UK stock market has grown by 68%, or 3.4% a year on average. 
And, with an OpenMoney Stocks and Shares ISA, your money is invested in companies around the world, as well as other assets like property, so the risk of any one investment performing badly and pushing you into a loss is reduced.
Here at OpenMoney we offer three portfolios with different levels of risk, so you can find one that’s right for you.
Can you withdraw money from a Stocks and Shares ISA?
One of the most useful features of a Stocks and Shares ISA is their flexibility. You're not locked in and you can withdraw your money whenever you need it.
However, a commonly quoted rule of thumb is that you shouldn’t put any money into a Stocks and Shares ISA that you think you will need to withdraw within five years.
That gives you enough time to ride out any peaks or troughs in the market that could see you make a loss on your investment.
Can I transfer from one ISA to another?
Yes, with some restrictions. If you already have a Stocks and Shares ISA or a Cash ISA with someone else, you can transfer it to OpenMoney – or any other provider – at any time.
You can also transfer your money between a Cash ISA and a Stocks and Shares ISA at any time, and vice versa.
But if you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.
For money you’ve invested in an ISA during previous years, you can choose to transfer all or part of your savings.
To find out if investing your money into an ISA is right for you, just answer some quick questions.