If you are planning to start a new economic path and wondering what kind of account is most suited for your situation, you should first learn the difference between savings accounts and investment accounts. These are two different types of funds that serve very different purposes. As the name suggests, a savings account is designed to give the account holder a chance to save money. This money can be used to undertake, in the future, an investment path, to buy a new house or a new car, to support children and much more. On the other hand, an investment account is meant to invest your money in different financial areas. Often, those who embark on a new investment path have the goal of making their money mature over time. However, you should never consider investing as an easy way to grow your savings. In fact, investing is risky and may easily lead to severe financial losses. Since the outcome of any investment is totally dependent on the volatility of the market, the amount of money obtained is always unpredictable. Today there’s a wide range of accounts designed for those who want to save or start investing money. Among the most popular are ISAs and GIAs. Let’s take a look at the main differences between these two accounts. You can also consult this link for more information on how to invest your capital https://blog.moneyfarm.com/en/financial-planning/invest-100000-100k/.
What is an ISA?
Nowadays, Individual Savings Account – also called ISAs – are a really common choice among first-time investors. ISAs are similar to regular savings accounts except that they let you invest your capital in a wide range of economic fields. They are indeed tax-free savings and investment accounts at the same time: this means that it won’t matter whether you open one to save or invest, your money will always be protected from UK taxes. Just like a regular investment account, an ISA lets you invest in stocks, shares, bonds, and so much more. When opening one, you’ll have the opportunity to choose between many different accounts, each of which has been designed for a certain purpose. For instance, a Cash ISA is similar to a regular savings account but tax-free. There’s also a special account meant for parents and legal guardians whose goal is to put money aside for their underage children. Whichever account you’ll decide to open, you should know that there’s a limit on the amount you can deposit in a year. This sum has been set at £20,000 for most ISAs and £9,000 for Junior ISAs.
What is a GIA?
GIAs, on the other hand, are General Investment Accounts specifically meant to invest outside of tax wrappers. Just like a Stocks and Shares ISA, a GIA will let you invest in many different areas. Every British citizen over the age of 18 is eligible to open a GIA, which will also let the holder withdraw his money at any time with no restrictions. Also, there won’t be any limit on the amount of money you can deposit in a year. However, GIAs come with no tax benefits. In fact, when you invest through a General Investment Account, you’ll be required to pay contributions, which will be based on your tax situation. Generally, this kind of account is opened by people who already used up their annual ISA allowance or by people under the age of 55 who want to be free to access their savings before their pensionable age.
