Why invest in a Stocks and Shares ISA?

Build your own personal tax haven

Almost all investments are subject to tax – ISAs are different.

The easiest way to think of a Stocks & Shares ISA is to consider it as a ‘wrapper’. Within that wrapper you may hold (almost) whatever investments you wish, and those investments will be sheltered from tax.

Investments within ISAs work in exactly the same way as they would outside, so an ISA investment in a fund or share will leave you holding exactly the same investment as if you had bought it outside an ISA. The only difference is there is no further tax to pay on any income received, and no tax to pay on any capital gains. These benefits come absolutely free of charge for the vast majority of investments.

If you invest your full ISA allowance each year, it is possible to build up a sizeable tax free savings pot – and remember: all future gains, and all future income will be sheltered from the taxman.

Less tax simply means higher returns for you. In fact, for those with money to save or invest, there is little reason not to open an ISA. Most investors shouldn’t even consider investing outside an ISA until they (and their spouse) have used their full ISA allowance.

Taxes are going to rise

Given the parlous state of UK’s public finances, most commentators agree that taxes will have to rise. This means tax shelters, such as ISAs, are set to become more valuable than ever.

On 6 April 2010 the ISA allowance increased to £10,200 for everyone (so a couple can shelter as much as £20,400 every year). There are two types of ISA – Cash ISAs and Stocks & Shares ISAs. Up to £5,100 can be invested in a Cash ISA with the balance (up to the £10,200 limit) in a Stocks & Shares ISA.

Cash ISAs are just like a deposit account, except you don’t pay any tax on the interest.

Stocks & Shares ISAs allow you to hold a wide choice of investments, but you need to be comfortable with the risks involved. Over the longer term funds and shares have the potential to produce significantly higher returns than cash. However stock market investments can fall in value as well as rise, so you could get back less than you invest.

Where can you invest within a Stocks & Shares ISA?

Within a Stocks & Shares ISA with Hargreaves Lansdown you can invest in any combination of:

• Funds – almost any fund open to private investors (our clients currently hold over 2,000 different funds)
• Shares traded on the London Stock Exchange, the DOW 30, Nasdaq 100, S&P 500, and  European top 300 shares
• Corporate bonds
• Government gilts
• Investment trusts
• Exchange traded funds (ETFs)

Or you can open your Stocks & Shares ISA with cash and then invest at your leisure. You can also hold cash when you sell an investment and want to wait before reinvesting the proceeds. Interest is earned on cash held within a Stocks & Shares ISA, but it is paid net of a 20% charge to HM Revenue and Customs.

Why should you invest in a Stocks & Shares ISA with Hargreaves Lansdown?

• Low costs: the best fund discounts, no dealing charge on funds and competitive dealing commission on shares
• Manage your account online with our award-winning website
• The widest investment choice – no other provider gives you more choice than the Vantage Stocks & Shares ISA
• Mix and match different investments – you are not restricted to one fund management company
• Free investment research and ideas from our award-winning research team
• No call centres or automated answering systems - just friendly, knowledgeable people that you can speak to whenever necessary
• We can even pay you an annual Loyalty Bonus for keeping your investments with us! 

Plus, you can transfer all of your existing investments to your Hargreaves Lansdown account and manage them online. Our website allows you to switch easily between investments and to analyse your portfolio at the touch of a button – essential in today’s fast-moving markets.

Investment ideas for your ISA

• 
• HL MM Income & Growth
  30 Jul 2010
  The equity income sector is home to some of the finest fund managers in the UK. This fund aims to identify them, investing in a selection of what we believe are the best equity income funds available. It fuses different, yet complementary fund management styles and is constantly monitored by a dedicated team.
• 
• SLI UK Smaller Companies
  30 Jul 2010
  Some smaller companies are world-leaders, generating earnings globally in all market conditions. But with such a vast array to choose from you need to invest with a manager who has demonstrated the ability to achieve superior returns.
• 
• First State Greater China Growth
  30 Jul 2010
  This fund invests in China and the related markets of Hong Kong and Taiwan. The manager, Martin Lau, tends to focus on large, well established companies, with an appreciation of the risks as well as the opportunities in China.
• 
• Old Mutual Corporate Bond
  30 Jul 2010
  This fund aims to deliver a good level of income combined with some capital growth from a portfolio of corporate bonds. A minimum of 80% of the portfolio is invested in investment grade bonds. The rest of the fund is invested in a selection of other bonds, including some higher risk high yield bonds, to enhance the overall level of income.
• 
• Elite Bloxham Global Equity Income
  30 Jul 2010
  Equity income investors who are looking to diversify beyond the UK might want to consider this global fund. Pramit Ghose, the manager, focuses on large companies with resilient earnings, as these companies often prosper in times of volatility. He seeks opportunities in all regions, from developed Western markets to higher risk emerging markets, leaving no stone unturned.

Open an ISA now

You can open a Stocks & Shares ISA online and invest a lump sum or set up a regular savings plan. Your application will take less than 5 minutes.

Transfer an existing ISA

You can also transfer existing ISAs (including Cash ISAs) to Hargreaves Lansdown and benefit from having all of your investments in one place.