Stocks and shares Isas explainedTaking the plunge

Stocks and shares Isas aren’t always tax-free

Investing in a stocks and shares Isa isn’t for everyone. And, unlike cash Isas, stocks and shares Isas aren’t always tax-free. 

There are other products available – such as self-invested personal pensions (Sipps) – that save more tax but place greater restrictions on access to your savings.

Find out if you’re ready to invest in the stock market

If you can answer yes to our five questions, you could be ready to invest in the stock market. The next step is to decide whether it makes sense to wrap your investments in an Isa – see the checklist in the ‘Stocks and shares Isas’ section to find out whether you’ll save tax.

If you’re still unsure whether or where to invest, get advice from an independent financial adviser - see our guide to financial advisers for more information.

Have I cleared my debts? 

It makes sense to reduce or pay off any debts – such as credit cards or personal loans – before you commit to an investment.

Am I properly insured? 

Have you got life insurance to protect your dependants if you die, or income protection insurance in case you can’t work? 

It's worth paying off debts before you invest

If not, get cover before you invest. See our guide to choosing life insurance.

Have I got a rainy-day fund? 

Ideally, you should have enough cash in an easily accessible savings account to be able to keep you and any dependants going for three to six months.

Can I tie up cash for at least five years?

A combination of the charges you’ll have to pay and short-term fluctuations in the stock market mean you shouldn’t invest if you think you’ll need the money in the next five years.

Am I prepared to lose money?

If you’re going to invest in the stock market, be prepared to take some risk – the value of your investments may go down as well as up. This won’t suit everyone. If you go ahead, remember it will be a long-term investment and things can go wrong.

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