Investment Accounts
What is an investment account?
To start investing and saving for your future, you’ll need an investment account. This is where you’ll buy, sell, and hold things like stocks, funds, or bonds. There are many types of investments to consider, and it can feel overwhelming at first. But don’t worry – over time, you’ll learn what works best for you. The most important first step is selecting the right account to get started, based on your goals and needs.
There are several types of investment accounts, and choosing the right one depends on your financial goals, such as saving for retirement, a home, your child’s education, or building long-term wealth. Each account offers different benefits, like tax advantages or flexibility, so it’s important to understand which one aligns with your needs.
Below you can find the different investment accounts available to you, their advantages and disadvantages, to help you choose the one that fits your needs and plans for the future.
A quick tip -
Choosing the right investment account is the first step to investing for the long term. After that, you can pick the investments that match your goals. If you're unsure, consider getting financial advice to help you make the right choices.
Compare investment accounts
Let’s explore the different types of investment accounts and how they work. Each one has unique rules and benefits, helping you choose the best way to grow your money.
Investment accounts for long-term savings
Stocks and Shares ISA
A Stocks and Shares ISA helps you invest for the future with tax advantages. You can save and invest in a range of assets like stocks, bonds, and funds, all while benefiting from tax-free growth.
- No capital gains tax on your investment gains, income, or withdrawals
- Flexibility to invest in a wide range of assets to grow your savings
- It’s a great way to save for specific goals for the future
General Investment Account
A General Investment Account lets you invest in stocks, bonds, and funds for the future. It offers investment flexibility but doesn't have the tax benefits of an ISA, so profits may be taxed. No limit to how much can be invested.
- Investment gains and income may be subject to capital gains tax
- Unlike ISAs, there are no annual limits on how much you can invest
- Easy withdrawals and accessible
Something to think about
General Investment Accounts should be used with caution. Maximise your ISA allowance first, as these accounts lack the tax benefits.
Cash ISA
A Cash ISA is like a regular savings account, but you don’t pay tax on the interest your money earns. It’s super safe because your money isn’t invested. While the returns are usually lower compared to other types of investments, it’s a great option for those who aren’t willing to take risks with their money.
- Your savings grow free of capital gains tax
- Low risk, as your money is not invested in stocks or shares
- Simple to manage and understand
A Risk Free Alternative
A Cash ISA is a safe way to save money without any risk of investing into the stock market. The returns might not be as high, but it’s great for people who want to keep their money safe and make the most of their ISA allowance.
Investment accounts for long-term life goals
These accounts help you save for long-term goals like retirement or a home. Access is often restricted, making them ideal for savings you won't need soon.
SIPP (Self Invested Personal Pension)
A SIPP is a flexible retirement account where you choose your investments. Savings grow tax-free, with government contributions. Access from 55 (57 in 2028), 25% tax-free.
- Tax-free growth on investments
- Helps build a savings pot for when you retire
- The government adds money on top of your contributions
Lifetime ISA
A Lifetime ISA helps you save for two big things: buying your first home or saving for when you’re older (over 60). The government even gives you a bonus of 25% on the money you save.
- Get a free bonus from the government (up to £1,000 a year)
- You don’t pay tax on your savings, growth or on the bonus
- Great for long-term goals like buying a home or a retirement fund
Investment accounts for your children's future
Invest in your children's future and give them a head start. These long-term accounts offer growth potential, but withdrawals are typically restricted.
Junior ISA
A Junior ISA is a tax-free savings account for a child's future. Parents invest the money, which grows tax-free, until the child turns 18 and takes control. No withdrawals are allowed before then.
- Tax-free growth on investments
- Helps build a big savings pot for when the child becomes an adult
- Investment ISA or Cash ISA options available for fixed rate growth
Junior SIPP
A Junior SIPP is a tax-free savings account for a child's retirement. Parents invest the money, which grows tax-free, until the child can access it much later in life.
- Early start advantage towards your child's retirement
- Benefit from the power of long-term investment growth
- Savings are locked until retirement age
Choosing the right investment account
Picking the right investment account is an important first step in planning for your future. Take your time to learn about your options and choose the one that matches your needs.
Before you decide, ask yourself these simple questions:
- How long do you want to invest your money for?
- Are you okay with some ups and downs in the market, or do you prefer a steady approach?
- What are you saving for—like retirement, a home, or education?
- How much risk are you comfortable with?
If you’re still not sure, it’s a good idea to talk to a financial advisor who can help guide you through your choices.