GIAs and ISAs are two of the most common accounts available in the UK. Both of them give investors the freedom to choose the investment field according to their preferences, needs and risk tolerance. However, we are talking about two very distinct accounts with very different characteristics. As a matter of fact, an ISA is an Individual Savings Account which has been designed to let people save or invest money depending on their preferences. The money you deposit in this account, whether you want to save it or invest it, will always be protected from UK taxes. On the other hand, a GIA is a General Investment Account which lets you invest in a great diversity of areas. By opening one, you won’t have the chance to use it as a regular savings account, but only to invest your capital and to pay taxes depending on your economic situation. Also, ISAs come in many different types, each of which has been designed to help people choose the best one for their situation. Let’s have a closer look on this matter.
How does ISAs work? How many types are there?
An Individual Savings Accounts represents a modern and wise way to save or invest your savings. Its great popularity comes from the many benefits you can enjoy by opening one. In addition to being able to save or invest money in a tax efficient way, ISAs let you choose the best investment field according to your preferences. As a matter of fact, today you can open a stocks and shares ISA if you want to have the gains of an investment account that lets you invest in stocks, bonds, real estate and so much more. You can also take advantage of very useful tools such as a stocks and shares isa calculator in order to get a forecast about your investments. Lifetime ISAs are another really popular choice because they give you the chance to save money for your life related purchases, such as a new house or for retirement. On the other hand, Cash ISAs are really similar to regular savings account. Lastly there’s the Innovative Finance ISA and the Junior ISA. No matter what ISA you decide to choose, you should know that every type available comes with a restriction on the amount of money you can put in it in a tax year, the so-called annual allowance which is currently set at £20,000 for all ISAs and at £9,000 for Junior ISAs.
How do GIAs work?
As mentioned above, GIAs are General Investment Accounts which let the holder invest in a great diversity of areas. Unlike the ISA, a GIA won’t grant you any particular tax benefit and you will have to pay contributions according to you tax situation. As a matter of fact, people usually decide to open a GIA when they have already exceeded their annual ISA allowance. Also, a General Investment Account may be a really good idea for people who don’t want to lock their money in a pension trust, because unlike retirement funds, GIAs let you withdraw your money at any time.
GIAs and ISAs are definitely not the same
As explained above, ISAs and GIAs are definitely not the same. ISAs are particularly suited for people who want to save or invest their money without paying any tax on it. It could also be a very good option for first-time investors who want to embark on a new economic path. On the other hand, GIAs are particularly suited for people who want to access their money at any time without any restriction on the amount you can deposit in a year.