What is a Trading 212 Stocks and Shares ISA?
A Trading 212 Stocks and Shares ISA is a way to invest money in the UK with a number of tax benefits.
Click Here to open accountWhat is a Trading 212 Stocks and Shares ISA
A Trading 212 Stocks and Shares ISA, also known as an Investment ISA, is an account which allows you to invest into a variety of funds, bonds and individual company shares without having to pay capital gains tax (CGT), and income tax on any dividends or profit from your account.
ISA stands for Individual Savings Account and there are 4 main types available:
- Stocks and Shares ISA
- Cash ISA
- Lifetime ISA
- Innovative Finance ISA
You can open one of each type of ISA, which allows you contribute a maximum combined amount of £20,000 across these accounts every tax year💰
You can invest all your allowance into a Trading 212 Stocks and Shares ISA or spread it across your different ISA accounts, but you must stay within the annual £20,000 limit. The UK tax year runs from April 6th to April 5th in the following calendar year.
A Stocks and Shares ISA is often seen as a long-term strategy by investors to help make their money work harder than it would in a cash savings account. However, it is important to understand that your money is at risk when opening a Stocks and Shares ISA, because (unlike a Cash ISA) the value of your investments can go down as well as up.
You should only invest if you’re prepared to take the risk, and make sure to read handy articles like this to help you make a fully informed decision.
Can I have more than one Trading 212 Stocks and Shares ISA?
You may only contribute to one Trading 212 Stocks and Shares ISA within any given tax year. You could open a Cash ISA and contribute to this within the same tax year, as long as you don’t go over the maximum combined ISA allowance of £20,000 across these accounts.
You can, however, open a new Stocks and Shares ISA with a different provider when the new tax year begins, after April 6th.
It is worth noting that if you decide to do this, you can only contribute to your new ISA account within that tax year, and not any existing ones.
Before you open a new account, don’t forget that your ISA allowance resets each tax year, so you can continue to contribute to the same Trading 212 Stocks and Shares ISA account without having to open multiple ISAs. However, if you’re still thinking of switching ISA providers, you may be able to transfer your existing account, making it easier to stay on top of your investments and keep everything in one place.
Withdrawing money from Trading 212 Stocks and Shares ISA
Withdrawing from a Trading 212 Stocks and Shares ISA is relatively flexible. You can sell the shares and funds you have invested in through your ISA provider and transfer the cash to your bank account. However, you may need to check with your individual provider if there are any fees or terms and conditions for making a withdrawal.
A key thing to remember about withdrawing from a Trading 212 Stocks and Shares ISA is that you may lose out on some tax benefits if you do so.
For example; you invested the maximum £20,000 yearly ISA allowance, but later decide you want to withdraw £5,000 for a holiday 🏝 However, due to COVID-19 you were forced to cancel your holiday and so you want to reinvest the £5,000 back into the ISA. Unfortunately, because you had already invested the yearly maximum allowance of £20,000, you would have to wait until the start of the new tax year to put the money back ⏰ By withdrawing the money you might have missed out on potential returns, had your investments performed well.
With this in mind, it is worth thinking about the timings of your withdrawals and if you can afford to leave the money in the Trading 212 ISA, so you can make the most of your yearly allowance and tax benefits.
Cash ISA vs Stocks and Shares ISA
Deciding on a Cash or Stocks and Shares ISA will depend on your personal financial situation and goals.
When it comes to organising your personal finances, you may want to start an emergency or rainy day fund for those occasions when an unexpected bill or expense appears. A Cash ISA is a great place to store some rainy day savings as you can steadily accrue interest whilst also retaining quick and easy access to your money to help you weather any financial storms which might come your way ☔️ Cash ISAs are a good way to help you build a short-term financial safety net, however long term they might not be the best solution if you want to protect your savings from the effects of inflation.
A Stocks and Shares ISA is considered a longer-term saving strategy, with the general consensus amongst financial experts being that you should look to leave your money invested for at least 5 years. If you can afford not to touch your savings, investing in a Stocks and Shares ISA could be a preferable option as there is a greater potential for returns, (compared to a Cash ISA), however your money is at risk if you invest it.
As with all investing, the value of your investments can go down as well as up, so make sure to do your research and check your finances are in order, before you take on any risk.
There is no right or wrong answer, but your decision should boil down to a few core factors. Are you prepared to take on the risks involved with investing, and when do you think you’ll need to access the cash?
How to open a Trading 212 Stocks and Shares ISA
There’s a lot of choice when it comes to opening a Stocks and Shares ISA. You can open an account directly from an ISA provider, such as Trading 212. a fund manager, a bank, or through a financial adviser or online share account.
Once you’ve done your research and picked your provider, it’s time to open your Stocks and Shares ISA. To open a Trading 212 Stocks and Shares ISA you must be 18 or over and a UK resident, (for tax purposes) and able to provide a few personal details such as address, national insurance and date of birth. You may also need to provide some form of ID and proof of address.
You can open an account at any time during the year and the process is relatively simple.