Savings Accounts

Are investment ISAs worth it?

If you want to increase the value of your savings, investing in stocks and shares through an investment ISA can grow your wealth over time. Potentially, they could even help you achieve a better return than a cash ISA or regular savings account. But does that make them worth it?

 - 9 Min Read
Last updated and fact checked:
Are investment ISAs worth it?
  • An investment ISA from InvestEngine is the same type of product as a stocks and shares ISA.
  • Stocks and shares ISAs allow you to invest in the stock market and buy/sell other types of financial assets.
  • Any interest earned or capital growth is tax free in any tax year, according to current tax rules.
  • Investments have the potential for unlimited returns, outstripping main interest rates on savings products.

FAQs: Investment ISAs

  • Is an investment ISA the same as a stocks and shares ISA?

    Yes, an investment ISA is the same as a stocks and shares ISA. It means that you can open one and benefit from the same tax efficiencies that a stocks and shares ISA offers. Money invested can earn a return, without you paying tax on the gain. Within an investment ISA you can invest money in a variety of investments, including stocks and shares.

  • Is it better to open a savings account instead of an investment or cash ISA?

    It depends. Savings accounts can be structured in such a way that in some situations, you may find that they are better for you. For instance, it may have a high savings interest rate that negates the tax benefits of a cash ISA or stocks and shares ISAs. However, over time, the money made when investing in an ISA can make savings products less attractive - particularly if you are an additional rate taxpayer who doesn’t receive a personal savings allowance.

  • What's the personal savings allowance?

    The Personal Savings Allowance (PSA) is an amount of interest you can earn on your savings, tax-free. As of 2024/25, for basic-rate taxpayers, the allowance is £1,000. For higher-rate taxpayers, it is £500. Additional rate taxpayers do not receive a Personal Savings Allowance. As of 2024/25 tax year, the personal savings allowance is unchanged, but it’s still a good idea to check for any updates on the HMRC website.

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Investment ISAs - also known as stocks and shares ISAs - are a popular way of saving, with almost 4 million people choosing to open a stocks and shares ISA in the 2021-22 tax year

Let's look at why an investment ISA may be suitable for you when you consider them with your financial situation in mind.

Whether you're looking for an ISA, personal pension, or investment account, check out how these compare at Invest Engine and click the button to open your account today!

*Total limit for all ISA types
**Per person for the year 2024/25 tax year
***Per person across all investments, 2024/25 tax year

Types of ISAs

ISA stands for Individual Savings Account. ISAs are tax-efficient as any gains made in them are free of capital gains or income tax. You are given an allowance you can invest in ISAs each year, which is £20,000 for the 2024/25 tax year. 

There are five types of them:

Cash ISAs and stocks and shares ISAs are by far the most popular. Let's look at the differences between them.

Cash ISAs

A cash ISA is a tax-free savings account and have long been a favoured option for those seeking a secure place for their money. That’s because if you open a cash ISA, you earn a set interest rate on it, fixed from the start by your chosen provider. The interest you earn over the term is paid to you, without the need to pay tax on it. For cash ISAs to be of most use, the interest rate needs to be higher than inflation so you don’t lose real value in your cash savings. 

Stocks and Shares ISA

A stocks and shares ISA is an account where you can invest in a range of assets, such as stocks, international shares, bonds, ETFs, and mutual funds. Doing so gives you exposure to potentially beneficial market fluctuations, which offers the chance for higher returns than the interest rates earned on a cash ISA. 

In fact, stocks and shares ISAs offer the chance of uncapped returns. Not only can these then significantly compound over the long term, the capital gains and any dividends paid remain tax free in every tax year, too.

However, you do need to remember that investing in the capital markets does come with increased risk. There is a chance that you may not get back all of what you originally invested. That being said, when building a portfolio within a stocks and shares ISA, it's possible through diversification to minimise the risks that investing in the stock market can often bring. Losing money will always be a risk, but some of that risk can be diversified away.

Which should I choose?

When deciding between which may be better for you, remember that a stocks and shares ISA carries the possibility of uncapped gains, while in comparison a cash ISA will only ever earn a set amount of interest. However, the risk with a cash ISA is generally lower as it is not subject to market volatility. Depending on your situation, one may be better for you than the other. Ultimately, you need to consider your risk tolerance, financial goals, and time horizon before making a decision.

You can invest in both types within the same tax year, too. So, for example, you could invest £10,000 in a cash ISA and £10,000 in a stocks and shares ISA.

Why choose InvestEngine?

If you do decide a stocks and shares ISA is the best way forward for you, over a regular cash savings account or a cash ISA, InvestEngine may be a good option for you to explore, whether you are a novice investor or more experienced. 

We rate these features of their Investment ISA products:

  • Zero ISA account fees.
  • Large number of ETFs.
  • Powerful investing tools.
  • Free transfers.
  • ISA sign up bonus.

Let's look in more detail at the benefits of picking InvestEngine as your provider:

Zero ISA account fees

InvestEngine has a competitive fee structure - it doesn’t charge you for opening an ISA account - meaning you can keep more of your money, which isn't the case for every single stocks and shares ISA provider out there. Furthermore, the fees charged on trading transactions and investing are low, though they do vary according to the type of portfolio you choose. If you opt for do-it-yourself management, you won’t pay any InvestEngine fees. 

Currently, InvestEngine offers two types of portfolios: DIY or managed. If you opt for the commission-free DIY portfolio service, your only costs involve the exchange-traded funds (ETFs) in which you invest. These aren’t fees which go to InvestEngine. They are annual charges set on the ETFs themselves. Alternatively, if you opt for the managed portfolios, InvestEngine charges a modest 0.25% per year. The extra cost is the fee for managing your investments, with the same ETF annual charges applied where necessary. It means that you keep more of the gains made on your underlying assets, which over time can add up to a material amount. 

When added to the tax benefits of stocks and shares ISAs, when you finally want to withdraw money, you could well have earned far more than with other savings vehicles available on the market.

Large number of ETFs

InvestEngine has a choice of 600+ ETFs on its platform. Such a wide range gives you more chance of finding a fund that aligns with your goals and investment strategy. As there are so many of them, you can gain access to global investments, specific regions and asset classes which are otherwise difficult to gain exposure to. 

Furthermore, with InvestEngine, you can invest as little as £1 in any ETF they offer, thanks to fractional investing. It means you can get access to even the most expensive ETFs, so you can diversify your portfolio quickly and easily.

Powerful investing tools

If you choose to invest yourself, InvestEngine’s range of tools are incredibly supportive. Our favourites are the AutoInvest, Savings Plans, rebalancing and look through features, which we explore in more detail below. These tools allow you to make informed investment decisions, helping you not only invest in a tax efficient way, but also in a way which is smarter too.

AutoInvest and Savings Plans

If you have too much surplus cash in your account, as determined by your investment strategy, the AutoInvest feature puts it to work automatically. While it's good to hold cash as a small portion of your portfolio, having too big a cash holding can sometimes act as a drag on your returns. With AutoInvest, your funds are invested regularly for you in an automated way, so you never lose out on returns. InvestEngine's smart order technology determines appropriate trades calculated according to your strategy.

Savings Plans is a way of transferring money from your bank automatically, then Autoinvest puts it to work. It's great for adding discipline to investing.


InvestEngine's regular rebalancing feature also helps with investment decisions. You can reset your DIY portfolio to your chosen asset allocation in a single click, with InvestEngine's technology generating a combination of buy and sell trades so your portfolio is realigned to your chosen weights. If you do choose managed portfolios, InvestEngine experts regularly review your portfolio so that it's well-positioned for current market conditions.

Look through

Finally, the portfolio look through feature is particularly powerful. You can quickly see what companies, sectors and geographical regions you are currently invested in. Having this feature allows you to manage your investments more easily due to the clearer transparency and insights gleaned.

Free transfers

If you already have an ISA (of any type), with another provider, you can transfer all your money, or a portion of it, to InvestEngine for free. While your current provider may charge a fee for the transfer out, InvestEngine won’t charge you for the transfer in, so you don't have to worry about InvestEngine's fee structure eating into the real value of your account.

The process is straightforward too. You only need to fill in a form on InvestEngine's website and then their transfer team will deal directly with your existing ISA provider on your behalf. If they don't have the right information, they'll get in contact with you directly. Any ISA transfers should be completed within 30 days.

The net contribution means the total amount funded or transferred into the relevant account as a new customer or as an existing customer. It's good to be aware that the net contribution does not equate, therefore, to the same as your account's value.

Are stocks and shares ISAs a good idea?

While it does depend on personal circumstances, using up your entire ISA allowance every year is often a good way of saving for the future thanks to the tax advantages of these products. Cash ISAs can sometimes be appropriate, but cash savings rates won't always beat inflation or maximise possible returns. Instead, picking stocks and shares ISAs can facilitate tax-efficient saving, just as a cash ISA, but with the added benefit of unlimited growth potential.

InvestEngine offers both DIY and managed portfolios within its stocks and shares ISA, so you can invest according to your individual circumstances. The platform helps you start investing with confidence, either using investment tools to support your investment process or by using the managed portfolio service. Whether you aim for steady growth, beating inflation, or achieving specific investment goals, InvestEngine is there to help you make your money work smarter.

When investing, your capital is at risk. Tax treatment depends on personal circumstances and may be subject to change.

Image Credit: SteveBulley at pixabay

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