An ISA can be an effective way to save for the future. They're a type of savings account in which you can invest or save your money without the returns being subject to income tax or capital gains.
There are two types of ISA: a stocks and shares ISA and a cash ISA. A cash ISA is a savings product with which you know the interest rate you will earn from the outset. A stocks and shares ISA is when you invest your money in companies or funds. While you don't know the return, it can outstrip the rate on a cash ISA with no limit on the returns you can make. But, of course, the major downside is that the value of your investment could also fall.
What ISAs does Vanguard offer?
Vanguard currently does not offer a Cash ISA product but does offer the below options.
Stocks and shares ISA
Vanguard’s stocks and shares ISA allows you to invest in the company's range of over 75 individual funds. You could also invest in one of the company's five LifeStrategy funds. This ISA product is flexible, which means you can take money out and then put it back in again later in the same tax year, and it won't affect your ISA allowance.
Vanguard’s managed ISA is an option if you don’t want to make all investment decisions on your own. Vanguard will work with you to determine your risk appetite and profile so you can then create an investment plan. To do so, the company matches you with one of five portfolios, each tailored to a different level of risk and comprising low-cost index funds. If you like the plan, the company then manages your portfolio. They check each month to ensure the level of risk you have taken on is still appropriate for you.
In short, the product gives you expert investment guidance, with those experts on hand to answer any questions you have about how your money is invested.
Finally, you can open a Junior ISA for your children under 18 who are UK residents. Or, you could ask your grandchildren's parents to open one for them so you can transfer them money for investments in active funds, ETFs or any other type of investment vehicle that Vanguard offers. Junior ISAs currently have an annual allowance of £9,000, which means, just as you do as a UK tax resident, they benefit from an ISAs' tax efficiency.
Benefits of Vanguard ISAs
Besides shielding your investment returns from capital gains tax or income tax payable to HMRC, Vanguard's ISAs are attractive as they are relatively low cost and have a low account fee each year. For example, with the Stocks and Shares ISA, the account fee is only 0.15% per year. Plus, there are no hidden charges, so you do not get penalised for the number of times you buy or sell funds or even make payments.
Quick online access
We also like that the company's investing interface is accessible from anywhere, anytime, so you can manage your investments and keep track of your portfolio's position 24/7. It makes managing your money that much easier and means that you can stay on top of ISA investments at a time that works for you.
Is Vanguard right for me?
Vanguard's stocks and shares ISA has many benefits. It's flexible. It has a great fee structure. And its online interface is not only easy to use but also accessible at all hours of the day. Importantly, in terms of investments, it offers plenty of choice. Picking from over 75 funds is not something many providers can do, so it's great to see that Vanguard offers that breadth.
Plus, despite the low costs, the quality of support is high. You'll be able to contact the company with any queries and get an answer quickly. As a result, you will feel more at ease with the safety of your investment.