Stocks & Shares Individual Savings Accounts (ISAs) have been growing in popularity over recent years, and a 2020 report from HM Revenue & Customs found an increasing trend in the number of people in their 20s and early 30s choosing to invest. In fact, young people who can afford it are more likely to invest than the Baby Boomer generation. So, what’s the appeal?
This does not constitute advice and advice should be sought in all instances before acting on it.
It seems millennials (the generation born between 1981 and 1995/96) have become disillusioned by today’s meagre savings rates and are flocking to other savings and investment avenues (HMRC stats).
A Stocks & Shares ISA might be appealing to investors as there are a variety of investments that can be held within it, including unit trusts, investment trusts, exchange-traded funds, individual stocks and shares, corporate and government bonds, and OEICs (Open-Ended Investment Companies).
Stocks & Shares ISAs are a popular option for many people under 25, and it is in fact the fastest-growing demographic in terms of this type of investment.
People aged between 25 and 34 years old come a close second, rocketing 71% from 109,000 to 186,000 between the 2016/17 and 2017/18 tax years. And between the two brackets, subscriptions jumped 92.3% from 131,000 to 252,000 within the same time period. Additionally, the number of under-25s with both a Stocks & Shares ISA and a Cash ISA also increased during the same year by 138% from 13,000 to 31,000.
It’s quite the difference when comparing this activity to the group of people aged between 35 and 44, as well as those aged 65 and over. Subscriptions for a Stocks & Shares ISA only increased by just 4% and 5% respectively during the tax year in question.
As with all ISAs, the savings held inside a tax-efficient Stocks & Shares ISA wrapper are exempt from Capital Gains Tax, dividend tax and Income Tax. Your contributions are still limited by your overall ISA allowance limit and all contributions will need to be made before the end of the tax year.
Expand your investment strategy
Your investment strategy will depend on your financial goals, plans for the future, and when you begin investing. A Stocks & Shares ISA is ideal if you are looking to put your money away for the medium to long term (five years or more), but it’s not the only choice. To find out more about your investment options, contact us today.
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