What is a stocks and shares ISA?

What is a Stocks & Shares ISA?

An ISA is an “Individual Savings Account”, which is a tax-exempt savings plan, meaning you don’t pay tax on any money that you earn on your savings.

A stocks and shares ISA allows you to invest in shares, funds, bonds and other assets, which has the potential for more growth than in a cash-based ISA. There is a savings limit, and this is decided by the UK government, so you can save up to this amount tax-efficiently each new tax year.

Shepherds Friendly Stocks & Shares ISA

Our Stocks & Shares ISA launched in 2008, and we’ve been helping our members save towards a securer financial future since then.

You can invest from as little as £30 a month, or with a lump sum investment. It’s really easy to open a plan with us, and you can manage your plan online if you need to pause your payments, top up, or change the amount you want to pay in to suit your needs.

With-Profits investing

Your savings are then invested into a ready-made fund, known as a With-Profits fund, which is a combination of different assets, such as cash, equities, and bonds. Our fund managers carefully invest your savings and actively manage where your money is invested to make the most of upticks in the stock market, while limiting the impact of market volatility.

Annual Bonus

We aim to pay returns on your investment in the form of bonuses paid directly into your plan. Your bonuses are calculated based on market conditions and how your investment is performing. Remember that our aim is to provide consistent returns, so, following periods when the market has performed well, we may hold back some of the returns gained, so we can still pay you a bonus when the market performs badly.

In fact, we’ve been consistently paying bonuses to our members since our Stocks & Shares ISA launched, and our members continue to trust us to develop and grow their savings with us.

Smoothing

This method of calculating and paying bonuses is known as smoothing, as it leads to a smoother overall investment journey where the daily ups and downs in the market are levelled out. So, in the longer term, your money can weather changes in the stock market and continue to grow when the market performs well

Medium-to-long term investing

For this reason, we recommend investing with us in the medium-to-long term, and for at least five years. That might seem like a long time, but this gives your money a good chance to grow with us, giving you more confidence in your financial future. You can sit back, knowing we’re working hard behind the scenes to ensure your savings have the best opportunity to grow. You can withdraw your money at any time, but doing so early, or during periods of particularly bad performance means you may get back less than you put in.

As with all investments, your money has the best opportunity to grow in the long term; however, if you do need to withdraw your money, you can do so at any time, and you may get a final bonus, depending on your investment’s performance.

When you open a Shepherds Friendly Stocks & Shares ISA, your money is invested into a ready-made fund, known as a With-Profits Fund. A With-Profits Fund is made up of a variety of assets, such as cash, equities, and bonds, which limits the volatility that you might experience if investing directly in individual shares.

The fund is also actively managed, which means that fund managers monitor the market and, when certain asset types are performing particularly well, they may invest more heavily in these assets to capitalise on changes to the stock market, while limiting exposure to assets that are performing poorly. At any given time, fund managers are working hard behind the scenes to ensure your money has the best opportunity to grow in the changing landscape of the investment market.

When you invest in the With-Profits Fund, returns on your investment are made in the form of regular bonuses paid directly into your Stocks & Shares ISA.

Bonuses are tied to the performance of the With-Profits Fund and general market conditions; however, our aim is to pay you consistent returns, so when the market is performing particularly well, we may hold back some of the returns gained so we can continue to pay you bonuses when the market performs badly.

This is known as “smoothing” as it means that, in the medium-to-long term, we can provide you with a smoother investment journey where the daily ups and downs in the market are levelled out. Thanks to our smoothing strategy, we can aim to provide your investment with more predictable returns while protecting your money from high levels of market volatility.

This can mean that, following periods of market growth, you may find that your bonuses are lower than expected; however, after periods of market decline, where you would ordinarily experience a loss in the value of your investment, we can continue to pay bonuses to our members and grow their savings.

In fact, we’ve been consistently paying bonuses to our members since the launch of our Stocks & Shares ISA in 2008.

Once you’ve reached your investment goal, or if you need your money for any other reason, you can withdraw at any time. We do recommend investing for at least five years, as this gives your money the opportunity to weather investment market volatility and benefit from our smoothing strategy.

Our Stocks & Shares ISA offers a medium-to-low risk investment; however, it is important to note that no investment is free from risk and there is always a chance that you may get back less than you put in.