The easier it is to borrow money on credit, the more difficult it is to manage one’s finances. With the national debt escalating each year in the UK, it is high time people started learning how to manage their savings and expenditure.

Are you an aspiring investor who is contemplating a foray into the world of investment? Then there is good news for you ? The finance market today offers a wide spectrum of investment opportunities to those who are serious about saving some good bucks.

Has the suggestion of investing into ISAs been thrown at you quite often? And you don’t really know what ISAs actually are? Then, you are not the only one. There are a lot of people who face this dilemma every day and often feel confused due to an absolute loss of guidance in this area. Well, you don’t need to worry any more for this piece aims at giving you a complete overview of ISAs.

Let’s start with understanding what ISAs actually are. An ISA is an individual savings account that was introduced in April 1999 to replace TESSAs and PEPs.

The benefit of ISAs: The ISAs are investments that are free from income and capital gains. In other words ISA is a tax-exempt savings plan.

The Investment Limit: Each person can invest upto £7,000 in an ISA in each tax year that is from April to April.

The types of ISAs: There are mainly two types of ISAs namely Maxi ISA and Mini ISA. A Maxi ISA allows an investor to invest a maximum of £7,000 into shares. However, the sum can be broken to invest £3,000 into cash if desired. In contrast, you can buy three Mini ISAs in one tax year including three components namely shares, cash and insurance. A Mini ISA imposes a limit of £3,000 in cash and £4,000 in shares.

The restrictions:

• No single investor can invest in both Maxi and Mini ISA in the same tax year.
• The taxman allows you to buy a Maxi ISA through one provider each year. Mini ISA allows up to three providers each year, one for each component. However, no two components can be bought from one provider.
• Investors must normally be aged 18 (16 for cash mini ISAs) and UK residents to be eligible for ISA investment.

Difference between share ISAs and cash ISAs:

S.No	Share ISAs	Cash ISAs
1	A share ISA allows investors to invest in stocks, in a manner that allows their gains to be exempt from tax. However, the capital is put at risk to the changes in the stock market.	A cash ISA allows investors to save their money and earn interest in the same way as banks but with the benefit of being tax-free.
2	A share ISA is considered as a long-term investment.	A cash ISA is considered as a short-term investment.

ISAs can be bought from just about anywhere that is banks, building societies, fund managers and even online. Now that you know what ISAs are all about, you can go ahead and start making inroads into the world of investment.