Comparing ISAs

There are four types of ISA - a cash ISA, stocks and shares ISA, lifetime ISA and innovative finance ISA. Each of these offers a tax-efficient way of saving, so you don’t pay any tax on the gains you make.

Saga offers a cash ISA (provided by Goldman Sachs International Bank) and a stocks and shares ISA (provided by Hubwise). Here are the key differences and the pros and cons of each.

Cash ISAs

Putting your money into a cash ISA is a lot like putting it into a traditional savings account. Your savings grow because you are paid interest, and you won’t pay tax on the interest you earn.

A cash ISA could be right for you if you want:

Your money to grow by earning interest (although inflation can reduce the buying power of your money if the interest rate is lower than inflation)
No investment risk.

There are typically no charges to pay with the Saga Cash ISA.

Stocks and shares ISAs

When you put your money into a stocks and shares ISA, your money is invested on your behalf in different types of investments like company shares, bonds and cash. This is either done directly or through fund managers. With the Saga Stocks & Shares ISA (provided by Hubwise), your money is invested in funds managed by established fund managers.

The value of your money is linked to the performance of these underlying investments. The investments can go up and down depending on a number of factors, including global economic and political events. If the investments grow in value, so will your money.

However, the investments can also go down in value and you may not get back the amount you invested. The purchasing power of any investment growth can also be reduced by inflation.

A stocks and shares ISA could be right for you if you want your money to:

Be invested across a range of asset types that increase the opportunity for your money to grow over the medium to long term (at least 5 years)
Have the potential to grow above the rate of inflation and more than a cash ISA over the medium to long term (at least 5 years).

Ongoing charges typically apply to stocks and shares ISAs. With the Saga Stocks & Shares ISA, you’ll pay up to 0.75% per year based on the value of your ISA.

Find out more about the Saga Stocks & Shares ISA.

What are the similarities between a cash ISA and a stocks and shares ISA?

There are two types of ISA available through Saga. The Saga Stocks & Shares ISA is provided by Hubwise, and the Saga Cash ISA is provided by Goldman Sachs International Bank, both ISAs share the following features:

Any payments into them will count towards your annual ISA allowance (currently £20,000 for each tax year).
There’s no tax to pay on any interest, income or growth, which is why ISAs are sometimes referred to as ‘tax-efficient wrappers’.
You must be aged 18 or over and a UK resident (including for tax purposes) to apply.

Can I have a cash ISA and a stocks and shares ISA in the same tax year?

Absolutely. It's not an either/or choice. You’re free to mix and match different types of ISA. So for example you could start off with a cash ISA. Then if you find you have some money you can save for longer, you could start saving into a stocks and shares ISA too.

There are different benefits with each kind of ISA, and your decision to invest in one type or both will depend on what you want to achieve with your money and your personal circumstances.

Just remember that your total payments into them can’t be more than the annual ISA limit set by the Government. This is currently £20,000 in a tax year, but may change in the future. As ISAs are individual accounts you are responsible for making sure you do not exceed the annual allowance.

It is important to bear in mind that you can pay into more than one stocks and shares ISA or cash ISA in the same tax year, providing you don’t exceed your annual ISA limit.

Find out more about the Saga Stocks & Shares ISA.

Find out more about the Saga Cash ISA.

The information provided on this website should not be taken as a recommendation, advice or forecast. Tax depends on your personal tax position. Tax rules are subject to change by the UK Government.

The Saga Cash ISA is provided by Goldman Sachs International Bank. Goldman Sachs International Bank is registered in England and Wales (no. 1122503), authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Financial Services Register number for Goldman Sachs International Bank is 124659 and the registered office is at Plumtree Court, 25 Shoe Lane, London, EC4A 4AU.

The Saga Stocks & Shares ISA is provided by Hubwise Securities Limited. Hubwise Securities Limited (FRN 502619) is authorised and regulated by the Financial Conduct Authority), is an ISA Plan Manager (HMRC ISA Plan Manager Z1723) and a Member of the London Stock Exchange.