‹ Explainers

Cash ISA or stocks and shares ISA?

The short answer

Cash for money you need within five years. Shares for money you do not.

A cash ISA is a savings account with the tax taken off. The balance cannot fall. That certainty is exactly what you want for a deposit, a wedding, or an emergency fund.

A stocks and shares ISA can and will fall, sometimes a long way, and historically has beaten cash over long periods. The five-year rule of thumb exists because that is roughly how long it takes for a bad entry point to stop mattering.

You can hold both, and since April 2024 you can pay into more than one of the same type in a tax year, as long as the total stays inside your allowance.

The numbers
  • £20,000 total allowance
  • Both count toward it
Read next
Is an ISA actually worth it for me?Often not, if you are a basic-rate taxpayer with under about £22,000 saved. What is changing in 2027 and 2028?The cash ISA allowance falls to £12,000, and the Lifetime ISA is replaced.

General information about savings and tax, not advice about your situation. Rules and rates change — this page was checked on 26 Aug 2026.