A Stocks and Shares ISA is tailor-made for building long-term wealth. Every UK adult can get one, and can contribute up to £20,000 a year. All returns are entirely free of income tax, dividend tax, and capital gains tax for life. If you’re married or in a civil partnership, you can even pass your unused pot to them when you die, with all tax benefits intact.
Many people prefer the Cash ISA, which feels safer. It’s handy for short-term savings, but over the longer run, history shows equities do better.
Should I choose shares over cash?
Over the last decade, the average Cash ISA paid 4% a year. By contrast, the average Stocks and Shares ISA delivered 9.5% annually, according to Investing Insiders. Let’s look at what that means for somebody who invests a one-off lump sum of £20,000.
| Term | Cash ISA | Stocks and Shares ISA |
| 10 years | £29,605 | £49,565 |
| 20 years | £43,823 | £122,832 |
| 30 years | £64,868 | £304,406 |
The Stocks and Shares ISA turns the initial £20k into a staggering £304,406 after 30 years. The real gains from investing are measured in decades. Which means it pays to start as early as you can.
So how much do you need to generate a monthly second income of £1,500, which works out as £18,000 a year? The answer depends on the yield.
- 4% – £450,000
- 5% – £360,000
- 6% – £300,000
Looking for yield
As my list shows, the bigger the yield, the higher the potential income. Luckily, there are plenty of juicy dividend stocks on the FTSE 100 today. In fact, 25 of them yield 4% or more. Of those, seven yield between 6% and 8%. The most generous of all is Legal & General Group (LSE: LGEN), which yields 8.1%. I hold it myself.
This is one of the world’s largest institutional investors, with more than £1trn under management. It also provides wealth management, workplace pensions, personal retirement products, and protection such as life insurance. It’s a household name, which will make many investors feel more secure in purchasing it. Yet no stock is completely without risk, and that’s the case here.
Lately, share price performance has been weak. The Legal and General share price is up just 12% in the last year, and down 5% over five. To a degree, that income has come at the expense of growth.
The key reason is that underlying full-year pre-tax profits have been pretty flat lately, as this list shows:
- 2025 – £1.623bn
- 2024 – £1.616bn
- 2023 – £1.667bn
- 2022 – £2.517bn
- 2021 – £2.265bn
Legal & General was hit by the 2022 gilts crisis following the Liz Truss mini-Budget, and has struggled since. I’m hoping it can turn this round. In the meantime, there’s that income. It should remain reliable, as the board has increased dividends every year since 2010, apart from a freeze in the pandemic year of 2020. Future growth will be slower, though, at just 2% a year.
I think Legal & General is well worth considering for income, but at some point I’d like to see some share price growth as well. I’m hopeful it will come, given time.
Should you invest £5,000 in Legal & General Group Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General Group Plc made the list?
Harvey Jones owns shares in Legal & General.
