Investment ISAs can generate tax-free regular income

You can use an investment ISA to create a regular, tax-free income for your family. The key is to choose investments that provide consistent payouts. This income is exempt from tax, which makes it a valuable addition to your salary or pension. To get started, focus on investments that pay out dividends or interest. This includes investment trusts, funds, and bonds, which can provide expected payments. To know how much income you might receive, look at the "yield," which compares the payment amount to the investment's price. It's important to remember that high yields are not guaranteed. Factors like market performance can change, so it’s wise to diversify your investments. Experts recommend including a mix of share funds, bond funds, and some cash to spread your risk. For potential returns, a 5% yield is realistic with smart choices. For example, a £20,000 ISA could generate £1,000 annually, tax-free. If you contribute to your ISA over five years, it could grow to £100,000, providing £5,000 in tax-free income annually. To choose successful investments, consider these strategies: 1. **Dividend Investment**: Look for investment trusts with a strong history of dividends, like the City of London, which has increased payments for 58 years. 2. **Fixed Income**: Invest in funds like Jupiter Monthly Income, which offers a 7.65% yield. 3. **Niche Investments**: High-risk options can yield more. For instance, Bluefield Solar has a yield of 9.9%. 4. **Cash Options**: Some ISAs can offer 4.25% interest, though check if they provide regular payouts or just one lump sum. 5. **Balanced Portfolio**: A general rule is to keep a percentage of shares that equals 100 minus your age, with the rest in safer assets. By following these tips, you can build a solid income through your investment ISA while enjoying tax benefits.