3. Stocks and Shares ISAs

A stocks and shares ISA enables you to invest your money in the stock market, rather than simply saving it. You can invest up to £10,680 in a stocks and shares ISA for the 2011/12 tax year.

You can put your money into the shares of any company listed on a 'recognised stock exchange', or into pretty much any fund run from the UK. A recognised stock exchange means most major markets, such the London or New York Stock Exchanges.