Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest. The tax treatment of ISAs depends on individual circumstances and all tax rules may change in the future.

As a tax-efficient way of investing, ISAs are second-only to pensions. The ability to grow your money free from income and capital gains tax, coupled with the flexibility they offer, the range of investment options available within an ISA and the fact that every eligible adult has the same annual ISA allowance, regardless of whether they’re a higher rate taxpayer or a non-taxpayer, means they are, quite rightly, the first port of call for anyone wanting to grow their hard-earned money.

However, despite the fact that ISAs have been around for 21 years, some people are still a little unsure of some of the rules around them. Here are some of the most popular myths surrounding ISAs - and the facts you need to know.

Five ISA Myths.

• Myth one : You have to choose between cash or shares

No, you can have both - and mix them up however you like, as long as you stay within the annual allowance. This is currently £20,000 for anyone over the age of 18. You can also change your mind and transfer money from a cash ISA into your Stocks and Shares ISA and vice versa. The golden rule is to keep the money inside your ISA. As long as the money stays within the ISA wrapper you can save or invest it as you choose and it will retain its tax-efficient benefits.

• Myth two: You have no control over what you invest in within your Stocks and Shares ISA

No, you have total control over where, in what and how you invest. With a Fidelity Stocks and Shares ISA you can choose exactly what you invest in and even where in the world you invest. So whether you want to invest in gold, Japanese equities, US small caps or FTSE 100 giants you can, or you can opt for a mix of all of the above. It’s entirely up to you. Our Select 50 list of our experts favourite funds, can help make building a diversified portfolio easier.

• Myth three: You can only have one ISA with one provider

Yes, it’s true that you can only pay into one Stocks and Shares ISA in each tax year, but you can open a new ISA with a different provider each year if you want to. However, it can be easier to keep track of your investments and possibly cheaper too, if you consolidate them into one.

• Myth four: You need a lump sum to invest

Not at all. While investing a lump sum is a great way to make your money grow, you don’t need a lump sum to get started. If you have a Fidelity Stocks and Shares ISA you can invest as little as £50 a month. That regular investment will soon grow and better still, you can keep adding too. It’s a great way to save with no great sacrifice required.

If you think you can’t afford to save, think again. It’s easy to trim over-spending and divert the cash that you would otherwise fritter away. Switch your habits and make a few changes to your routine spending and you’ll easily claw back potentially thousands of pounds that you can put to far better use, inside your ISA.

• Myth five : Once investments in your ISA hit the annual allowance you start paying tax

No. This year’s annual ISA allowance of £20,000 refers to the maximum amount you can invest within your ISA in the current tax year. That figure doesn’t include any growth in your investments, nor does it include any money you’ve invested in previous tax years.

In fact, with ISAs having been around for over two decades - there will be plenty of canny investors who have built up a nice sum of money in their ISA account(s) - all of which has been able to grow tax-free and will continue to do so, as long as it’s held within their ISA.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. This information and Select 50 is not a personal recommendation to buy funds or any particular investment. Equally, if a fund you own is not on the Select 50, we're not recommending you sell it. You must ensure that any fund or investment you choose to invest in is suitable for your own personal circumstances. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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