This is a common question that many ask when it comes to finance.⁣ The answer is MAYBE – but it depends on your objectives.⁣⁣

If you are planning to trade/stock pick your account then maybe you CAN.⁣ But this requires immense skill AND the time to do it. If you’re time poor (as most of us are) then maybe this is not viable.⁣⁣

Most people will be investing use a “Buy and Hold” strategy.⁣ In which case we want our portfolio to COMPOUND.⁣ Compounding is one of those things that we often struggle to appreciate fully.⁣ Compounding is the premise that certain things grow exponentially faster with time rather than linearly.⁣

If our portfolio doesn’t compound then we can never hope to retire.⁣ Therefore the MORE it compounds is the sooner we reach financial freedom.⁣ Therefore, IF you use your ISA for “passive income” then you are INHIBITING your portfolios ability to compound.⁣

Most would consider using the dividends of a stocks portfolio for these purposes.⁣ Typically dividends yields are 3-4% – if we use 10% as a good rough metric of what can be attained from a fully equities portfolio, then its definitely worth looking at the effect on your eventual retirement pot using the graph above.⁣⁣

So the answer to the question "Can I Invest In My ISA For Passive Income?" is this:⁣

YES – but it depends on your investing style and/or it may mean that our financial freedom date is not as soon as we’d like.⁣

Fun fact for the day.