Final answer:
Andrea can invest up to £17,000 in a stocks and shares ISA for the 2019/2020 tax year, taking into account her £3,000 investment in a Cash ISA and the £20,000 total ISA allowance.
Step-by-step explanation:
The student's question concerns how much more Andrea can invest in a stocks and shares ISA given that she has already invested £3,000 in a Cash ISA for the tax year 2019/2020, with an ISA allowance of £20,000.
To calculate the remaining amount Andrea can invest, you subtract the amount she has already placed in the Cash ISA from the total ISA allowance for that year. So, the calculation would be £20,000 (total ISA allowance) minus £3,000 (amount already invested in Cash ISA) which equals £17,000.
Therefore, Andrea can invest up to £17,000 in a stocks and shares ISA for the 2019/2020 tax year.
The importance of starting to save early and the benefits of compound interest are illustrated by the example given.
If Andrea invests her money at an assumed 7% real annual rate of return, which is above the rate of inflation, she could see substantial growth over time, much like the provided example where an initial £3,000 investment grows nearly fifteen times over 40 years.