So i googled what is ISA, and it says tax free on your interest, but if you get like 0.5% interest, i dont get why the first point to consider is to put your money up to 20k in ISA? What do you get by doing this?

Also read it’s available to uk residents, im on tier 2, which should be fine.. im thinking of putting 20k into vanguard life strategy 60%, can i withdraw and close the account after 2 years? Do you lose capital when the market is not doing well just as you would investing in a company’s shares directly?

Im basically looking for passive account i can put excess cash in to make 5-7% a year if anything in vanguard will give me close to that?