A shares ISA is a good choice for putting away cash in a tax-sheltered product over the long term. However, a shares ISA also carries a degree of risk, since shares are tied to the performance of the stock market. By the same risk-to-reward token, a shares ISA also promises a greater potential for earnings for the same reason.

An almost unlimited choice of shares ISA options can make it difficult to choose the right account for your needs. We have five factors to consider when shopping for a shares ISA to ensure you find the best fit for you.

Types of Shares ISAs

There are many different types of shares ISAs, and they vary in terms of the level of risk and the type of return one might expect. Three basic types of shares ISAs include:

• Managed investment products, where money is invested by a funds manager
• Tracker investment ISAs that are typically tied to a specific financial index
• Self-directed ISAs where the account holder determines the investment package

The best choice depends on how savvy you are with investments, the risk level you are willing to undertake, and the potential return you hope to receive.

Rate of Return

Your rate of return is an important consideration with a shares ISA because it will determine how much profit you can expect to generate from your money. However, a larger potential return usually involves a higher risk factor as well.

To determine the potential rate of return, many turn to past or present performance of a fund. However, previous performance is not the best indicator of how a fund will perform in the long term. This is why many investors seek input from a financial advisor before choosing a shares ISA with the most promising return.

Risk Tolerance

Some people are comfortable with a greater degree of risk than others, if they think the risk will mean a higher rate of return. This approach is particularly effective if you plan to invest over a longer period of time, since you will have time to recoup possible losses and continue to earn a decent return.

However, others are not willing to take on as much risk, and these investors are happy with a lower return to limit their risk factor. This is especially important if you don’t plan to invest your money for very long.  Only you can decide how much risk you are willing to undertake in your shares ISA.

Shares ISA Fees

Because shares ISAs often require participation by a financial advisor, fund manager or other investment professional, there are often fees involved with purchasing or trading shares. It is important to shop around for the best deal on fees without sacrificing knowledge and experience.

Some investors find that tracker investment ISAs are less expensive than managed investment products because they do not require the same participation by a financial expert. However, a well-managed fund might pay off bigger dividends to offset the higher fees.

Choosing a shares ISA isn’t easy, which is why many turn to a financial advisor to help them find the best fund for their needs. This helps ensure you get the best return with as much risk as you can comfortably tolerate for the best investment fit for you.