Best Stocks and Shares ISA
Picking the best Stocks and Shares ISA can be tough, there are plenty to choose from so it can be a little daunting. Particularly for people who are new to investing.
After the Bank of England cut UK interest rates following on from the 2008 financial crisis, they have remained at extremely low levels ever since. The European credit crisis, huge public borrowing and more recently Brexit and COVID-19 have all put pressure on central banks to keep interest rates close to zero.
Indeed, the amount of global debt issuance by investment grade companies paying negative interest rate hit just over 17 trillion USD recently – a new record - although perhaps not one to shout from the rooftops about!
So what kind of returns can I expect on cash going forward?
The chart below from the BOE gives you a good visual aid on current cash return prospects.
Looking at this if you are looking to invest for the longer term you have to question the logic of putting money into a cash ISA.
UK savers who keep money in long term savings accounts or Cash ISAs where returns are historically lower on fixed rate products will be doing very well to keep their money's buying power ahead of inflation.
Needless to say, investors are left scratching their heads in how to earn any meaningful yield on their money.
However, it doesn’t have to be that way and providers are constantly making it easier for people new to investing or people who are too busy to manage their funds.
If you are looking to invest for the long term (5 years +) on either a regular or lump sum basis then a stocks and shares ISA should be a first port of call when you are considering options. ISAs are simply tax efficient wrappers for your investments which means that dividends and capital gains you enjoy are not subject to income tax or CGT tax.
Options now include: Investment platforms which offer you a wide range of choice with simple interfaces that provide lots of information to help people make clear investment choices.
Best Platforms for Funds:
What is on Offer?
A good ISA fund platform provider will offer:
- Wide range of funds - The major investment platforms offer extensive fund options including OEICs (Open ended Investment Company) funds, Investment Trusts, Exchange Traded Funds (ETFs), Exchange Traded Commodities (ETCs) and more.
- Index Tracker funds - An easy and popular way to invest that follows the performance of a particular stock market index e.g. FTSE 100 and the S&P 500
- Actively Managed funds - A good way to invest in a particular sector or region
- Multi Asset funds - A range of funds that invest in other funds (a fund-of-funds) or funds where assets are made up of a portfolio of company shares, bonds and cash (a mixed investment range)
- Income funds - Invest in funds lending money to a government or company, in return for an agreed level of interest over a set period
- Property fund – Funds that invest in commercial property
- Ready Made Portfolios - Allow you to invest in a range of investments chosen by an investment expert
- Share dealing account options - Many platforms offer share dealing facilities to buy and sell shares in UK and international companies. Some platforms will give you an idea of what shares are currently popular with clients and give buy and sell trade volumes. Platforms such as Interactive Investor and Hargreaves Lansdown offer information and research on individual companies and funds to help you make informed choices about investing in shares.
- Mobile app functionality - Mobile app functionality is getting better all the time and allows investors to keep tabs on their investments 24/7
- Research and expert analysis - Platforms in wanting your business are constantly innovating to provide better added value services including research to allow you to make better informed decisions.
Don’t just look at the cost
Costs are important: this isn’t a decision you’re going to revisit every year.
For fund supermarket platforms the costs can include:
- Annual account charges ranging from zero to £100 a year.
- Annual fund charges from zero to 0.45% of portfolio value.
- Plus charges each time you make a trade, which could be from £1 to £12.50 per transaction.
- Consider platforms that run on a flat fee basis for larger portfolios
BUT… some of the more expensive fund supermarket platforms are rated highly by investors for ease of use and good customer support.
Please note that with stocks and shares investment ISAs you could lose money. If you are unsure about what is right for your or your circumstances then consider getting financial advice by talking to an independent financial adviser.