What is an Investment ISA Platform?
An Investment ISA platform is a Stocks and Shares ISA account that lets you choose the funds and shares you invest in.
They have all the standard tax benefits of an ISA, which means you never have to pay income, dividend or capital gains tax on your investments.
Stocks and Shares ISA Platform providers give you access to thousands of investment options, and it’s up to you to pick your portfolio yourself.
How does an Investment ISA Platform work?
You can think of an Investment ISA Platform as an investment supermarket. They list thousands of investments on their ISA platform and you choose the ones you want to buy.
You can hold any number of different investments, from shares to funds and investment trusts, and it’s usually a good idea to diversify your portfolio to spread the risk.
It can be daunting at first to understand what’s out there, but with a little research, you should be able to make confident investment decisions for the long term.
Here are some of the most popular investments you can buy through an Investment ISA Platform:
- Managed Funds (Unit Trusts and OEICs
- Investment Trusts
- ETFs (Exchange Traded Funds)
How do I pick my investments in an Investment Platform ISA?
First, you need to decide what type of investments are best for you.
Shares of individual companies allow you to tap into the growth and success of a business and reap the rewards. However, they’re fairly high risk because your investment is concentrated on only one holding.
Managed Funds and Investment Trusts invest in a specific sector or industry and spread your investment across multiple companies in that area.
This means your investment is diversified and your risk is spread, and you can even invest in several funds in different sectors to diversify even more.
Don’t forget, the fund manager’s charges are deducted from the performance of your investment.
ETFs invest in a particular sector or index like managed funds, but they are designed to simply replicate the performance of that market.
They aren’t controlled by a fund manager who picks the best companies. Instead, they instead aim to mirror the main holdings to simply replicate the growth of that sector.
There’s no professional fund management, but the charges are significantly lower to compensate and often the performance is similar to managed funds.
What are the advantages and disadvantages of Investment Platform ISAs?
- 100% tax-free savings
- High potential returns in the stock market
- Take your investment dividends as regular, tax-free income
- Withdraw at any time
- Your investments can lose value
- Maximum contribution of £20,000 in the 2021/22 tax year
- Platform and investment charges
Which is the Best Investment ISA Platform?
Here are some key account features to think about when comparing the best ISA Platform for you:
- Can they hold your entire portfolio?
Most ISA providers will be able to, but if you have overseas stocks or sophisticated investments then it’s worth checking.
- What are the annual management charges?
Some providers will charge more depending on the assets you hold, so make sure you cross-reference the charges with your portfolio to work out the cheapest ISA platform for you.
- What ad hoc charges will you pay?
If you think you’ll be trading frequently, check the dealing charges for your provider to find the cheapest ISA trading fees. If you plan to hold each of your individual investments for a long time, this is less of a factor for you.
- What account features are available?
Dealing features like limit orders, stop losses and price alerts are essential if you plan to trade regularly via your Stocks and Shares ISA platform. However, they’re not so important for long term investments, so consider what’s best for you.
- How good are the ISA provider’s customer service ratings?
Often an overlooked aspect of ISA platform comparisons, customer service forms the backbone of an investment supermarket. The cheapest ISA platform isn’t necessarily the best - you’re likely to need help at some point and you’ll want to speak to a well-trained professional without waiting hours on hold.
A few other considerations:
- How good is their app and online platform usability?
- Do they provide investment insight, research and tips to investors?
How do I open an Investment Platform ISA?
You can open a Stocks and Shares platform ISA online, over the phone or by post.
You’ll need to add money with a debit card top-up and buy the investments you want to hold through the platform.
Is an Investment ISA platform a good idea?
An Investment ISA is a good idea as long as you understand the risks involved and you’re comfortable making your own investment decisions. You could lose money on your investments, but they could also significantly outperform other ISA investment options.
Is now a good time to invest in an Investment ISA platform?
Yes. There is never really a good or bad time to invest in stocks and shares within an ISA, but generally, the longer you invest for the better.
Can I lose money in an Investment ISA platform?
Yes, your underlying investments can lose value, particularly in periods of short-term volatility.
How much can I contribute to an Investment ISA platform?
The current annual ISA allowance is £20,000 per person for the 2021/2022 tax year. This is your allowance across Stocks and Shares ISAs, Cash ISAs, Lifetime ISAs and Innovative Finance ISAs combined.
Can I withdraw money from an Investment ISA platform?
You can withdraw at any time from your ISA after you wait for your investments to sell. The process usually completes within two weeks.