You’ve decided you want to be earning more from your tax-free ISA opportunity, so you want to get going with an investment ISA: putting your money to work on the stock market. But how do you get started?
What’s the process for buying a Stocks and Shares ISA? Are you making a phone call, or going online? And what are you looking for?
The first simple decision to be made: how much do you want to be involved in this investment decision? That will determine how you get into an investment ISA.
1 Do it for me / do it with me: managed ISA investments
You can stay hands-free, offline, by paying an investment adviser (an independent financial adviser or IFA), or a wealth manager, to handle your investments for you.
But unless you’ve got a really substantial amount of money to invest, you’ll probably decide that outsourcing in this way isn’t worth the professional fees you’ll be paying.
Your alternative is to is to go online via a “fund supermarket.”
Buying into a pre-packaged “fund of funds” ISA
If you want an online “do it for me” service you will probably be looking at this kind of fund which groups together a number of funds to give you a diversified spread of investments. Useful if:
- You’re not confident in your knowledge of the investment market
- You don’t have the time to actively manage your investments
You buy into a pot of collective investments managed by a professional fund manager.
You usually have a choice of funds with different balances of risk vs earnings.
The administration fees are usually higher because you’re paying for two levels of fund management.
But you can choose a more conservative and managed range of investments: for example, “passive funds” which “track” a stock market index.
Or “active funds” where a manager tries to pick the investments which will perform best.
Fund supermarkets to consider (which will include “fund of funds” options):
Using a “robo-adviser” investment manager
Investing in a “managed” fund doesn’t mean that you will get personal, one-to-one service from the fund manager.
- your attitude to risk
- your ethical outlook
- your long-term financial goals
Or you may want to be more actively involved…
2 DIY: I want to manage my Stocks and Shares ISA investment myself
- I have a good understanding of financial markets
- I’ve got time to manage my investments – and I want to be involved
- I don’t want someone else making these decisions for me
To actively manage your own stocks and shares ISA , you will again be choosing an “investment platform”.
But you’ll be looking for a share-dealing ISA, or a “self-select” fund ISA.
And you’ll be paying close attention to the costs of trading: buying and selling shares and bonds.
What to look for when you’re choosing your trading platform:
Does it offer the range of investments you want:
- Investment trusts
- Index funds
- Direct shares
What are the costs?
- Administrative charges for the platform
- Fund charges
- Charges to transfer between funds
- Share dealing charges when you buy and sell
Is there a minimum investment?
Do they accept transfers-in (if you want to consolidate investments you’ve already got in an another stocks and shares ISA?
Share dealing and fund platforms you might want to consider: