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Jun 2017

What is the best investment ISA?

What is the best investment ISA?

People often ask: “what is the best investment ISA?” The answer to this question is not a simple one, with the best investment ISA for you depending on a number of factors. 

These include how much you wish to invest, how long for, what level of return you are looking for, your attitude to investment risk, how you feel about charges and more.

For the 2018/19 tax year, you can invest up to £20,000 into an ISA and pay no tax on the returns generated.

To work out what is the best investment ISA for you, therefore, you need to carefully consider your saving goals and personal circumstances. You can then begin to consider the various types of investment ISAs available and see which of these best matches your requirements.

Questions to ask when choosing an investment ISA

When comparing your investment ISA options, there are several key questions you should ask before choosing a particular ISA.

What is the minimum investment?

Many investment ISAs have a minimum investment, which can vary considerably between different ISA products. This could be an issue if you are planning to spread your investment between several different ISAs.

What is the level of risk?

As a general rule, the better potential rate of return an ISA offers, the higher the risk involved. It is important to make sure you are completely clear about the level of risk involved with any investment ISA before choosing to place your money into it.

What charges apply?

There are a number of different charges involved in ISA investment, although not all will apply to every ISA product on the market.

Some of the most common investment ISA charges include:

  • Transfer in fees
  • Transfer out fees
  • Buying charges
  • Selling charges
  • Dividend reinvestment fees
  • Fund switch charges
  • Fund manager charges
  • Platform charges

The amount you pay in fees can make a significant difference to the total return you see on your investment, so it is a good idea to check the rate of all applicable fees before making an ISA investment.

Does the ISA accept transfers in?

If you already have an investment ISA, or several, you may be considering consolidating them, so all your ISA investments can be held by a single provider. Some investment ISA providers do not allow these kinds of transfers and others have limits on how much you can transfer in, so this is worth checking. You should also find out what, if any, fees the provider will charge for transferring in.

Where will your money be invested?

Depending on the type of investor you are, you may want a detailed understanding of exactly where all of your money is being invested, or you may be happy with a more general understanding.

Having your investments spread all around the world can reduce the chances of any local market fluctuations having a significant adverse effect on your portfolio.

Some investors are now also increasingly conscious of the ethical implications of their investments, so this is also worth thinking about when choosing where to put your money.

How can you manage your account?

Some newer ISA providers offer an online-only service, meaning if you have a problem, you cannot pick up the phone and talk to someone about it. How much of an issue this is for you will likely depend on how comfortable you are with an online-only service and how actively you intend to monitor and manage your investment.

Smartphone apps are increasingly being offered as an option for managing investment ISAs and can make the process much more straightforward. If you like the idea of managing your ISA from your phone, this could be something to look out for.

Comparing different types of ISA investments

When planning your ISA investment, there are various different investing options to consider with their own pros and cons. Which you should choose will depend on your own preferences and requirements.

The following are the main commonly used types of ISA investments which you should consider:

Using an ISA to invest in shares

A stocks and shares ISA allows you to choose where to invest your money, allowing you to earn potentially larger rewards than with a cash ISA.

When using your ISA to invest in shares, you will usually have the option to pick individual investments yourself, or select from a range of portfolios put together by the ISA providers. These will usually come with different levels of risk and potential returns.

Investing in shares with your ISA may be worth considering if you feel confident of your ability to pick shares that you feel will match your investment goals.

Using an ISA to invest in funds

When you choose to use your ISA allowance to invest in an investment fund, you do not pick which shares to invest in. Instead you pick a fund based on its goals, risks, fees and other factors. The fund manager then picks the shares to invest in and manages your investment for you.

Prudential investment ISAs offer an example of this kind of investment fund ISA. Investing in funds can be a good choice for those who want to see significant returns, but don’t want to pick shares themselves and would rather rely on the judgement of an experienced investor.

Using an ISA to invest in structured investment plans

Structured investment products aim to offer a set rate of growth or a fixed monthly income, based on the performance on an index (such as the FTSE 100 Index), several indices (e.g. both the FTSE 100 Index and the Dow Jones Index) or a large group of shares.

This kind of investment provides a defined risk with defined returns set out at the outset. You stand to receive a defined return, as long as the index or indices perform, although your capital and returns are at risk if the underlying investment performs poorly.

Best Income Investment ISA

Using an ISA to invest in peer-to-peer

You can now use your ISA allowance to invest in peer-to-peer platforms using the new Innovative Finance ISA or IFISA which was introduced by the UK government on 6 th April 2016.

Peer-to-peer or P2P lending allows investors to lend directly to borrowers, which are companies or individuals. This means you can potentially earn higher returns that with a cash ISA.

Peer-to-peer investment ISAs often allow you to select the level of return you want to see and how long you are willing to lend your money for, giving you a high level of control over the returns you earn. Peer-to-peer lending companies tend to boast of very low default rates, but it is worth remembering that your capital is still at risk if the borrower fails to repay.

Crowd2Fund provide a P2P ISA option. This P2P offering allows you to lend to small businesses.

Peer To Peer ISA

Investing in an ISA using an investment platform

An investment platform is an online marketplace for funds and shares, generally used by intermediaries and individual investors. It allows investors to view and manage their investment portfolio simply and efficiently.

Investment platforms will usually allow you to hold your investments in an ISA, giving you the tax-efficient benefits of any investment ISA. They can usually be accessed via a computer and increasingly from smartphones, making investment platforms a highly convenient way to manage your investments.

When choosing an ISA investment platform, make sure to pay attention to the fees you will be charged and the tools and information available to you to help you manage your investment.

Companies that offer this type of service include Nutmeg

Compare the best investment ISAs on the market

As stated above, which investment ISA is best for you will depend on your own investment goals and personal circumstances. The five investment ISA ideas listed below are worth considering when you are deciding what to do with your 2017/18 ISA allowance.

Hargreaves Lansdown Stocks and Shares ISA

With a Hargreaves Lansdown Stocks and Shares ISA you can:

  • Use your full 2018/19 ISA allowance of £20,000
  • Open your ISA with as little as £100 or a monthly direct debit £25 or more
  • Choose from a ready-made ISA portfolio with a minimum investment of £1,000 or a do-it-yourself ISA allowing you to pick your own shares.

Fees and charges:

  • There is no charge for buying, selling or switching funds with your ISA
  • DIY ISA customers will pay from £11.95 per trade online while frequent traders can pay as little as £5.95 per trade

The annual management charge for a stocks and shares ISA with Hargreaves Lansdown is tiered based on the level of your investment.

  • 0.45% a year on the first £250,000
  • 0.25% a year between £250,000 and £1m
  • 0.1% a year between £1m and £2m
  • No charge on the value of funds over £2m

Charles Stanley Stocks and Shares ISA

With a Charles Stanley stocks and shares investment ISA, you can:

  • Invest your whole £20,000 ISA allowance for 2017/18
  • Top up your ISA online in minutes
  • Transfer in existing ISAs
  • Access your money at any time
  • Benefit from award-winning, UK-based telephone support

Fees and charges:

  • 0.25% or less platform charge
  • £11.50 share trading fee when you buy or sell shares
  • No fund trading fee when you buy or sell funds

IG Investment ISA

IG offer two main types of investment ISA: IG Share Dealing ISAs and IG Smart Portfolio ISAs.

IG Share Dealing ISA

With an IG Share Dealing ISA you can:

  • Use your whole 2017/18 ISA allowance of £20,000
  • Invest in UK shares for as little as £8
  • Invest with as little as £5 if you have placed 10 trades in the previous month
  • Pick from over 9000 stocks and EFTs globally
  • Withdraw funds flexibly without affecting your annual ISA allowance
  • Manage your investment using IG’s award-winning smartphone and tablet apps

Fees and charges:

  • 0.3% foreign exchange conversion fee
  • No opening fees, admin fees or platform fees
IG Smart Portfolio ISA

With an IG Smart Portfolio ISA you can:

  • Use your whole ISA allowance
  • Start investing with as little as £500
  • Get a fully managed ISA portfolio
  • Choose your portfolio based on the level of risk you are comfortable with
  • Have as many different portfolios as you like within one ISA

Fees and charges:

  • Low annual portfolio management fees

AJ Bell Stocks and Shares ISA

With an AJ Bells Stocks and Shares ISA you can:

  • Use your whole 2017/18 ISA allowance of £20,000
  • Invest from £25 per month
  • Choose your own investments
  • View your account online 24/7 or using their smartphone app
  • Access two UK-based customer service teams, webchat and email support
  • Benefit from a range of free investment tools and research to help you plan and manage your investments

Fees and charges:

  • From £150 to £9.95 per deal

Fidelity Stocks and Shares ISA

With a Fidelity Stocks and Shares ISA you can:

  • Use your full 2017/18 ISA allowance of £20,000
  • Hold cash as well as investments in your ISA
  • 24/7 access to your account online or via mobile app
  • Various tools to help you choose your investments, including Fidelity Pathfinder, a Select 50 list of Fidelity’s experts favourite funds and Fidelity’s fund supermarket.

Fees and charges:

  • A single low cost service fee, typically set at 0.35% of the investments in your portfolio

Find the best investment ISA for your savings goals

Picking the best investment ISA for you can be difficult, especially with so many different options to choose from. If you are looking for best investment ISA to help you build a tax-free nest egg, take a look at the range of investment ISAs on our website to see some of the most attractive options currently available.

Investment Fund Supermarket ISAs

Vitality Stocks & Shares ISA

from Vitality

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Choose from 6 funds based on risk level or build your own portfolio
  • Invest From: £100 pm or £1,500 single

Why we like it: Vitality Stocks & Shares ISA. Invest in Vitality funds and they will add extra money to your investment every 5 years – on top of returns. This could get you an extra 15% over 25 years. Capital at risk. More Info

Click & Invest Stocks & Shares ISA

from Investec Click & Invest

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Managed Portfolios
  • Invest From: £2,500

Why we like it: In a nutshell this service helps make your ISA money work harder! Investec Click & Investis an online investment service that aims to make actively managed, globally diversified investment portfolios accessible to a wider audience. Everyone deserves harder working money, and Click & Invest’s goal is to make a positive difference to more financial futures. Their experts build and manage investment portfolios from £2,500 online, intelligently blending expertise with high-quality service. With a £2,500 minimum investment, Click & Invest aims to deliver an exceptional service for a straightforward fee. They offer both stocks and shares ISAs and general investment accounts, with a seamless online experience, with dedicated 24/7 support available. Capital at risk.More info...

Peer to Peer Lending ISAs

Premium Innovative Finance ISA (IFISA)

from easyMoney

ISA Option
Allows ISA Transfers
Interest Rate 4.05% annualised target return
  • Term: No Fixed Term
  • Invest From: £1000

Why we like it: Invest up to £20,000 this tax year and/or transfer in from an existing Cash ISA, Stocks & Shares ISA or IFISA. When you join the easyMoney family you will automatically become an easyMoney plus card member, offering savings up to 55% at over 100 of Britain’s biggest retailers and more! e-Money Capital Ltd trading as easyMoney is authorised and regulated by the FCA (FRN 231680). As with all investing, your capital is at risk when you lend to businesses and returns are not guaranteed. No FSCS. For more details please refer to our full risk statement.

  • 4.05% TAX-FREE through the Conservative Innovative Finance ISA
  • Minimum investment of £1,000
  • Secured by UK property
  • Maximum 65% loan to value
  • Significant buffer of 35% should the value of a property fall
  • you will automatically become an easyMoney plus card member, offering savings up to 55% at over 100 of Britain’s biggest retailers and more!
  • Also accepts ISA transfers from previous year's ISA's
  • As with all investing your capital is at risk when you lend to businesses. easyMoney reduces this risk by taking security over property
  • Returns are not guaranteed and your actual returns may vary
  • Capital is at risk
  • Must be aged 18 or older
  • Peer to peer lending is not covered by the FSCS

Calculate your interest with this plan

Your savings:
You could gain:
£0.00 (per tax year)
Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

How much can I pay into an ISA?

21st March 2019

Each tax year, there's a limit set by the government to the amount you can save and invest in ISAs: your “annual ISA allowance”. The allowances are intended to reward savers and encourage us to invest more to support our future retirements, without creating a tax haven that can be taken advantage of by very wealthy individuals who just want to avoid paying tax.

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