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Jan 2021

​What is the Best Stocks and Shares ISA?

​What is the Best Stocks and Shares ISA?

The allowance for the current 20/21 financial year is £20,000. This means, if you haven’t already, you can still invest £20,000, tax-free until the beginning of April. But what is the stocks and shares , what should you look for and which is for you?

What is the Best Stocks and Shares ISA?

The ISA allowance for the current 20/21 financial year is £20,000. This means, if you haven’t already, you can still invest £20,000, tax-free until the beginning of April. But what is the best stocks and shares ISA, what should you look for and which is best for you?

The short answer is that there no is right or wrong when it comes to choosing which is the best stocks and shares ISA. It all comes down to personal circumstances and what suits you.

When exploring your investment options, here are the points you need to consider:

Why Choose a Stocks and Shares ISA?

After the financial crash of 2008, interest rates have remained too low to make any return on investment from a cash ISA or other savings accounts. Instead, investing the money over a 5 year term in a stocks and shares ISA is much more likely to provide higher returns.

Tracking the financial markets, stocks and shares ISAs allow you to deposit as much or as little as you want (maximum £20k over the year) in a managed fund. 

You cannot open more than one per year, but you can transfer ISAs from previous years into a new one.

Having the option to invest £20k per year in a single ISA does give you the advantage of being able to pick and choose a new one each year diversifying your investments and spreading your assets with tax free benefits.

How Much You Want to Invest

First, you need to decide how much you want to invest.

If you want to drip feed in a little each month, there are many market leading, stocks and shares ISA that allow you to deposit as little as £20-£25 per month.

To make your investment worthwhile, you should aim to invest considerably more than this. 

The more you can afford to deposit, the higher the risk or the prospect of return and the more you will get for the fees you pay for having the account.

Where are the Funds Invested?

Each stocks and shares ISA manage funds differently. While some index tracker fund ISAs follow the performance of the world’s stock markets such as the FTSE 100,  S&P 100 or the FTSE 250, others invest the capital into property funds, income funds and readymade ISA portfolios.

There is no right and wrong as to which you choose but spreading the investment across a number of options minimises the risk. As the old saying goes; “don’t put all your eggs in one basket”.

The Term of the Investment

When considering a stocks and shares ISA, you want to look at the longer term of 5 years or more. Any profits or dividends that you receive from this ISA are not subject to income tax or capital gains tax.

Being able to invest £20k per year in a new fund means that you can build up a varied portfolio of stocks and shares ISA. 

If you are looking at your options for the next financial year, consider a different option to what you already have even if your current ISA is performing really well.

Again, always good to spread the risk and maximise the profit potential.

Choosing a ISA Provider

Some of the current stocks and shares options on offer are from household names that you will recognise such as Fidelity, Legal & General or HSBC while others are those that you are less likely to have heard of although this shouldn’t put you off choosing any one specific ISA provider.

It is worth taking a little time to look at the various providers and do a little background research. A quick internet search will tell you more about the company you are looking to invest your funds with.

Choosing a popular brand may come with more of a premium than choosing a lesser known company but that may also carry the additional security and peace of mind that comes with choosing a household name that is tried and tested.

Choose Something that interests You

As well as choosing the best possible return on investment, you can also have a little fun with stocks and share ISAs. Perhaps you have a keen interest in technology? If you like to follow the performance of top tech giants such as Apple, Google and Facebook, choose an ISA that invests your funds into these companies.

Use your knowledge of the tech industry and have some fun following the performance of your FTSE Global Technology Index Tracker Fund from Legal & General for example.

The Cost of Stocks and Shares ISAs

How much is it going to cost you to open a stocks and shares ISA and to manage it going forward? Usually there is an annual account fee. This can be anything from £0 - £100. In addition to this there is a fund fee of anything up to 0.45% of the portfolio value to consider.

Transaction charges of £1 - £12.50 will apply each time if you are buying and selling shares. If you have a larger portfolio and make regular trades, it is worth considering an ISA with a flat fee such as Interactive Investor.

Bearing these charges in mind, it is important that you get the most out of the benefits of the ISA including investing more than the minimum each month.

Ease of Use & Accessibility

In today’s world of modern technology, investors look to manage their investments on the move.

Easy access to the performance of your ISA is important if you want to stay up to date with your investments 24/7. Mobile accessibility is a must if this applies to you.

Remember the Risks

The value of investments can go down as well as up so be prepared to lose money. Choosing wisely will ensure that you minimise the risk however you need to bear this in mind. 

There is no get rich quick scheme so only invest if you have no outstanding credit card bills to pay and you understand the risks. When considering which is the best stocks and shares ISA, it is critical to understand the risks. 

Investment Fund Supermarket ISAs

Stocks & Shares ISA

from Fidelity

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 4,000 investment options, including one of the widest fund ranges in the UK, plus shares, investment trusts and exchange-traded funds. There’s also expert guidance to help with your investment decisions, which includes a selection of tools and insights from Fidelity’s experts. Capital at risk. Tax and ISA rules apply.
  • Invest From: £25 through regular savings or £1,000 lump sum

Why we like it: Fidelity has lots of investment options, plus an extensive range of guidance tools to help you decide what to invest in. Their award-winning ISA is easy to start and offers great value, their a typical service fee of just 0.35%. Other ongoing charges apply. On top of that, everything is backed by Fidelity’s 50 years of investment experience.

Important: The value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Tax treatment depends on individual circumstances and all tax rules may change in the future.

Stocks & Shares ISA

from Hargreaves Lansdown

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Choose from over 2,500 funds, shares, investment trusts and more to build your portfolio. UK and overseas shares. Corporate and government bonds. Exchange Traded Funds (ETFs). Ready-made portfolios to suit your goals and attitude to risk from £1,000. Expert research to help make your decisions. Investment trusts and much more. Capital at risk.Tax & ISA rules apply
  • Invest From: £25 pm or from £100 lump sum

Why we like it: Choose your own funds or alternatively a ready made portfolio. Market-beating savings and discounts of up to 5.5%. No charge to buy and sell funds. Low, tiered annual charges for holding funds, with a maximum of just 0.45% per annum. Free fund updates and analysis from experienced research team. Invest with a financially secure, FTSE 100 company.

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Stocks & Shares ISA

from AJ Bell

Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: 2000+ Funds
  • Invest From: £25 pm

Why we like it: It is simple to invest in a fund online. You will need to open an account first and then choose the fund you are interested in investing in. There are over 2,000 funds to choose from but to make it easier for you AJ Bell have created their favourite funds list which is their pick of the best funds. 

Important: The value of your investments can rise as well as fall. You may get back less than you invested. If you’re unsure, we recommend you ask for independent advice.

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal 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

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