What are the Best ISAs for Income?

POSTED ON Wednesday, 16 September, 2020

Lots of experienced investors are looking to diversify their investment holdings, then you might be looking for some form of Income ISA, which can give you returns which are structured in such a way that they pay out regularly: like income. But with so many options, the question stands: what are the best ISAs for income? 

How do I get Income from my ISA?

An Income ISA is an ISA account where the returns from your investment are paid in a regular fashion: options can include monthly, quarterly or six-monthly. There are two different kinds of “income” ISAs:

  1. High Income ISAs
  2. Monthly Income ISAs

You will often notice that some of these types of ISAs fall into both of these categories – this is because often, there is a good deal of overlap between the two different kinds of ISAs.

So, What are High Income and Monthly Income ISAs?

These are ISAs which use your yearly ISA allowance with the aim of providing you with a regular tax-efficient payment from your investment (or, in some cases, savings). Some of these accounts focus specifically on getting the highest income possible, while others may have other focuses (whilst also obviously aiming to get a high income within certain constraints). This income may be paid:

  1. quarterly
  2. monthly
  3. six-monthly
  4. or yearly

There are a variety of high income ISA accounts available, so it makes sense to shop around for the one that best fits your income goals.

How risky are these?

These types of accounts tend to be higher risk than other types of Investment ISAs, such as your bog-standard investment ISA. However, with higher risk can potentially come higher reward – especially with High Income ISAs where the goal is to maximise the total amount of returns by strategic investment.

Our Top Picks for High Income ISAs

Artemis High Income ISA

This fund is available via Hargreaves Lansdown, which holds a focus on high yield bonds and shares. It is managed by an experienced bond investor with a flexible approach to finding the best income opportunities. It is a bit more volatile, so this is an account more suited to an individual with a higher risk tolerance; but it does offer an attractive 5.29% per annum yield.

Hargreaves Lansdown Multi Manager High Income Account

This ISA works by blending together different types of funds and moving between areas of the market when they spy emerging attractive opportunities. The idea of this is that over time, the income payment will grow and therefore, they can then invest in smaller (higher risk) companies, which offer great potential for growth. This ISA offers a 5.03% per annum yield.

Fidelity Moneybuilder Income

This is a fairly conservative option when it comes to bond investing, but still offers a 3.12% per annum income yield. This ISA focuses on quality companies with good financial health which continually generate sufficient cash to continue to pay bondholders. The aim here is to ensure steady growth, regular income and attempt to make sure that the risk is as minimal as possible.

Meteor FTSE Quarterly Contingent Income Plan

This ISA offers an annual yield of 6.10% annually with a term of up to ten years. It’s supported by Barclay’s bank PLC, so it’s associated with a well-known High Street face. But it’s very important to remember with these kinds of ISAs is that Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone.

Our Top Picks for Monthly Income ISAs

Legal and General Ethical Trust Income

This is an Ethical Income ISA – this means that investments in this type of ISA will only be put into funds which meet a range of ethical and environmental guidelines in a process which is known as “ethical screening methodology” which is then undertaken by the fund manager. With this ISA type, the fund is available via the Hargreaves Lansdown platform. This is a low cost option for an ethical fund with only a 0.25% per annum ongoing charge. This fund also aims to provide growth by tracking the FTSE 350 Index and investing accordingly.

Jupiter Asian Income

This type of ISA will give you access to the growth potential currently available in Asia. This focuses on larger companies in the Asian markets (such as Hong Kong, Singamore and Australia) and companies within this group that pay dividends. An investment in this kind of fund could be fairly secure, as investments are usually made in a small number of companies with strong growth potential but also that tend to be more stable. You can access this from Hargreaves Lansdown.

JP Morgan Asset Management Global Equity Income

If you want to invest with one of the worlds largest and best known brands in investment management, then JP Morgan Asset Management should be one of your first ports of all. This fund in particularly aims to achieve high (and continually rising) income by investing world-wide in equities which are participating in long term capital growth; you can find this at Hargreaves Lansdown.

Read more about High Income ISAs here.