How to Find the Best Stocks Shares ISA
ISAs are a popular way of saving and investing money. They are tax efficient with a generous annual allowance and are relatively easy to use for the financial novices amongst us.
There are two types of ISAs: cash, and stocks and shares. A cash ISA is effectively a tax-free savings account whilst a stocks and shares ISA is an investment account. Stocks and shares ISAs are a tax-efficient way of investing, particularly if you are a higher or additional tax payer.
In the UK, each individual over the age of 18 can put a maximum amount of money each year into an ISA. For the financial year 2015-16, that amount is £15,240. The money can be paid into an ISA all at once or paid in instalments through the year, and it can be put into a cash ISA or stocks and shares ISA in its entirety, or divided between the two.
What is a stocks and shares ISA?
A stocks and shares ISA is a tax efficient investment account. It allows you to invest money in a number of different ways such as government and corporate bonds, unit trusts, investment trusts, open-ended investment companies and company shares. As it is an investment it is susceptible to market fluctuations and therefore comes with the risk that you could make a loss rather than a profit.
How do I buy a stocks and shares ISA?
If you can, it’s best to get advice from an independent financial advisor and let him or her do all the work. However, many people invest successfully on their own without professional advice so if you want to go it alone, you will need to know how it works.
There are two stages to investing in a stocks and shares ISA. First of all, you need to select a provider or platform for your ISA. Some of them are well known names, others less known unless you are au fait with the financial world. They will all make a charge for you to use them.
A few of the highstreet and popular ISA providers
Once you have chosen your provider, then you can start to put together your portfolio of investments. Be aware that there will be further charges for each fund you choose to invest in.
How do I choose the best stocks and shares ISA?
As the market changes, so will the charges of the ISA providers so you will need to do some research before you start. Study a few reputable financial websites to get advice about what to look for and which platforms they are recommending currently. Websites such as Which?, moneysavingexpert.com and moneysupermarket.com have lots of information and advice.
There are different types of ISA providers with different levels of charges so consider which type will meet your needs the best. Most banks offer ISAs but often their investment options are limited. Some providers come from a stockbroking tradition or there are premium or budget fund supermarkets. The premium fund supermarkets charge more than the budget option but offer you more help and resources to choose and monitor your investments.