My tried and tested guide to the Isa minefield: Holly Mackay puts her own money on the line | This is Money

2022-07-02 18:52:09 By : Mr. SHUANGZHI DONG

By Holly Mackay For The Mail On Sunday

Published: 22:02 BST, 16 March 2019 | Updated: 12:21 BST, 18 March 2019

There are hundreds of stocks and shares Isas to choose from – and in the run-up to the end of the tax year on April 5 advertising campaigns promising investment excellence jump off the pages.

It can be tricky to sift through the noise and find the best Isa to suit you.

As an experienced investor, I have tested accounts with nearly 30 providers – funded with my own money – to research the market.

Here's my guide through the minefield to the best Isa options to suit a variety of needs and levels of experience.

Holly Mackay has tested accounts with nearly 30 providers to research the market

The world of investment management has been slowly waking up to the fact that not everyone finds the nuances of oil price movements or emerging market debt as fascinating as they do.

It is now easier than ever to choose a stocks and shares Isa, delegating the business of investment selection and ongoing monitoring to an expert. 

This hands-off approach can often be a great option as customers are more likely to be delivered a well-diversified range of investments which makes it a less risky option than an enthusiast picking a handful of shares – and being exposed to the fate of just a few companies.

So-called robo advisers such as Nutmeg and Wealthify will ask potential customers a few questions to establish what mix of investments will best suit – and then serve up a ready-made portfolio, so no prior expertise is required. 

Moneybox is a simple, painless investment app which rounds up your change from any digital expenditure and sweeps the total over to your Isa on a weekly basis. This is perhaps the most enjoyable investment app I have ever seen. It has cut back on the waffle and jargon and it's amazing how loose change can add up.

A number of high street banks have jumped on board this Isa simplification bandwagon. 

Santander has designed a user-friendly risk profile questionnaire for its Digital Investment Adviser which will match you to a suitable portfolio. It is a more interesting Isa journey than you might expect from a traditional bank.

It is not necessarily my top Isa pick, but it is well worth a look if you bank with them, like the peace of mind that big brands provide and you want to benefit from seeing your Isa details alongside your online banking.

For years there has been a lot of intellectual snobbery about ‘ethical investing’. Hobbyist investors would typically curl a lip and see this as the domain of ‘lefty, green types’ who are prepared to sacrifice returns for morals.

But things are changing. Indeed, a recent survey of European institutional investors found that more than 50 per cent expect half of all their assets to be managed according to environmental, social or governance criteria within five years. Not so niche any more.

If we look at the impact on performance, a leading global index with a socially responsible slant – the MSCI SRI All Countries World Index – outperformed the more traditional global index by nearly 3 per cent last year. There is growing evidence that this approach to investing stands up in its own right.

If you prefer a simple all-in-one option, many online ‘robo’ advisers now offer an ethical Isa portfolio. Nutmeg has led the charge with a complex screening approach behind the scenes.

For those preferring to choose one or two ethical funds as part of a bigger portfolio, AJ Bell Youinvest is a good option offering choice and an ethical filter on its list of preferred funds. Royal London Sustainable World Trust is its top-selling ‘ethical’ fund.

If you prefer bigger brands, Barclays Smart Investor offers investors the ability to open an Isa and select the Multi-Impact Growth fund.

This aims to invest in the best third-party positive impact investment brands.

Legal & General has a wide range of ethical choices in its Future World range, addressing issues such as climate change and gender diversity, for example.

The online tools for investors in this area remain remain pretty basic but the socially responsible investment range is interesting.

Halifax Share Dealing is the cheapest option for most traders. Don’t expect any bells or whistles and you should be confident to navigate your own path. But with a £12.50 annual Isa administration fee and a dealing fee of £12.50, costs are low, especially if you don’t trade often or hold many investments.

Interactive Investor is one of the only other big names to offer a fixed fee in pounds and pence rather than as a percentage of funds. This will benefit those who have built up Isa investments of £60,000 or more over the years in a blend of shares and funds. 

There is still work to be done to offer the same level of service as AJ Bell Youinvest and Hargreaves Lansdown, but this is now an option for confident investors who want choice, interesting content, low fees and who object in principle to the idea of having fees levied as a percentage of their assets.

Finally, AJ Bell Youinvest and Hargreaves Lansdown are strong all-rounders which offer a good, decently priced option for share traders. Service and ease of use is arguably better at Hargreaves Lansdown, but it’s hard to look past AJ Bell Youinvest as a strong option to suit differing levels of confidence and experience.

Junior Isas are a tax-free savings account for children which anyone can pay into. There is an annual limit of £4,260 per child per year.

Wealthify has recently launched a Junior Isa that is probably the most novice-friendly option available. The fund selection and ongoing management are done for you and the website and mobile application are clear and simple to use.

For those wanting a little more choice, Fidelity is a big global brand that offers reasonable value and helpful fund shortlists to assist navigation and choice. Minimum fees make it relatively pricey for accounts under £7,500. Above that and the ongoing annual fee falls to 0.68 per cent.

Hargreaves Lansdown is the UK’s largest online investment service. It can be expensive, but its charge for smaller Junior Isas offers good value. There are investment options to suit different levels of confidence and interest. Service is the best around.

One of the most common mistakes I see from Isa investors is that they have some luck with a particular share or fund, get more interested, trade more and try to time the market.

But timing the market is impossible. Even if you predict events correctly, you cannot assume you will accurately predict how markets will react.

One of the most successful investors ever, George Soros, constantly reminds us that good investing should be boring. The ‘boring’ solution in the Isa world is Vanguard, a US-based investment firm.

It offers the LifeStrategy range, funds providing access to a broad global mix of investments. Opening a Vanguard Isa and using a fund from this range will cost 0.48 per cent a year. Vanguard will monitor, anticipate, tweak and manage the global range of investments for you.

If this removes investment fun, don’t forget you can have more than one Isa. The rules just say you can’t pay into more than one investment Isa in any one tax year. If your enthusiasm may be leading to poorer outcomes why not open a new low-cost, ready-made option next tax year (April 6 onwards) and see which approach does better.

DIY investing platform prices can be chiefly be split into two camps, writes Simon Lambert . Some charge a flat administration charge, while others charge a percentage of investors' holdings.

The former tend to always charge for buying and selling investment funds, while the latter may bundle this cost in and offer free fund dealing.

All charge for buying and selling shares, investment trusts and other products that are not funds, but the dealing fees vary from as low as £5 to about £12.

If you are a buy and hold investor putting away a large sum of money then you may benefit from a flat fee rather than percentage-based charging, which can mount up to a hefty amount. 

But if you plan on buying and selling regularly watch our for dealing charges, as these can also add up substantially and easily erode the gain from a flat fee. Lower charges for regular monthly investing can substantially cut costs.

Read our round-up of the best investment platforms to check the best one for you.

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