Before deciding on which is the best Stocks and Shares ISA for you, or which shares to buy now, it is advisable to gain a proper understanding of what a Stocks and Shares ISA comprises.
A Stocks and Shares ISA is a type of account where you can enjoy tax free earnings on any investment income you make within that account.
Anyone over the age of 18 is able to open a Stocks and Shares ISA and deposit up to £20,000 of ISA allowance into their ISA for the tax year 2020/21 and this amount remains the same for 2021/22.
Your ISA allowance can be split between whichever provider you feel is offering the best Stocks and Shares ISA for you, and any other type of ISA including a Cash ISA, Lifetime ISA and Innovative Finance ISA.
Stocks and Shares ISAs can be accessed through traditional banks as well as online platforms and robo advisers. In this article we have gathered all the relevant information to help you find the best Stocks and Shares ISA.
|Rank||ISA Provider||At a glance||Go to Site|
The number one choice for UK Investors with a range of ISA options available from £25 per month
Get Zero ISA Platform fees until when opening a new ISA by 30 September 2021. 0.25% max when promo ends.
New accounts opened with Nutmeg get 6 months 0% Portfolio Management Fees.
Open a Stocks and Shares ISA with Hargreaves Lansdown with a low fee of 0.45% annual account charge
Best Stocks and Shares ISA for Beginners with a ’round up’ function to drip feed small balances from your bank to your ISA
Excellent, user friendly trading platform and extensive product portfolio
Multiple options for funding and withdrawing money and great educational tools
|8||AJ Bell Youinvest
One of the cheapest options for small and medium portfolios with an easy to use platform phone, ipad and laptop
A great provider for self-invested Junior ISAs with over 3k funds available
The InvestEngine stocks and shares ISA has no setup fees, dealing fees, ISA fees or withdrawal fees, and you can choose to have it as a DIY or managed portfolio.Read my InvestEngine review to find out more.
The answer to which is the best Stocks and Shares ISA, very much depends on what type of investor you are and there are some key questions you should ask yourself.
Will you need help with your investment?
Investing can be complex and for aspiring investors who don’t have much knowledge of the market, and who don’t have time to dedicate to meticulously studying the marketplace, there are platforms that can manage the whole process for you. These ‘set it and leave it’ type investments are constantly monitored throughout, with a team of experts who can make changes in response to fluctuations within the marketplace. Whilst a fully managed portfolio will usually incur a management fee, this is usually a worthwhile cost if you have little experience to fall back on. The management fee you are charged will vary between providers so it is worthwhile shopping around as high charges can end up eating into your profits.
Would you rather do your own trading?
If you would rather engage in a ‘do it yourself’ option then there are plenty of platforms that can facilitate this and in this instance you may want to consider what tools you will require in order to make informed choices. The fees per trade will also be a consideration and each platform will have its own charging structure and you should ensure you engage with the best one for your investment strategy.
How much are you looking to invest?
The reason this is of relevance is due to the various charging structures within the platforms that are available. For a smaller investment pot, you may be best to look for a platform which charges a percentage of your pot in order to keep costs low. However, percentage fees can soon add up for larger investment pots and in this instance it is best to find a provider with a flat fee.
What are you looking to invest in?
When it comes to the range of investments and funds on offer, not all platforms are created equal and therefore it is essential that you ascertain whether the platform you are considering can meet your investment needs before deciding where to place your money.
These are our ‘best in class’ investment platforms that provide model portfolios to suit your risk profile.
Moneyfarm provides seven different portfolios, each with a different level of risk, invested across a range of financial instruments including EFTs. Moneyfarm make investing very easy for newbies and what we really like is that their portfolios have all performed very well over the last four years, providing their investors with good returns. They are also competitively priced for the level of service you can expect.
Read our Moneyfarm review to find out more.
Whilst Nutmeg may not be offering the cheapest service in the market, there are plenty of reasons why Nutmeg remains a market leader when it comes to investment platforms. Their full eight year track record on their investment portfolios is all detailed on their website with a +5.7% AR, outperforming many of their peers. They offer a fully managed service with a globally diversified portfolio to suit your risk profile
**Nutmeg are currently offering new accounts 0% Portfolio Management fees for 6 months.**
Read our complete Nutmeg Review to find out more.
For seasoned traders who prefer to pick their own investments, here are our pick of platforms taking into account investment selection, cost and research tools.
It’s difficult to imagine a DIY investor who wouldn’t be satisfied with the sheer volume of investments on offer at ii. For experienced investors who are after the full range in order to build their own, diversified portfolio, on a cost effective platform, you need look no further. They provide a mobile trading app as well as a web based trading platform that works on both Mac and Windows. The other major advantage that beats off a lot of the competition is their 24 hour customer service.
Read our Interactive Investor Review to learn more.
Whilst Hargreaves Lansdown are slightly pricier than some of their counterparts, there are a few reasons why Hargreaves Lansdown stood out in our comparisons of platforms. One of the things we really liked about Hargreaves Lansdown was the access they provide to a financial advisor, either by phone or in person which really sets them apart from a lot of the competition. They also provide a comprehensive range of investment options, tools and research for the more seasoned shareholder.
Read our Hargreaves Lansdown Review to learn more about their stocks and shares ISA products.
Watch their video below which explains stocks and shares ISAs.
Want to invest in line with your personal values? Here’s our pick of the best impact investing platforms available.
For newbies who are just starting out and wanting to achieve good returns whilst supporting businesses that are leading the way in making a positive global impact, you won’t find much better than Tickr. Their £1 per month flat fee is fairly competitive, however, users with a small portfolio may find that this amount can eat into their returns quite quickly and may be more suited to a percentage based fee.
That being said, Tickr offers four social and environmental portfolios that cover climate change, disruptive technology, gender equality or a combination of the three. It is also worth knowing that 90% of their users are first time investors which is testament to how easy it is to use the platform. Tickr also allows users to utilise Round-ups, really helping to maximise on your investments without taking a noticeable hit to your pocket.
Read our Tickr Review to learn more.
We understand that costs can quickly have a negative impact on your investment returns, so here are our picks for the platforms we believe represent the best value for money.
If you are looking for a low cost platform then you need look no further than Vanguard. They offer excellent ready-made portfolios that have historically performed well and give risk levels to choose from. The draw back for Vanguard is that you can only invest in their own funds, however, as long as those funds continue to perform well, this need not be a concern. Fund charges at Vanguard are highly competitive and vary according to the fund manager.
Read our Vanguard Review to learn more about the Stocks and Shares fees they charge.
Trading212 offers free Trading with as little as £1 in over 3,000 stocks, shares and ETFs. They also offer zero fees on commissions, dividend investment and administration. As there are no ready-made options this platform is more suited to experienced investors, however, in terms of fund charges, it is highly competitive.
Read our Trading212 Review to learn more.
For experienced investors who are looking for a wide range of opportunities with which to create a diverse portfolio, here’s our pick of the bunch.
ii take the top spot when it comes to the sheer range of investments on offer, perfect for more experienced investors who are looking to build their own portfolio. They are also very cost effective for medium to large portfolios due to their fixed fee. If you know how you want to invest your money, then this is an excellent choice provided you meet their minimum investment of £25 per month. ii allows you to take advantage of free regular investing, whereby you drip feed your money into the stock market, helping to mitigate your risk and increase profits. Whilst this approach won’t guarantee better returns, it will ensure that you pay the average price for a share and henceforth provide you with a smoother return.
ii offer the following range of opportunities:
- Stocks & Shares
- ETFs (Share ETFs and Index ETFs)
- Investment Trusts
- Investment Funds
- Bonds & Gilts
- Venture Capital Trusts (VCTs)
Read our Interactive Investor Review to learn more about their range of Stocks and Shares ISAs.
Want to know which portfolio performed the best in 2019? We’ve studied the rates of return so you don’t have to.
Moneyfarm Level 6 Portfolio
The Moneyfarm level 6 portfolio experienced a 16.6% return in 2019, after fees, elevating them into the top spot for best performing Stocks and Shares ISA, helping to cement their spot as the best ‘set it and leave it’ platform. With competitive fees and a ‘set it and leave it’ type investment style, this makes them perfect for beginner investors looking to save for retirement or grow their money in line with their financial aspirations.
Read more in our Moneyfarm Review here.
Just setting off on your investment journey? We’ve identified the best Stocks and Shares ISA for people who are new to investing.
Moneybox is a great option for newbies, providing you with a wealth of information to help you get to grips with some of the terminology as well as useful tools that can predict what your money will be worth in the future. One of the things that sets them apart is their Round Up feature that allows you to link to your bank account and round up to the nearest pound each time you spend money. This is a great way to drip feed money into your investments, helping to reduce your risk and build your investment bankroll without taking a big hit to your bank balance.
Read more complete Moneybox review and find out more about their full product range.
We’ve identified the best Junior Stocks and Shares ISA for your circumstances below. However, for more details on Junior ISAs please go to https://investingreviews.co.uk/guides/how-to-start-junior-isa/ for our full JISA guide.
Best for self invested JISA and no platform fees.
Fidelity are one of the market leaders when it comes to Junior ISAs and it is little wonder when you look at the wide investment range, with over 3,000 funds to choose from. They also provide self invested account holders several tools with which to make informed decisions.
Read our Fidelity Investments Review to find out more.
Interactive Investor JISA
Best for large portfolios
Interactive Investor works out very cost effective for large portfolios with two free trades thrown into their flat monthly fee. Joining ii costs new customers just £9.99 a month and gives account holders access to the ISA and Trading Account in addition to the JISA. This means that regardless of how big your child’s investment pot gets, they will always pay this low flat fee.
Read our Interactive Investor Review to learn more about their products including Junior Stocks and Shares ISAs.
Vanguard Stocks and Shares ISA
Best for cost.
Vanguard remains one of the most cost effective options available for all account sizes and offers account holders ready made portfolios that are suited to both novice and passive investors. Vanguard is one of the world’s largest fund manager and also offers a DIY platform for investors who know how they want to invest. The platform fee at Vanguard is only 0.15% per year on investments up to £250,000 capped at £375 which is less than half the industry average for a platform fee.
Read our Vanguard Investor Review to learn more about their Junior Stocks and Shares ISAs.
It is really important to understand that while you could earn more in a Stocks and Shares ISA, you can also lose some, or even all, of the money you invest. There are no investments that are completely without risk, although you can set the level of risk you are willing to take. However, this needs to be carefully considered, as the less risky the investment, the less the expected returns. That being said, the returns from a Stock and Shares ISA could be a lot higher than you would get from the interest earnt in a Cash ISA, especially now when the interest rates are so low. It is also possible to reduce your risk by creating a truly diverse portfolio across different markets and sectors.
So what returns on your investment can you expect from a Stock and Shares ISA to make it worth the risk? Well the good news is that in recent years Stocks and Shares ISAs have performed well with an average return rate of 4.8% in 2017/18 and 4.04% in 2018/19. However, as always with investing in shares, it’s important that you consider your time frames, as it is advisable to invest your cash for a minimum of five years in order to ride out any volatility in the market.
A Cash ISA is a savings account where you never pay income tax on any of the interest earnt on your savings. Whilst there is a lot to be said for protecting your interest earnings from the taxman, the introduction of the Personal Savings Allowance means that every basic rate tax payer will not have to pay tax on any interest they earn until it exceeds £1,000 in any one tax year. This is the equivalent to the interest earnt on about £180,000 in a high interest savings account.
The advantage of a Cash ISA over a Stocks and Shares ISA, is that your money is protected and you are always guaranteed to get back what you put in. Conversely, investing your money in a Stocks and Shares ISA comes with a degree of risk, and you could end up losing some, or even all of the money that you originally invested. That being said, Stocks Shares ISAs are designed to grow your wealth free from tax, and when it comes to returns they have historically beaten Cash ISAs.
The other thing to consider is the current interest rate as set by the Bank of England is 0.1% which is in response to the economic shock caused by the pandemic. With interest rates being so low, you can expect the returns on any savings to be minimal, and you could end up losing money over time due to inflation. Therefore, the chances of growing your wealth are currently better within a Stocks and Shares ISA, however, you will need to leave your cash untouched for a minimum of five years within a Stocks and Shares ISA in order to ride out any volatility in the market. Therefore if you feel you will need to access your money within the next five years, and you still want to protect your interest from the taxman, then a Cash ISA may be the best option for you.
- You can pay some, or all of your £20,000 ISA allowance into a Stocks and Shares ISA in any one tax year. Any unused allowance is lost to you and cannot be recovered. A Stocks and Shares ISA is specifically for people who want to invest, should you wish to hold cash, then you may want to consider a Cash ISA.
- You can choose between making a lump sum deposit, or alternatively making smaller contributions throughout the year, as long as you stay within your ISA allowance.
- All financial gains experienced in your Stocks and Shares ISA are free of Capital Gains Tax.
- You can only pay into one Stocks and Shares ISA in each tax year.
- You can open a new Stocks and Shares ISA with a new provider each year.
- You can transfer an existing Stocks and Shares ISA to a new Stocks and Shares ISA without affecting your ISA allowance.
- You can sell your investments at any time and cash out or reinvest your money.
Paying into two ISAs is a common mistake which is thankfully easy to rectify. The main thing to remember is that you should never try to rectify this error yourself as you could stand to lose your ISA allowance completely for that tax year. Instead, you should contact HMRC, who will advise you on the best course of action.
Any investment comes with a degree of risk and therefore investments can never be 100% safe. However, with a Stocks and Shares ISA whilst you can’t protect your money from a drop in the Stock Market, the cash you hold within the ISA is protected from the provider going bust up to the value of £85,000 by the Financial Services Compensation Scheme. Should you exceed that amount, you are at liberty to open a new Stocks and Shares ISA each year and deposit any excess into the new account, however, remember that you can only deposit into one Stocks and Shares ISA in any one tax year, regardless of how many ISAs you have open.
Investing in a Stocks and Shares ISA should always be considered a long term endeavour and experts agree that investors should remain in the market for a minimum of five years in order to recover from any volatility in the market.
What Are Exchange Traded Funds (ETFs)?
Exchange Traded Funds (ETFs) are types of investment funds that provide a vehicle for you to invest in a wide range of bonds or shares on the London stock exchange.
Frequently Asked Questions
Should I open a Stocks and Shares ISA now?
There is no doubt that the market is volatile at the moment due to the pandemic, in fact during 2020 the FTSE 100 plummeted by 14%, however things were looking brighter on the other side of the pond. That being said, now could be a good time to pick up a bargain and given that a vast majority of the UK population find themselves with a bit of extra cash following lock down, now could be the best time to start investing. Some stocks have become vastly undervalued, presenting an opportunity for long term investors who can ride out any further loss the market may experience.
Can I pay into two different Stocks and Shares ISAs in the same year?
In short, no. You can pay into a Cash ISA and a Stocks and Shares ISA but not two different Stocks and Shares ISAs. That being said, you are allowed to have more than one Stocks and Shares ISA open at any one time, it’s just that you can only pay into one of them.
How are Stocks and Shares ISAs performing?
The 2019/20 tax year saw the biggest fall in performance for Stocks Shares ISAs in over a decade as the stock market felt the impact of the pandemic and the effects of a global lock down. On average, funds fell by 13.3%, and in that one tax year savers using a Cash ISA would have seen better returns.
However, it’s not all doom and gloom as any seasoned investor will know that whilst the stock markets have experienced unprecedented volatility, the outlook for the long term remains positive as the market starts to recover following news of the vaccine and the Brexit deal. It is for this reason that advisers recommend leaving your investments for a minimum of five years in order to ride out any hits to fund sectors. It is also worth considering that this fall in the marketplace follows three consecutive years of positive gains for Stocks Shares ISAs.
Is Interactive Investor a good investment platform?
The answer to this question very much depends on the type of investor you are. ii very much lead the way when it comes to the volume of investments on offer, and therefore provide an excellent investment platform for experienced investors who want to buy shares with which to build their own globally diverse portfolio. Their charging structure is most cost effective for medium to large size investment pots, however, their fixed fee will leave smaller pots paying considerably over the odds.
Can you lose all your money in a Stocks and Shares ISA?
In theory it is possible to lose all your money in a Stocks Shares ISA, however, this would very much depend on your investment style. Were you to buy a single stock with your entire pot then the odds of losing all your money would increase significantly, however, by creating a diverse portfolio, by buying shares in a wide range of assets, then the odds of losing all your money would be very remote. Indeed, should this occur, you may find you have bigger worries than the loss of your money.
What is the best thing to do with a lump sum of money?
If you find yourself in possession of a lump sum of money that you don’t need access to for the foreseeable future, then you may be considering paying this into a Stocks and Shares ISA. However, you would be sensible to assess any debts you have first as one of the best investments you can make is to rid yourself of any high interest debt first. The average interest on credit cards is currently around 17.87% and you would be hard pressed to see these kinds of returns on any investments you might purchase in even the top performing Stocks and Shares ISA.
Once you have rid yourself of any high interest debt you would be wise to start building your emergency fund. This should be to the value of three to six months living expenses, which can be utilised in the event that you unexpectedly lose your salary or need funds for car or home repairs. Being forced to sell your investments when the market is low to cover the emergency costs can leave you significantly worse off.
Once you have your emergency fund, you are in a position to start growing your wealth by saving and investing. A Stocks and Shares ISA is an excellent option at this point, or alternatively you can check whether you are on target for your retirement within your SIPP, or if you are renting consider buying your own property.
Should I cash in my shares?
With the current volatile state of the stock market, it’s completely natural to want to cash in your shares to avoid incurring further losses, however, we would advise you to take a moment to consider the following before taking any action.
When your stocks have fallen in value, you may feel like you have suffered a monetary loss, however, at this stage you have only incurred what is known as a paper loss. Only when you sell your shares will this become a permanent, real loss. However, should you sit tight and hold on to your shares you may experience a rebound in the market, allowing you to recover any value you lost, and in many cases experience a profit beyond what you held originally. This is all part of the rise and fall of the stock market and is the exact reason why experts suggest leaving any investments for a minimum of five years.
Is it worth keeping a Cash ISA?
If you currently have a Cash ISA and are disappointed with its performance, there are several things to consider. Firstly, anything under the personal savings allowance, may perform better in a high interest savings account. It’s important to remember that once you exceed the personal savings allowance, any cash you hold outside of your ISA will be subject to income tax.
Your other option is to transfer your Cash ISA to a Stocks and Shares ISA. It is important to remember that should you withdraw from your Cash ISA, you will not be able to deposit that money again without using your ISA allowance. A direct transfer on the other hand, will not affect your ISA allowance.
With today’s low interest rates, a Cash ISA is rarely going to help you grow your wealth, however, you must be prepared to assume some risk when you buy shares with a stocks shares ISA.
Can you lose money in Cash ISAs?
Whilst your money is completely safe in a Cash ISA and you are guaranteed to get back what you put in, there is a chance that your money can lose value over time in a Cash ISA. This is the result of historically low interest rates which are struggling to keep up with inflation, resulting in the cost of living, failing to keep up with any interest earnt on savings within a Cash ISA. AJ Bell have recently released details of a study that has unveiled that a person making maximum contributions into an ISA since 2011 will have deposited a total of £127,320, and the interest earned on this amount would make it equal to £133,037 today. However, when you take inflation into account, this amount is actually only worth £124,857 which is less than the original amount deposited.
What is the average return on a Stocks and Shares ISA?
When you look at the average returns on a Stocks Shares ISA in recent years, the argument for them becomes very compelling. Moneyfacts.co.uk have released data that shows the average Stocks Shares ISA returned 4.80% in the 2017/18 tax band and 4.04% in the 2018/19 tax year. In stark contrast to this a Cash ISA would have returned just 1.01%.
Anyone who has made the maximum contributions into a Stocks Shares ISA since 2011 would have deposited a total of £127,320 which, after inflation, would be worth £196,079 today, a massive 57% more. This is taken from data released from AJ Bell.
Before you commit your money to a Stocks Shares ISA, it is understandable that you would want an idea of the rate of return you can expect. As mentioned previously, engaging in an investment ISA in order to grow your wealth, should be considered a long term venture in order to ride out market volatility whilst avoiding any Capital Gains Tax. Of course the rate of return will depend on the ISA provider you choose, their annual charge, and your own personal risk appetite.
What is the best investment for 2021?
It is impossible to predict where 2021 can take us, however, investing is largely about adhering to averages, and when you take averages into consideration it is still favourable to invest in stocks.
The biggest factor affecting which stocks are the best to buy remains COVID-19. In 2020 we saw top performing stocks being linked to companies that benefited from COVID-19 lockdowns, namely technology as more and more people started working from home. However, 2021 is expecting to lean more towards a slow return to normal life as the vaccine is rolled out across the globe.
Travel is one sector that experts are expecting to bounce back with vigour as a population frustrated by lockdown rushes for a holiday. Companies who have taken a hit over the pandemic may be more affordable now with giants like Hilton representing cheap company shares that could prove profitable should you be in for the long term.
However, in times of volatility such as we are experiencing, the best advice from the experts is to ensure that you are adequately diversified. An investment platform or robo advisors that provides customers with a ready made, fully diversified portfolio may be the safest option in order to successfully ride out any bumps in the road ahead.
What is the difference between a Stocks and Shares ISA and an investment ISA?
An investment ISA is simply another name for a Stocks Shares investment account or Stocks and Shares ISA and both will offer exactly the same level of service to their account holders.
Is it possible to track the performance of my investment ISA?
A traditional investment ISA provider will provide you with quarterly or annual updates as to the performance of your ISA. However, more modern investment platforms and robo advisers allow you to track the performance of your investments live online.
Can I open more than one investment ISA?
The answer to this question is yes, however, you can only open one investment ISA in any one year and your ISA allowance remains the same regardless of how many investment ISAs you own.
How do I select what to invest in?
If you are asking yourself this question, then you may be better off selecting a ready made portfolio that has been put together by a team of expert financial advisors on one of the many investment platforms available. Successful investing can take a lifetime to master and you will need time to study the market in detail in order to make informed decisions. That being said, many of the online platforms come with a wealth of tools and research to help you make your selections, so you certainly don’t need to be an expert to go it alone. eToro offers investors recommendations on a number of stocks with a wealth of information such as average price targets and expert analyst reports.
Antonia is the Financial Editor at InvestingReviews.co.uk and brings a wealth of experience, having written for various industries over the past 10 years.
Her investment platform reviews, news, blogs and guides are meticulously researched, fact checked, and updated on a regular basis.