Not sure which ISA is best for you to invest in? Our finance savvy Michael Barton breaks down all the best ISAs for UK investors to suit your needs and experience.
Investing via an ISA is a no-brainer. You invest up to £20,000 in any tax year as you would normally, and benefit from tax-free growth and income.
You can invest in a wide range of investment assets and securities, and withdraw when you wish (tax-free) – though you should always treat a stocks and shares ISA as a medium- to long-term investment.
If you’ve decided to invest in an ISA (and who wouldn’t?), you’ll want to choose the best ISA for you. You’ll need to consider your investment experience as well as the assets and securities you want to hold. You’ll also need to think about the costs associated with the platform you select.
There’s a lot to think about to find the best stocks and shares ISA. Which is why I’ve done the legwork for you. Whether you’re a beginner or seasoned investor, this article unwraps all you need to know to discover the best option for you.
TLDR: Which ISA Should You Invest In?
In your quest for the ideal ISA, remember the key is to align your choice with your investment experience and goals.
Consider what you want to invest in, the costs involved, and the level of control you desire. Ultimately, your ISA choice should cater to your financial aspirations while maximising tax-free growth and income, without overstretching your current financial capabilities. Choose wisely to make the most of this powerful investment product:
Best Robo ISA – MoneyFarm (capital at risk)
Best Low Cost ETF – InvestEngine (capital at risk)
How To Find The Best ISA
Before I look at my top ISA picks, I want to discuss the criteria I’ve used to filter out the wheat from the chaff. There are three considerations to must bear in mind when searching for the best ISA to invest in:
1. Investment Experience
I’ve got decades of trading and investment experience, and the time to commit to investment selection, so a DIY platform with a broad choice of investment assets suits me best. This lets me make my own investment decisions, with the responsibility for profit squarely on my shoulders.
On the other hand, if you’re less experienced or time-poor, then a robo-advisor (or managed account) might be best. This type of investment platform takes the information you provide (usually via a questionnaire) to make investment decisions for you. Funds are created by professionals and, in the case of robo-advice, your money will be invested in funds that ‘manage themselves’.
2. Investment Assets
Next, you’ll need to consider what you wish to invest in. Options include managed funds, Exchange-Traded Funds (ETFS), shares, and international stock markets.
The assets in which you invest should be selected to achieve your financial goals aligned to your risk profile.
At the low end of the risk scale, you’ll have money market funds – great for reducing capital risk, but not so good for beating inflation over the long term. Working up through the risk scale, you’ll be investing in government and corporate bonds, managed funds, ETFs, and company shares.
To mitigate risk along the risk curve, you should also consider diversification (funds and ETFs are great for this).
3. Platform Cost
Finally, it’s important to think about costs. Higher charges – for dealing (or not dealing), custody, and fund management, among other costs – will eat into your returns. A 1% difference in annual charges may not sound a lot, but over a number of years it can impact your returns by thousands (if not tens of thousands) of pounds.
OK, now we’ve got the nuts and bolts out of the way, let’s look at the best stocks and shares ISAs in different categories.
Best Robo ISAs
If you’re a novice investor, or you simply want a no-hassle ISA investment, you’ll love the simplicity of Robo ISAs. You can start investing with confidence in only a few minutes, with investments selected for you. Here’s my pick of Robo ISAs:
Moneyfarm – Robo ISA
- Minimum Investment: £500
- Investment Options: 7 managed portfolios
- Platform Fees: None
- Average Fund Fees: 0.29%
- Management Fees: 0.75% to 0.35%
Moneyfarm’s algorithms will select one of seven professionally managed portfolios to match your investor profile. These portfolios are invested in a range of ETFs, helping to give them incredible diversification.
Its award-winning investment app is easy to use, and you can also access free investment advice. With no platform fees and low portfolio management fees, Moneyfarm ticks all the boxes. The only downside is that you’ll need £500 to open an ISA, with a minimum investment amount of £25 after opening.
*Capital at risk
Nutmeg – Robo/Ready-Made ISA
- Minimum Investment: £500, then no minimum monthly investment
- Investment Options: Wide range of managed portfolios, mostly invested using ETFs
- Platform Fees: N/A
- Average Fund Fees: 0.22%
- Management Fees: 0.75%
Nutmeg is another wonderful option for those just starting an ISA investment. Though charges average out at around 1% to 1.4%, you get a lot for your money.
Its range of ready-made portfolios are mostly invested in ETFs, professionally managed, and selected for you depending on your stated risk profile.
Like Moneyfarm, you’ll need £500 to open an account, though there is no minimum monthly investment. You’ll find Nutmeg’s website and app easy to use, and you’ll have access to a range of more advanced charts and tools, too.
*Capital at risk
Wealthify – Robo ISA
- Minimum Investment: £1
- Investment Options: 5 portfolios
- Average Fund Fees: 0.16% (0.7% for ethical funds)
- Management Fees: 0.6%
A clean and easy-to-use app, with minimum investment of £1, low fees, and a roundup feature that sweeps a little extra money from your spending into savings and investments. What isn’t there to like about Wealthify?
Your money will be invested in one of five portfolios comprising funds from some of the world’s top fund managers, covering the range of risk profiles, with a flat management fee structure.
Overall, a great ISA for beginners who are starting out on their investment journey.
*Capital at risk
Moneybox – Robo/DIY Investment
- Minimum Investment: £500
- Investment Options: 7 Managed Portfolios
- Platform Fees: None
- Average Fund Fees: 0.29%
- Management Fees: 0.75% to 0.35%
Like Wealthify, Moneybox allows you to invest from as little as £1, and it, too, includes a roundup feature to help you save. Its management fees are middle-of-the-road, as are its fund management fees.
It offers a range of three ready-made portfolios, or, if you prefer, you could create your own portfolio using tracker funds, ETFs, and U.S. stocks.
It’s a great app for beginners and poor savers, and gives a degree of extra flexibility that I like. However, despite its low fee structure, you will need to pay a £1 per month subscription charge. The smaller your investment, the more this impacts you.
*Capital at risk
Best DIY ISAs
If you want to be in full control of your ISA, you’ll want to choose an ISA that allows you to select the investments you make. When reviewing the DIY ISAs available, I was mostly concerned with the range of investment options and costs:
IG – Best ISA for ETFs
If you’re a regular reader of Wallet Savvy, you’ll know that I’m a big fan of ETFs. They allow you to invest with maximum diversification in the asset class, geography, and industrial sector of your choice.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| 5,000 ETFs UK & US shares, & other assets, ready-made portfolios | £250 | 0.5% pa | UK trades £8 US trades £10 £3 trading fees if trading more than 3 times per quarter | £24 quarterly |
The IG platform gives you access to more than 5,000 ETFs worldwide. That’s a choice you’ll find hard to match elsewhere. You can also choose from its ready-made portfolios, shares, and more.
However, this market access doesn’t come cheap. Its standard dealing fee is £8 for UK shares (£10 for US). To benefit from lower dealing fees of £3, you will need to deal at least three times each quarter.
There is a platform fee of £24 per quarter, too. The minimum initial investment is £250.
*Capital at risk
Hargreaves Lansdown – Best ISA for Investment Range
Hargreaves Lansdown is the UK’s most popular investing and trading platform. It gives you access to thousands of funds, shares, ETFs, and more. You can also access personal financial advice (though this is fee-based). Investors have around £135 billion invested through the platform.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| 1000s of funds, shares, ETFs & more | £100 | 0.45% on portfolios up to £250,000 | £11.95 per trade £5.95 if trading 20+ times per month | N/A |
The minimum lump sum investment is £100, or you can invest as little as £25 per month.
There is no charge for dealing in funds, but other trades will cost £11.95. This charge reduces in steps to £5.95 if you make 20 or more trades in a month. Platform fees of 0.45% of funds are levied on accounts below £250,000.
*Capital at risk
Interactive Investor – Best ISA for Investment Platform
Like Hargreaves Lansdown, Interactive Investor offers access to tens of thousands of securities.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| Ready-made portfolios, shares, investment trusts, investment funds, ETFs, corporate & government bonds, & more | No minimum | See platform fee | UK & US funds & shares: £5.95 International shares: £19.99 | £4.99 to £19.99 per month |
As a beginner, you might wish to invest in its Quick Start funds or Model Portfolios. With more experience, you can invest in shares, investment trusts, investment funds, ETFs, corporate and government bonds, and more.
Its dealing fees are around average (though expensive for international shares), but where it really excels is its trading platform: user friendly and functional, with access to plenty of research. I really like its comparisons to other investments. It has a great Investor’s Knowledge Centre, too, packed with useful information.
Its platform fees of £4.99 per month can make smaller portfolios more expensive.
*Capital at risk
InvestEngine – Best ISA for Low Costs
This pretty much got my vote for the best ETF ISA, because ETFs are the only instrument you can invest in through the InvestEngine ISA.
However, the costs are so low that I was compelled to make it my sole pick for a low-cost ISA.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| Only ETFs, plus a few managed funds holding ETFs | £100 | None, unless you invest using managed funds, in which case a charge of 0.25% | None | None |
If you want to build a portfolio using a range of ETFs, your total costs will be… Zero! That’s right – no set-up fees, no dealing fees, no ISA fees, and no withdrawal fees.
The costs you pay will only be those levied by the ETF and the market spread (the difference between buying and selling prices).
If you elect to invest in one of InvestEngine’s managed portfolios, you’ll pay a total of just 0.47% (cheaper than Wealthify’s 0.76%).
The negatives for ETF investors? The minimum initial investment is £100, and the risk questionnaire is not the friendliest. If you’re new to investing, you might be disappointed by the lack of educational resources provided by InvestEngine although having spoken to them this is something they are certainly looking to address.
*Capital at risk
Trading 212 – Best ISA for International Stocks
Trading 212 is a no-frills investment platform that could be ideal for you if you wish to build a portfolio of international shares and ETFs in an ISA wrapper.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| Global shares & ETFS | £1 | None | None | None |
You can easily search for stocks, and get basic information and historic price charts. It’s easy to buy and sell on the app, and you can deal in fractional shares.
Using its ‘Pie’ feature, you can build your own diversified portfolio, and put your investment on autopilot, with dividends reinvested, too. In addition, you can copy how others are investing. Plus, if you’re new to investing, you can use its practice mode to get used to things before you commit any money.
A great tool, with plenty of educational resource, and one that won’t hurt your investment with costs of dealing and ISA fees – it’s free! (Oh, you also get 5% interest on your sterling cash balance held in your account.)
*Capital at risk
Freetrade – Best ISA for Novices
With a great app and ease of setting up an ISA account, as well as access to shares, ETFs, and investment trusts, I’ve chosen Freetrade as the best ISA for novices. Freetrade was named as Investor Chronicle’s Best ISA broker in 2023.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| Shares, ETFs & investment trusts | £2 | See platform fee | Commission free | £5.99 to £11.99 |
The app is clean and clear to read, with the most popular shares grouped to make it easier to research. You’ll find it easy to buy and sell, and there is help available to build a portfolio. However, there is a lack of advanced functions that a more experienced investor might desire.
Like Trading 212, you’ll benefit from commission-free dealing, and you can start your ISA with as little as £2. However, there is a rather hefty ISA fee of £5.99 per month (£11.99 per month if you are on the Plus Plan). This makes it an expensive option for those with small portfolios.
*Capital at risk
AJ Bell – Best ISA All-Rounder
Like Hargreaves Lansdown, AJ Bell is one of the most popular trading platforms in the UK (and it offers a great SIPP product, too). If you have only a modicum of investing experience, you’ll get a lot of help from its resources and guidance sections.
| Range Of Investments | Minimal Initial Investment | ISA Fee | Dealing Fees | Platform Fees |
|---|---|---|---|---|
| Shares, funds, ETFs, bonds, & investment trusts | £500, or £25 per month | 0.25% for portfolio up to £250,000 Decreasing to 0% above £500,000 | From £1.50 to £9.95 | None |
This isn’t the best option if you want a hands-off approach to investing, but you will have access to thousands of investment options – including shares, funds, ETFs, bonds, and investment trusts.
The AJ Bell ISA is free to set up, though you will need to invest at least £500 or £25 per month to receive a discount on dealing charges – which ranges from £1.50 to £9.95. There is a 0.25% custody fee (capped at £7.50) on the first £250,000 held in your portfolio, decreasing to 0.1% on the next £250,000, and zero above £500,000.
Its online tools present quite a package for investors. These include:
- Top buys and sells
- Investment articles and videos
- Investment alerts
- An award-winning investment app
Overall, a terrific all-round ISA platform.
*Capital at risk
Why Use ISAs for Your Investment?
As I said at the head of this article, investing in an ISA is a no-brainer. The tax advantages will make a significant positive impact on your long-term gains – and who doesn’t want to protect their money from the taxman?
Here are five reasons why you should invest as much as possible into an ISA:
1. Tax-Free Growth & Income
Growth and income within an ISA is free from capital gains tax and income tax. You get to keep all the profits, without the taxman dipping in. The longer you hold investments in an ISA, the greater the impact will be – especially if you are reinvesting dividends (which will also be free from income tax).
If you decide to withdraw any funds, you won’t pay any income tax or capital gains tax on it either.
2. Flexibility & Accessibility
You can withdraw from an ISA at any time, making them highly flexible – a real bonus if you find you need funds for an unexpected event. You won’t lose tax benefits on the remaining funds in your ISA.
Because you can invest in such a wide range of investment instruments in an ISA, this also makes them especially attractive when developing a portfolio to meet unique investment goals, and adapt to your evolving risk profile.
3. Long-Term Financial Planning
ISAs offer a compelling investment option for long-term investment planning. Your investment will benefit from tax-free income and growth, boosting returns and if, for example, you wish to take income from your investment in retirement, you won’t pay tax on withdrawals.
Whatever your medium/long-term financial goal, an ISA should be on your list of investment products to take advantage of.
4. Simplicity & Ease of Use
ISAs are relatively straightforward to set up and manage. This makes them accessible for all, including the newest of newbies. Most ISA platforms have moved with the times, and offer easy-to-use interfaces and tools to help manage your ISA investments efficiently.
5. Estate Planning Benefits
Here is a lesser-known benefit of ISAs – inheritability. Not only of the fund, but of the tax benefits, too.
While the investments within an ISA form part of your estate for inheritance tax purposes, the ISA’s tax-free status can continue for a spouse or civil partner after death. A great way to build a financial legacy for your most loved one, without the taxman getting their hands on it.
How Do You Select the Best ISA?
I cannot say which ISA is right for you. The choice depends upon so many factors, including your financial situation, goals and objectives, risk profile, and investment experience.
Here are some of the considerations you’ll need to make before deciding which is the best stocks and shares ISA for you:
Assess Your Investment Experience
Are you a beginner or an investor with limited time to research potential investments? If so, a Robo ISA might be the best option.
On the other hand, if you have more experience and want to take full control of your investment choices, then a DIY platform with a wide range of investment options could be the smart move.
Consider Investment Assets and Diversity
Think about what types of assets you want to invest in, and which align best with your investment goals and risk profile. Equities (shares) may offer the highest potential gains, but they are accompanied by the highest risk.
If you want to invest with a diversified strategy, ETFs and ready-made funds are a good starting point.
Think About Platform Costs
Pay attention to the costs associated with different platforms, including dealing fees, custody charges, and fund management fees. Costs cut into your performance, and can significantly reduce your returns over the years.
Check Minimum Investment Requirements
Some ISAs have higher minimum investment requirements that may be above your financial capacity. While it’s important to invest for your future, you should always be certain that you won’t overstretch today.
Examine Additional Features and Tools
Apart from the ability to buy and sell the instruments that will help you attain your financial goals, think about what else you want from an investment platform
For example, would roundup features make it easier for you to save and invest? Do you want to learn more about investing, or receive help with your investment choices? If so, then consider ISA platforms that offer features like investment advice and educational resources.
A Word About Tax
ISAs are extremely tax-efficient, but there is a partial exception to this.
If you hold American shares in your ISA, the American tax authority will withhold 15% tax on income and dividends paid on the shares you hold – and you’ll need to complete a US tax form called a W-8BEN. I have to do this every year, and it’s a bit of a pain!
Parting Thoughts
In summary, choosing the best ISA for your needs requires a combination of self-assessment, financial planning, and a clear understanding of your investment goals.
Whether you’re a novice wanting a simple platform and automated ISA investing, or a seasoned investor seeking greater control to build a diversified, tax-efficient portfolio, there’s an ISA for you.
Always remember that the real power of an ISA is its tax status – helping you to maximise investment returns without filling the taxman’s pockets at your own expense. It’s a game changer for medium- and long-term financial planning.
As you move forward in your quest to find the best ISA, consider all the options available, the associated costs, and the level of control and assistance you require.
With a wealth of choices available – from Moneyfarm’s diversified ETF portfolios, to Trading 212’s international stocks, to Freetrade’s novice-friendly app, and all in between – the perfect ISA for your investment style and needs is within reach.