Looking to make your money travel further? Instead of using any old savings account, it might be worth your while looking for a simple investment ISA. Even new investors are likely to understand that the stocks and shares game can get a bit complex at times – and that’s why it’s worth filtering through the available options to find the best stocks and shares ISAs for beginners completely new to investing.
Getting started with investing? It might be worth looking into a stocks and shares ISA account to help you make bigger returns on your money in the long run.
What is a Stocks and Shares ISA?
While you may have heard of a cash ISA before, a stocks and shares account and investment service runs a little differently. That’s because they actively place your money into the stock market. Crucially, these accounts and services are appealing as they allow users and investors to grow capital over an extended period without having to put in much effort.
There are tax benefits, too, to these types of account. Just as you can use your £20,000 annual allowance for a cash ISA, you can instead invest up to the £20,000 limit each tax year in a stocks and shares ISA (or split the £20,000 limit between the two). As long as that money remains within an ISA wrapper, it is free from tax year after year after year.
How Does a Stocks and Shares ISA Work?
Similar to a basic cash ISA in the sense that you place money into your account for it to grow, tax free, over time. A stocks and shares ISA (also known as an investment ISA) will instead place your money into the stock market.
For example, if you want to actively build your own portfolio, you can choose to use your ISA to invest in stocks and ETFs through a trading platform (Freetrade or Trading 212 are worth a look if you are a beginner investor who wants to actively pick stocks), which means that you are effectively using your account to own small portions of public companies listed on the stock market.
However, depending on the platform you opt for, you can also completely automate the stock picking and trading aspect. This can be a great option for beginners, as it means you won’t have to get involved in any complicated stock trading. You can just leave that up to the experts and (hopefully) reap the rewards.
Can I Have More Than One Stocks and Shares ISA?
You can have as many stocks and shares ISAs as you like. However, you can only ever pay into one ISA per year. If you are just getting started with investing, it’s probably best for you to keep things simple with one provider for now.
If at a later date you decide you want to open an investment ISA with another provider, you can also transfer in from an existing ISA. Crucially, transfers don’t count towards your annual allowance. So regardless of whether you stick with the same provider for years, or transfer to a different provider each year, you can still build up a significant tax free pot.
Best Stocks and Shares ISAs for Beginners
Without further ado, let’s look into my top picks for beginners stocks and shares ISAs.
There is also ten different risk levels, which you can choose based around your relationship with risk. This is determined by answering a few initials questions. Ultimately,
As well as a standard Stocks and Shares ISA, you can also invest in a Lifetime ISA and a Junior ISA. There are even pension options, too, meaning that you can have everything within one platform is you wish.
You’ll expect to pay set fees of 0.75% annually on fully managed or socially responsible portfolios on investments up to £100k. Dropping to 0.35% annually for investment accounts with over £100k. Fixed allocation portfolios are slightly lower with 0.45% up to £100k, dropping to 0.25% beyond £100k.
Even better is the fact that you can claim six months of no-management fees when you sign up for
Best For: Longer term investors looking for a reliable UK platform with proven track record and low fees.
It is another robo investor service which will help you to manage your money autonomously. This means that you get access to a portfolio of options tailored to the questions you answer when you first sign up.
Wealthify also take risk very seriously. After you have answered the initial questions to determine risk level, they will not let you continue your application if it is deemed that investing isn’t right for you at this stage.
Fees competitive, too. You won’t have to worry about spending more than 0.80% per year. On top of this, you can start investing from as little as £1, making it very appealing to starter investors who only have a small amount to get started with.
If you decide to sign up to Wealthify and are able to invest £500 or more you can also get a £25 bonus added to your account by signing up via the link below.
Best For: Ready made portfolios with strong level of guidance and support.
Wealthsimple is another super-easy platform that’s great for beginners to get into. As with the other services in my list, Wealthsimple is a passive investment service, allowing you to start investing in the stock market with very little effort and hopefully breed big results in the long run. There’s a real individuality to the service here, too, which is likely to come across fairly lucrative to beginner investors.
Wealthsimple is one of only four robo investors on the market to manage pensions, and alongside your Stocks and Shares ISA, you can also take out a Junior ISA. There are also no minimum investment demands involved here, and what’s more, you likely won’t have to pay more than 0.70% to the service per annum. That’s a very competitive rate compared to some of the other platforms and services operating out there right now.
If you eventually choose to invest over £100,000 with the service, Wealthsimple will knock their rates right down to 0.50%.
Best For: Those who want a flexible platform with a straightforward approach.
Many beginner investors will likely find the idea of a tailored portfolio built for them to be pretty appealing. With Moneyfarm all portfolio options are actively managed. Meaning they monitor the markets daily to adjust and re-balance your portfolio if appropriate. If you are new to investing and potentially slightly nervous about the possibility of loss, this approach is likely to appeal.
Again, Moneyfarm also offer transparent fees. Although their tiered approach is slightly more complex than the previous platforms mentioned. You’ll pay 0.75% on the first £10k invested. 0.60% between £10k – £50k. 0.50% between £50k – £100k. And finally 0.35% for anything over £100k.
Best For: Investors who want a fully managed portfolio and plan to invest a significant amount.
Plum is a great app which takes an interesting approach to investing. By connecting your bank account to the Plum app, you can save and invest money based on technology which analyses your transactions to learn about your spending and income. Plum will then automatically put aside a set amount every few days, based on how much it thinks you can afford to save.
You can also choose from various ‘mood’ levels which will give you control over how much is saved – such as ‘shy’ where you can expect 50% less savings than the default mood. All the way up to ‘beast mode’ where you will see 75% more savings.
Plum also offers various saving techniques, which you can switch on or off, such as a ‘rounding up’ service. When you pay £6.12 at a supermarket, for example, Plum can round this up to £7.00, investing 88p from the gap. This pot will then be invested on your behalf.
Fees here are very competitive, too. That’s because you can expect to pay as little as £1 per month after your first month which is free.
Their automated saving technology, along with three simple portfolio options, makes this a great platform for beginners who may struggle to save and need a helping hand to get started with investing.
Best For: Those who struggle to save or don’t have a lot to invest initially.
As you can see there are plenty of great beginner friendly investment platforms out there that offer Stocks and Shares ISAs. All of these platforms are ideal for novices as they not only take the stresses and strains out of knowing how and where to invest, but will also help you to hit the ground running sooner rather than later.
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