Readers and journalists often ask me which is the best Stocks and Shares ISA. The answer depends on your circumstances and whether you want to buy shares, buy investment trusts, buy exchange-traded funds or simply buy unit trusts.
Below I highlight two of the best Stocks and Shares ISAs for tools and functionality as well as two of the best & cheapest Stocks and Shares ISA for beginners.
The Best Stocks and Shares ISA
Best Managed Stocks and Shares ISA for beginners
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If you are simply concerned with cost, we provide fund platform Stocks and Shares ISA comparison tables later in this article in which we compare every ISA provider in order to show the cheapest Stocks and Shares ISA as well as the cheapest robo-adviser for you. At the foot of this article, we also provide an explanation of how to compare and choose a Stocks and Shares ISA.
If you need access to your money within the next five years then you would be better off placing your money in a Cash ISA. In this instance see our section titled the Best Cash ISA.
The full amount you can invest in a Stocks and Shares ISA is now £20,000 (for the 2022/23 tax year) and that can be split between shares, ISA funds and cash.
Best Stocks and Shares ISA for tools, functionality & investment choice
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Check out our full Hargreaves Lansdown review
Best Stocks and Shares ISA for trading shares
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Other Stocks and Shares ISA providers
Check out our full independent Moneyfarm review
Check out our full independent Fidelity review
Check out our full independent Charles Stanley Direct review
Check out our full independent Vanguard Investor review
Check out our full independent Bestinvest review
– AJ Bell
Check out our full independent AJ Bell Youinvest review
The cheapest Stocks and Shares ISA provider
If you are only focused on getting the cheapest Stocks and Shares ISA, below is a comparison of Stocks and Shares ISA charges from all the major providers.
The first table shows the cheapest Stocks and Shares for those wanting to choose their own underlying investments. The table assumes that you only invest in unit trust funds and make 10 switches a year. Bear in mind that if you are picking your own funds then you need to allow for an additional 1% to 1.5% a year in fund charges on top of the numbers quoted below. Simply look at the column (on either table) that most closely matches the size of your stocks and shares ISA portfolio for an estimate of the annual cost if your investments were held with each fund platform.
The second table assumes that you want to invest in shares, investment trusts or ETFs and that you make 20 trades a year. Again, you will have to pay additional charges levied by the funds you invest in on top of the figures quoted but they will be fairly standard across all platforms.
The third table is a robo-advisor comparison table. In the case of the robo-advice table the quoted figures take into account all charges (i.e the total cost including fund charges)
Cheapest stock and shares ISA if you want to pick your own funds (unit trusts)
Cost based on portfolio size ranging from £5,000 to £250,000 – Assumes 10 fund switches per year
|Cost per fund
|£5,000 portfolio||£10,000 portfolio||£20,000 portfolio||£50,000 portfolio||£100,000 portfolio||
|AJ Bell YouInvest*||£1.50||£43||£55||£80||£155||£280||£655|
|Barclays Smart Investor||£3||£108||£108||£108||£160||£260||£560|
|Charles Stanley Direct||Free||£18||£35||£70||£175||£350||£875|
Interactive Investor cost is based on the ‘Investor' service plan. iWeb has a £100 upfront fee to open an ISA. Vanguard only allows you to invest in its own funds.
Cheapest stock and shares ISA if you want to invest in shares, investment trusts or ETFs
Cost based on portfolio size ranging from £5,000 to £250,000 – Assumes 20 trades per year
|Single Trade cost||Regular Investing cost||£5,000||£10,000||£20,000||£50,000||£100,000||£250,000|
|AJ Bell Youinvest*||£9.95||£1.50||£212||£224||£229||£229||£229||£229|
|Barclays Smart Investor||£6.00||£1.00||£168||£168||£168||£170||£220||£370|
|Charles Stanley Direct||£11.50||£254||£265||£300||£405||£470||£470|
|Close Brothers Self Directed Service||£8.95||£192||£204||£229||£304||£429||£804|
|Fidelity Personal Investing*||£10.00||£245||£245||£245||£245||£245||£245|
|Halifax Share's & Dealing Website||£12.50||£2.00||£263||£263||£263||£263||£263||£263|
|Interactive Investor *||£3.99||£200||£200||£200||£200||£200||£200|
|Strawberry||£7.50 minimum or 0.04%||£174||£180||£210||£300||£1,000||£2,500|
Interactive Investor cost is based on the ‘Investor' service plan. iWeb has a £100 upfront fee to open an ISA.
Cheapest Robo-adviser (who invest your money for you)
Robo-advice is the term that's been given to online investment managers which provide an investment product like an ISA where they invest your money for you. Technically robo-advisers don't actually give you advice but instead they offer a limited number of portfolios (from low risk to high risk) from which you select one. They then invest your money and usually at low cost using exchange-traded funds (ETFs).
Picking the best robo-advisor isn't just about picking the cheapest you need to also consider investment performance. The table below gives the cost for each size of ISA portfolio for the list of UK robo-advisers. The cost quoted is the charge applied by the robo-advisor to run your money plus the costs of the underlying investments (ETFs).
Based on portfolio size ranging from £5,000 to £250,000
|£5,000 portfolio||£10,000 portfolio||£20,000 portfolio||£50,000 portfolio||£100,000 portfolio||
Scalable Capital has a minimum investment of £10,000. Wealth Horizon applies a 0.25% charge upfront which is included.
Best Cash ISA
If you do not have an investment timeframe of at least 5 years (i.e. you will need access to your cash within 5 years) then you would be better off placing your money in a cash ISA rather than in an investment ISA. That is because when you take out a Stocks and Shares ISA you will be Investing in shares, funds, bonds, investment trust or exchange traded funds (ETFs) all of which carry investment risk and the potential to lose money as well as make it. Below are links to our latest cash ISA best buy tables:
How to compare Stocks & Shares ISAs
Under the current ISA rules you can choose to invest some of your ISA allowance in a cash ISA and the balance of your ISA allowance in a Stocks and Shares ISA if you wish.
Step 1 – Do you want to choose your investments or let someone run it for you?
There are two options when it comes to investing in a Stocks and Shares ISA. You can choose to pick the underlying investments (funds or shares) yourself or let someone take care of picking and running the investments for you. If you want to have control over how your money is invested then jump to step 2 below.
If you'd rather let someone run your money for you at low cost while optimising performance then you would be better off choosing what the press has coined a ‘robo-advisor'. Robo-advisers will put your money in a diversified portfolio based on the amount of risk you want to take. They will then manage the investment for you which you can view and monitor online. The ‘Best Managed Stocks and Shares for beginners' shown above is a robo-advisor which has managed to combine strong investment performance with low costs. If you just want to pick the cheapest robo-adviser then you can check out our robo- adviser comparison table above.
Steps 2 and 3 below provide further advice for those investors wanting to invest their own money themselves (so-called DIY investors).
Step 2 – Decide how you want to invest your Stocks and Shares ISA
If you plan to invest your ISA allowance yourself then when you compare Stocks and Shares ISAs the cheapest ISA provider or platform for you will depend on what you want to invest in. When you invest in a stocks and shares ISA there are a range of charges. Firstly there is the charge of the underlying fund or asset you are investing in. Then there are the charges levied by the broker or fund platform (often called a fund supermarket). Every Stocks and Shares investment ISA provider levy different charges based on what you invest in and how much you have invested with them. For example there may be additional charges levied for investing in shares or investment trusts. So what might you invest in?
Most DIY investors will invest in funds which in turn buy shares and other assets, such as corporate bonds. Funds (a term which includes investment trusts, unit trusts and ETFs) are called collective investments. They pool investors' money together to benefit from economies of scale and then invest that money in assets such as shares or bonds. Actively managed investment funds have a fund manager who chooses the underlying investments.
Meanwhile, passive investments simply track an index such as the FTSE 100 index using computers. If you are considering investing in funds then I recommend downloading this FREE guide to investing in funds. It's the best guide I've come across on the topic and tells you all you need to know including how to get started with buying funds.
If you want to buy shares within your Stocks and Shares ISA this limits your choices in terms of which would be the best provider for you. Some Stocks and Shares ISA providers do not offer the stockbroking facility required to buy shares directly. Investing directly in shares is a riskier investment strategy as while it can be profitable it increases the chances of a potential loss.
Step 3 – More things to check when choosing a Stocks and Shares ISA
Once you know what type of investments you wish to buy that makes life a lot easier. If you want to buy shares and investment trusts your options are much more limited. If, like most investors, you want to just invest in Stocks and Shares ISA funds then you need to consider other factors to screen down your choices. For now we will set cost to one side and come back to it later. Competition among funds supermarkets and online brokers is growing increasingly fierce so costs are falling all the time.
There has been a mini-explosion in new Stocks and Shares ISA providers, after all it can be a lucrative market if providers get the proposition right. To many of the new online providers that means keeping their own costs low, by that I don't mean the costs you pay but how much time and money they have to spend administering your investments.
As such, the level of service some provide is pretty minimal. You need to decide if being able to speak to someone on the phone if things go wrong is important to you. You need to decide whether you want a slick user experience with the ability to buy and sell investments quickly and easily. Would you like to be able to check your investments via your smartphone, if so do they have a smartphone app?
Does the Stocks and Shares ISA accept transfers in?
If you already have an existing stock and shares ISA portfolio you might want to consolidate them all with one provider. If so check what their rules and charges for doing so are.
Tools and research
Some Stocks and Shares ISA providers offer tools and some research (albeit limited). However most don't. Would you like a tool that can help you to pick the best ISA funds for your objectives? If so check they offer these. I highlight some of the best stocks and shares ISA providers in the next section and detail what they offer.
As mentioned there are a host of charges that Stocks and Shares ISA providers can levy. They include:
- transfer charges
- dividend reinvestment fees
- buying charges
- selling charges
- fund switch charges
- bid/offer spread
- fund manager charges
- platform charges
- transfer out fees
Make sure you understand these charges and are happy with them. However, you shouldn't just focus on cost but instead, consider value for money as well as the level of service provided.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers – Wealthify, Hargreaves Lansdown, Interactive Investor, Moneyfarm, Nutmeg, AJ Bell, Fidelity, Bestinvest, Freetrade
(image by worradmu. freedigitalphotos.net)