How to invest in a stocks and shares Isa

Stocks and shares Isas

How to invest in a stocks and shares Isa

By Michael Trudeau

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How to invest in a stocks and shares Isa

Before you place your savings into a stocks and shares Isa, you need to be sure that you are financially ready to put your money at risk.

Can you answer 'yes' to the following questions?

  • Have you got your debts under control?
  • Are you properly insured?
  • Have you got emergency savings to fall back on?
  • Are you making financial plans for retirement?

Find out more: Are you ready to invest? 

Investing in a stocks and shares Isa - with advice

If you don't have much experience with investing, it could be worth taking financial advice.

Most financial advisers offer a free initial consultation, so it makes sense to meet with a few in order to find a service that meets your needs, at a cost you're happy to pay. 

Advisers will charge a fee for their advice, usually calculated as a percentage of your assets or a set cost in pounds and pence, depending on the task. 

One issue to be aware of is that many advisers will only accept business from clients with a certain amount of money to invest – for example, £50,000. 

So, if you're only looking to invest your Isa allowance for the current tax year, you may need to shop around for an adviser prepared to accept your business and offer a charge that makes sense for you. 

The typical charge among advisers who levy up-front fees as a percentage of assets is 3% – so that would be £457.20 for a £15,240 stocks and shares Isa. 

If you then want your adviser to review your Isa on an annual basis, the ongoing charge each year is typically between 0.5% and 1%.  

Find out more: Choosing a financial adviser – read our guide to find the right adviser to meet your needs.

Investing in a stocks and shares Isa - the DIY approach

If you're going to go ahead and invest on your own, there are a number of decisions you need to make. 

Before deciding between the different types of investment products on offer, it's important to get the right mix of investment assets for your stocks and shares Isa. There are four key types of asset to consider:

  • Equities
  • Government bonds (gilts) and corporate bonds
  • Commercial property
  • Cash

It's important to place your money in different assets - see our guide on choosing the right asset allocation - to help spread the risk of investing. How much you have in each asset type will determine how much you could potentially grow your savings and how much you're putting at risk.

We've created eight portfolios, which enable you to see how much you should put into each asset class and how much your money might grow, combined with how much you're potentially putting at risk.

Find out more: The Which? investment portfolios - decide the right mix of assets for you. 

Fund supermarkets - how to invest in funds for your stocks and shares Isa

If you're happy to invest without advice, the best way to buy investments for your stocks and shares Isa is through a fund supermarket. These offer a wide range of investment options, enabling you to hold the right mix for you with one stocks and shares Isa provider. 

Fund supermarkets allow you to monitor the performance of your investment portfolio in real time, some on your phone or tablet, and allow you to switch investments as you see fit. 

Find out more: Fund supermarket reviews – our unique ratings for the major players in this market 

  • Last updated: April 2016
  • Updated by: Michael Trudeau