Stocks and shares Isas explained How to buy

A financial advisor sitting with two customers

It's a good idea to get independent financial advice

Choosing a stocks and shares Isa can be tricky – there are more than 2,000 investment funds in different sectors, ranging from high to low risk. And, as our table below shows, the performance of the funds can vary greatly – there's more than £1,500 difference between the best and worst performing funds over five years.

Best and worst

This table shows the best and worst performing stocks and shares Isa funds in the UK All Companies sector over five years, compared with the performance of the FTSE All-Share Index and a Best Buy cash Isa.

One thousand pounds invested in the best-performing fund grew to £3,001. The worst-performing fund rose to only £1,456 and didn't do as well as the general stock market – as shown by the FTSE All-Share Index in our table. The Best Buy cash Isa has grown slowly but surely to £1,267. Any investment here is protected against stock market crashes or major falls such as have been seen in late 2008 / early 2009.

How ISA performance can vary
Type of ISA	Value of £1000 ISA after 5 years
Best-performing UK All Companies sector fund	£3,000
FTSE All-Share Index	£2,050
Worst-performing UK All Companies sector fund	£1,450
Best Buy instant access cash ISA	£1,250

Table notes

Figures taken from 31 December 2002 to 31 December 2007 and include charges. Source for stocks-and-shares Isas and FTSE All-Share Index data: Lipper Hindsight

Get independent financial advice

Unless you're a super-confident investor, your best bet is to see an independent financial adviser (IFA) who specialises in investments. See our guide to financial advisers for more information.

If an IFA-recommended product turns out to be inappropriate, you can complain to the IFA that gave you the advice – provided they're authorised by the Financial Services Authority. If your complaint is unresolved, you can take it to the Financial Ombudsman Service, which can award compensation.

Choosing your own investment

Discount brokers

If you want to choose your own investment, buy through a discount broker

If you're confident enough to choose your own investment, your best bet is to buy through a discount broker.

They offer substantial discounts on the initial charge on unit trusts and open-ended investment companies – initial charges can be reduced to 0%, compared with up to 5.5% for buying direct from a fund manager.

The downside of picking your own investments is you've got no redress if it turns out to be unsuitable.

Fund supermarkets

Fund supermarkets are an increasingly popular way of buying stocks and shares Isas. They not only enable you to save on the initial charge, as they're often run by discount brokers online, but also allow you to mix and match funds from a range of different fund managers.

It's also quick and easy to switch funds, and admin is reduced because you get one statement with all your investments listed.

You can also buy from a fund supermarket via an IFA – see the Isa checklist for more details about this. If you go through an IFA, you'll receive advice on what funds to buy.