Best Isa - Your Guide To The Best ISA's On The Market

compare isa providers

best isa explained So, you have decided that an ISA looks an attractive way to invest and save tax, but where do you go to find the best isa on the market, and which companies offer them, and what are the main differences? The simple answer is that that are a huge number to choose from, and all have pros and cons. I have tried to group them together for you, so you have a broad idea of the types of companies and the products they are likely to offer. These products will all be available 'off the shelf' but you can do it yourself, with a self select ISA, so I will cover this option for you as well. Finally we'll look at how you track the performance of your selected ISA.

Best ISA - An ISA 'Off The Shelf '

The most common question I am asked regarding ISAS is " where can I buy my ISA?", and my response is always the same - it will depend on the type of investment you have chosen.

Let's start with stocks and shares isas, which are offered by the widest range of providers. Who you choose will depend on what you actually want to hold within the isa wrapper. Most of the well known fund management companies will allow you to invest through an ISA savings scheme. If you want to invest in a wide range of funds from different providers, or perhaps you want to try to keep the charges to a minimum, then it might be worth looking at a fund supermarket, which is exactly that! Fund supermarkets have grown quickly in popularity as they allow you to build a more diverse portfolio within a single ISA, and to transfer these investments between funds without the complication, delay and cost, of having to change ISA provider. The reason they are much cheaper is that the supermarkets are paid by the fund managers out of their usual charges. Two of the most popular are Cofunds and Fidelity Funds Network Now whilst this may appear the perfect solution, there are some drawbacks, which are primarily that the funds they offer can be limited and more importantly they do not allow you to invest directly in stocks and shares. Generally you can deal with these companies direct, or through an independent financial advisor.

A second question I am frequently asked is "where do I track the performance of my isa?" If you have invested in stocks and shares then the investment trusts, unit trusts and and unit prices will be quoted in the national press on a daily basis. If you have selected your own stocks or shares then again these are quoted in the quality national daily papers such as the Financial Times. In addition you will receive quarterly and annual statement updates on the performance of your fund, along with any charges.

Cash isas are available from a wide variety of financial organisation including banks and building societies which have traditionally offered savings accounts on the high street. These are usually deposit style accounts with variable interest rates, or alternatively accounts with a fixed rate over a specific time period. In addition to the above, many of the fund management companies now offer the cash isa along with the cash element of the stocks and shares isa. The choice of provider is likely to depend on the interest rates that are being offered, and when and how you wish to access your savings.

Best ISA - Self Select ISA

Now finally, if you really want to take control of your investing, then you may want to consider a self select ISA. In simple terms this means taking the existing isa wrapper and then choosing which stocks or shares, or managed funds you would like to invest in for the long term.  The choice of investment is yours, and you can also mix between funds for a more balance portfolio. The most common options are unit trusts, open ended investment companies, and investment trusts, along with individual shares, stocks, gilts and bonds. Self select isas are generally sold by stock brokers, and if you can buy from an online broker then this will reduce the costs significantly. Because you are making the stock selections and dealing online yourself, you will be able to manage and run the best isa at a minimal cost. However, I would only suggest you opt for this route if you have some trading experience and already have an online broker. If this is new territory for you, please opt for a more standard way to invest, until you have some more experience and are used to the daily fluctuations in share prices, or have a look at my trading and investing site to start learning for yourself!

Now let's look at the tax savings available using isas, and whether these are truly tax free! - the answer of course is no, but we can at least try to find the best isa to suit our own personal circumstances.

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