The best stocks and shares ISA provider
Readers and journalists often ask me which is the best stocks and shares ISA provider or simply which is the cheapest stocks and shares ISA. The answer to both depends on your circumstances and whether you want to buy shares, buy investment trusts, buy exchange traded funds or simply buy unit trusts. This guide will show you how to find the cheapest stocks and shares ISA as well as those providers that can offer advice on where to invest your ISA allowance. I will also highlight the best ISA for tools and functionality as well as the best managed stocks and shares ISA for beginners. The full amount you can invest in a stocks and shares ISA is now £15,000 and that can be split between shares, ISA funds and cash.
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 cary investment risk and the potential to lose money as well as make it. Below are links to our latest cash ISA best buy tables:
Fixed rate cash ISA best buy table
Variable rate cash ISA best buy table
Comparing 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. However, for the remainder of this article I will assume you are going to invest the full ISA allowance of £15,000 into a stocks and shares ISA (also called a NISA)
Step 1- Decide how you want to invest your stocks and shares ISA
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 ISA provider levies 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?
Funds
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 trust. 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.
Shares
If you want to buy shares within your Stocks and Shares ISA this limits your choices in terms of which would be the best Stocks and Shares ISA 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 2 – More things to check when choosing the best 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 trust your options are much more limited. If, like most investors, you want to just invest in 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.
Customer service
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 to 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.
Charges
As mentioned there are a host of charges that stocks and shares ISA providers can levy. They include:
transfer chargesdividend reinvestment fees
buying charges
selling charges
fund switch charges
bid/offer spread
fund manager charges
platform charges
transfer out fees
We include a full comparison of the costs of each stocks and shares ISA provider at the end of this article so that you can find the cheapest for you. However, you shouldn’t just focus on cost but instead consider value for money as well as the level of service provided.
A roundup of the best Stocks and Shares ISAs
Best managed stocks and shares ISA for beginners
Nutmeg – click here for more info*
Great for those who want the low costs associated with DIY investing but don’t want to select investments themselves
Provide a full discretionary investment service, usually reserved for wealthier individuals elsewhere, for sums as low as £1,000
Annual fee ranges from 0.3% to 1%
They manage this by buying low cost exchange traded funds
They help you choose the right portfolio for you with simple online tools
Best stocks and shares ISA for tools & functionality
Hargreaves Lansdown Vantage ISA – click here for more info*
Not the cheapest available but provides excellent investor information and tools
Information rich website packed with information from their advisers and analysts
Comprehensive shares and fund data
Useful smartphone app
Investors pay 0.45% annual fee on total fund investment up to £250,000, 0.25% up to £1m, 0.1% up to £2m and nothing above that
Allows you to invest in shares and investment trust although they incur a 0.45% annual charge on the entire holding, capped at £45
Non-Isa Vantage account carries same charges but with no fee for holding shares and investment trusts
Cheapest stocks and shares ISA for most (no frills)
Cavendish Direct – click here for more info
Funds only platform and should be considered for its very low charges
Investors pay 0.25% annual fee and no dealing charges, initial charges, or exit fees
Does not offer the comprehensive information of some of its rivals
Offers three model portfolios graded by risk
Good option for investors interested only in funds and keeping costs low
Alternatives…
Rplan
Funds only platform with a website full of investor tools
Compare funds on performance, risk and charges available prior to signing up
Can create different investment pots and goals
Quality fund research
Investors pay 0.35% annual fee on total investments with no further charges
SIPP investment not available
Interactive Investor
Offers a range of investments backed by solid research and is good for regular investors
Charges a quarterly admin fee of £20 but you can get that back in free trades spread evenly over four quarters
Standard charge of £10 to buy or sell funds, shares, investment trusts and ETF’s or £1.50 for regular monthly investing. Make ten standard trades in the previous month and a frequent trader rate of £5 kicks in
Dividend reinvested charge of 1% of the sum reinvested up to a maximum of £10
Alliance Trust Savings
Offers full range of investment trusts, shares, ETFs and direct bonds
Investment tools and research provided by Morningstar
Charges a flat fee of £12.50 per trade but this is reduced to £1.50 per trade for regular monthly investments via direct debit
Dividend reinvested costs a flat £5 fee
Good for ‘buy and hold’ investors due to the flat fee structure
Frequent Trader (Club Finance)
Administered by stockbroker James Brearley & Sons
Basic looking service compared with some of the larger platforms but dealing is cheap
Annual administration fee of 0.24% with a minimum annual fee of £120
£2.50 flat fee for buying or selling shares, investment trusts and funds, reduced to £1 for portfolios above £250,000 and 50p for portfolios over £500,000
Good for active investors looking to build a portfolio as this could be a cheaper option than the larger platforms
The Share Centre – Self-Select ISA
Offers a full DIY choice in its Self-Select Stocks and Shares Isa
Charges a monthly fee of £4.80
Fund, share, ETF, investment trust and corporate dealing costs 1% (£7.50 min.) or a flat fee of £7.50 and a quarterly charge of £24
Regular monthly investment costs 0.5% (£1 min.)
Dividend reinvestment costs 0.5% of sum reinvested (£1 min.)
Non-ISA dealing carries a £1.80 monthly admin fee
Some good analysis tips and advice
BestInvest – Select ISA
Annual charge on portfolios of 0.4% up to £250,000 and 0.2 % up to £1m with no extra charge over £1m
No dealing charges for funds
No reduced charges for regular monthly investments in shares and trusts and no cheap dividend reinvesting
Good for investors making regular trades due to the low dealing costs
AJ Bell Youinvest
Annual charge of 0.2% on fund holdings capped at £200 per year
Fund dealing charge of £4.95 and share investment trust dealing at £9.95 (reduced to £4.95 if you have traded ten times in the previous month
Regular monthly investment in funds costs £1.50
Investing available FTSE 350 shares and a limited range of investment trusts
Cost effective for monthly investments
iWeb – Self Select Stocks and Shares ISA
Competitively priced service run by Halifax share dealing service
Investment in shares, investment trusts and ETFs
One-off set-up charge of £25 but no annual admin charge
Flat dealing fee of £5
Good low cost option
Charles Stanley Direct
Low annual charge of just 0.25% on fund holdings, 0.15% above £500,000
No charge on investment trust or share holdings if you trade at least six times in the current six-month period
Free fund dealing but investment trust and share dealing will cost £10
Investors holding individual bonds and overseas shares must pay £30 per year holding
Good for active investors due to low annual fee and no buying or selling charges
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. Simply look at the column 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 table assumes that you only invest in funds and make 5 switches a year.
Portfolio size
£5,000
£15,000
£25,000
£50,000
£100,000
£250,000
£500,000
£1,000,000
Aegon Retiready
0.50%
0.50%
0.50%
0.50%
0.45%
0.36%
0.33%
0.32%
Aegon Retiready*
0.00%
0.00%
0.00%
0.00%
0.20%
0.26%
0.28%
0.29%
AJ Bell Youinvest
1.19%
0.53%
0.40%
0.30%
0.25%
0.10%
0.05%
0.02%
Alliance Trust Savings
4.00%
1.33%
0.80%
0.40%
0.20%
0.08%
0.04%
0.02%
AXA Self Investor
0.35%
0.35%
0.35%
0.35%
0.35%
0.20%
0.20%
0.20%
AXA Self Investor**
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Barclays Stockbrokers
0.70%
0.35%
0.35%
0.35%
0.35%
0.35%
0.35%
0.18%
Bestinvest
0.40%
0.40%
0.40%
0.40%
0.40%
0.40%
0.30%
0.25%
Cavendish Online
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
Charles Stanley Direct
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.20%
Chelsea Financial Services
0.60%
0.60%
0.60%
0.60%
0.60%
0.60%
0.58%
0.54%
Close Brothers A.M. Self Directed Service
0.35%
0.35%
0.35%
0.35%
0.30%
0.27%
0.26%
0.26%
Clubfinance
2.40%
0.80%
0.48%
0.24%
0.24%
0.24%
0.24%
0.24%
Fidelity Personal Investing
0.35%
0.35%
0.35%
0.35%
0.35%
0.20%
0.20%
0.20%
Fidelity Personal Investing***
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Halifax Share Dealing
2.75%
0.92%
0.55%
0.28%
0.14%
0.06%
0.03%
0.01%
Hargreaves Lansdown
0.45%
0.45%
0.45%
0.45%
0.45%
0.45%
0.35%
0.30%
Interactive Investor
2.00%
0.67%
0.40%
0.20%
0.10%
0.04%
0.02%
0.01%
iWeb
1.00%
0.33%
0.20%
0.10%
0.05%
0.02%
0.01%
0.01%
James Hay Modular iPlan****
0.18%
0.18%
0.18%
0.18%
0.18%
0.18%
0.18%
0.16%
Nutmeg
1.00%
1.00%
1.00%
0.90%
0.75%
0.60%
0.50%
0.30%
rplan
0.35%
0.35%
0.35%
0.35%
0.35%
0.35%
0.35%
0.35%
Strawberry
0.80%
0.42%
0.39%
0.37%
0.31%
0.27%
0.26%
0.26%
Telegraph Investor
0.40%
0.30%
0.30%
0.30%
0.30%
0.12%
0.06%
0.03%
TD Direct
1.02%
0.30%
0.30%
0.30%
0.30%
0.30%
0.25%
0.15%
The Share Centre
1.40%
0.63%
0.48%
0.46%
0.23%
0.09%
0.05%
0.02%
Trustnet Direct
2.40%
0.92%
0.65%
0.45%
0.30%
0.12%
0.06%
0.03%
Willis Owen
0.73%
0.73%
0.73%
0.73%
0.73%
0.73%
0.73%
0.72%
The data was compiled by langcatfinancial
*Invest by 6th April 2015 and pay no account fee on the first £50,000 of your investment for the lifetime of the plan
**AXA Self Investor new customer offer of no ongoing platform fee till 1st May 2016 if you sign up by 30th April 2015
***Invest with Fidelity Personal Investing by 5th April 2015 and pay no fees for 12 months
****James Hay Modular iPlan – Customers need to open a SIPP before access to an ISA is allowed
(image by Photo by worradmu. freedigitalphotos.net)
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