THE RIGHT ONLINE ISA FOR YOU
Expert Holly Mackay gives her verdict on the top Isa platforms – for beginners and seasoned investors
AS FOUNDER of website Boring Money, I have been testing online Isa investment platforms for many years. In theory, they are the best way to run an Isa portfolio because you can manage it from your computer – making changes and keeping a check on its progress.
You can also invest in the full range of investment funds, trusts and equities. So, an all-embracing Isa. Yet in practice, Isa platforms vary in quality and cost.
I have used more than 30 so far and I’ve experienced the good and bad, warts and all.
Here, I identify which Isa investment platforms are best, depending on how much you have to invest and what you are looking for.
It is a myth that investing is for sharp-suited Wall Street executives only. More than one in ten Isa holders have less than £1,000 in their account, while better options for the less confident are emerging all the time.
For beginners, the online investment service Wealthify is a nice option which offers an easy way in for those who do not want to make investment decisions themselves. You can choose from one of five profiles and get a ready-made investment which is blended for you.
The profiles are based on your attitude towards risk. So, to begin with, you can opt for a low risk ‘cautious’ portfolio where the prime aim is to minimise the risk of your investment falling in value – while hopefully growing it to exceed the rate of inflation.
Then maybe, as you gain confidence, you can opt to take on board a little more risk by directing money into its ‘tentative’ or ‘confident’ plans.
There are also ‘ambitious’ and ‘adventurous’ options which are very much equity based.The five portfolios are built around low-cost investment funds which means more of your money is invested. The underlying funds are passively managed which means they track the performance of specific stock market indices.
Wealthify prides itself on simplicity and makes its website userfriendly by avoiding financial jargon. For the record, it also offers a Junior Isa and provides ethical investment options for those keen to invest in companies doing their bit to save the planet – again ranging in risk from cautious to adventurous. Investors can contribute to a Wealthify Isa on a monthly basis from as little as £10.
Another service which has an
app, Moneybox, uses the concept of ‘round-ups’. In effect, you save into an Isa by rounding-up change from purchases, chipping in 50p here and there into the Isa.
It is less dramatic than sending thousands of pounds to an investment provider in one hit and is a great way to dip a toe into stock market waters. The app is simple to use and surprisingly engaging for an investment service.
Nutmeg is a further option which will walk investors through a simple questionnaire and then pull together a ready-made mix of investments to map your preferences.
For investors with up to £50,000 available the options are different. AJ Bell Youinvest is a decently priced good all-rounder which will let you buy both shares and a choice of leading investment funds.
There’s a nice supporting app and the research on funds is good. For those less confident, help is at hand in the form of ready-made investment options which do the heavylifting for you.
Fidelity is a big brand global name and offers a decently priced Isa, a good website, helpful people on the phones and a wide range of investments to suit all sorts of experience levels. The service has notably improved over the last year and is well worth a look.
Vanguard is a huge US investment manager that offers low-cost investing to millions of customers around the world. You can set up an Isa with Vanguard and choose from a range of five simple investment options from their ‘life strategy’ range. These vary in terms of investment risk according to your time horizon. The longer you are looking to invest, the more exposure to equities.
It is low cost but also currently rather ‘no frills’. It only offers its own products so if you prefer more choice and want to blend your own mix, it is not for you.
Investors with more than £100,000 are likely to be more experienced and confident. If you know your way around investment markets and want a solid basic Isa that is as cheap as they come, have a look at Halifax Share Dealing.
You can trade and access most mainstream investments but beware – this is bare bones stuff and do not expect anything fancy. AJ Bell Youinvest is arguably the best halfway house between having reasonable fees for larger Isa accounts – supported by decent service, a good website and app.
Finally, Interactive Investor levies fixed fees for Isas that means it gets relatively cheaper the more you invest. The website and service can be occasionally patchy but is improving.
If you are time-poor and impatient, the lower costs may not compensate for the sometimes clunky online journey. For some, sustainability is a key consideration. One in four investors say it is important to invest sustainably and back socially responsible firms.
There is increasing evidence that investing in longer-term sustainable businesses should not be assumed to involve a trade-off when it comes to investment returns (see page 68).
If you are looking for help to find sustainable investments, Interactive Investor has the best thought-through research for retail investors. We all have different priorities – avoiding fossil fuels, strong corporate governance, treating workers fairly, avoiding tobacco – and the tools here will help pinpoint what you are looking for.
Nutmeg also has a socially responsible option for all its portfolios and provides quite detailed information on what your investments will do for you and the planet.
It is one of the better options which tries to show – and inform – what goes on under the bonnet of funds and companies.