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7 Best Stocks and Shares ISAs for 2020

Stocks and Shares ISAs are tax-efficient investments that lets you to invest money across a range of different investments.
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Author: Edith Muthoni
Last Updated: May 18, 2020
Best Stocks and Shares ISAs 2020
Best Stocks and Shares ISAs 2020

The interest rates for commercial bank savings accounts are depressing, and so are those offered by the easy access cash ISAs.

Rarely do they go past 3% per annum.

Most are either a few percentage points below or competing with the inflation rate, implying that the money you stash away in these savings accounts is likely to lose its purchasing power over time.

What’s the alternative then? Stocks and shares ISAs. They may be in one of the most volatile money markets in the world, but they have over time yielded more returns than virtually every other share/stock investment option currently available.

Table of Contents

    MoneyFarm

    Our Rating

    MoneyFarm - ISA rates
    • Transfer out your savings when you need to
    • Invest in highly diversified portfolios
    • A personal adviser to help you get started with your investment
    • Expert portfolio management
    MoneyFarm - ISA rates
    What is a Stocks and Shares ISA? A Stocks and Shares ISA is a tax advantaged individual savings account that allows you to invest in stocks and shares. Such an investment counts as part of your 20% ISA allowance.

    What are Stocks and Share ISA’s?

    Buy and sell dices on market performance graph | Best Share and Stock ISA - Learnbonds

    The stocks and shares ISA also come off as one of the most versatile investment vehicles. Do you operate a lifetime ISA or Junior ISA? Consider channeling your deposits into a stocks and shares ISA trading company. You can also easily convert your cash ISA into a stocks and shares ISA and vice versa. It has a better chance of helping you compound the growth rate of the amounts deposited in long term ISA funds while earning you tangible returns.

    But in an industry where every stocks and shares company claims to be best, who can you trust with your hard-earned cash? Here are our eight top picks. We start by understanding why you need to deposit into shares and stock ISA and the criteria we have used to compile our list.

    Best stocks and shares investment ISAs: Reviewer’s choice

    REVIEWERS CHOICE

    Nutmeg

    Rating

    Account Type

    Stocks and Shares ISAs

    Interest Rate

    Variable Rates

    Initial Deposit

    £500

    Rating

    Visit Now

    Product Details

    • The annual management fee for the fully managed portfolios starts from 0.75% for investments below £100,000 and 0.35% for those that tear above this level. Fixed allocations on the other hand are charged 0.45% for investments below £100,000 and 0.25% for those above this level.

    Key Facts

    • Feature non-managed fixed allocation portfolios
    • Diversified portfolio drawn from low cost ETFs
    • Perfect for medium to high income traders

    Pros

    • Offers you a choice between managed and self-managed funds
    • Relatively inexpensive
    • Has a powerful investment portfolio creation tool

    Cons

    • Limited research and analytical tools

    MoneyFarm – stocks and shares isa

    Rating

    Account Type

    Stocks and Shares ISAs Account

    Interest Rate

    8.1% - 55.2%

    Initial Deposit

    £1,500

    Rating

    Visit Now

    Hargreaves Lansdown – Stocks and Shares ISAs

    Rating

    Account Type

    Stocks and Shares ISAs

    Interest Rate

    Variable Interest rates

    Initial Deposit

    £100

    Rating

    Visit Now

    Product Details

    • Your investment here can grow both sides- up and down. Some periods can even post negative returns, meaning your returns are less than you put in.

    Key Facts

    • The minimum investment here is £100
    • Earns variable investment return
    • The minimum monthly amount is set at £25

    Pros

    • Highly transparent
    • Riddled with analytical and research tools that inform the best buy or sell decisions
    • Relatively inexpensive management fees
    • Supports inter-ISA provider transfers

    Cons

    • Requires prior stock trading experience and thus not beginner friendly

    Wealthsimple

    Rating

    Account Type

    Stocks and Shares ISAs

    Interest Rate

    Variable Rates

    Initial Deposit

    £1

    Rating

    Visit Now

    Product Details

    • WealthSimple combines technology and human skills to come up with a highly customized portfolio designed for your specific needs

    Key Facts

    • Customized portfolio
    • Automatic re-balancing of portfolio
    • Human investment advice

    Pros

    • 100% passive revenue generating stream
    • Their portfolio rebalancing feature minimizes your risk exposure
    • Goal oriented investment plans

    Cons

    • You have no control of when and where your funds are invested

    Fidelity – Stocks and Shares ISAs

    Rating

    Account Type

    Stocks and Shares ISAs

    Interest Rate

    Variable rates

    Initial Deposit

    £50

    Rating

    Visit Now

    Product Details

    • You can access ready made investment solutions straight from their certified investors

    Key Facts

    • Transparent fee structure
    • Access your ISA online or on their app 24/7
    • Access tools to find your best investment solutions

    Pros

    • Well adapted for both beginners and experienced investors
    • Affordable minimum investment amounts
    • Diversified investment options

    Cons

    • Considerably expensive compared to most robo-advisers

    Why deposit into a stocks and shares ISA?

    • Faster growth rate: What are you trying to achieve with your ISA deposits? Are you trying to buy a home, save up for your child’s education, or prepping for retirement? Whatever the case, the high returns posted by stocks and shares ISAs give you a better chance of compounding the growth rate of your investment.
    • Passive income stream: Stocks and shares ISAs ensure that you take care of both the future and today. Most will maintain your deposits intact while earning you enough regular incomes to cover your daily expenses. The best thing about this is that interests from investing in some of the best ISAs in the UK are tax exempt.
    • Reward outshines risks: You probably are aware that shares and stock markets are quite volatile.  And that you are more likely to lose your money investing in stocks and shares than depositing it in a cash ISA. But their return, especially for long-term investments, will almost always outshine possible risks.
    • Tax-free earnings: Consider this scenario: Investor A and B decide to try out the equity markets and invest £20,000 each. A makes his investment through stocks and shares ISA provider while B invests directly through a stockbroker. If they both earned 10% returns on their investment, investor A will take more money home because his ISA returns are tax-free. B, on the other hand, will be charged a capital gains tax of 7.5%, 32.5%, or 38.1% depending on whether they are a basic rate, higher rate, or additional rate taxpayer.
    • Expert management: Before a company can provide stocks and shares ISA investment services, it must be registered and regulated by FCA and FSCS.  Expertly managed firms won’t intentionally expose your investments to unwarranted risks. And should they go down, FSCS will reimburse your investments of up to £50,000.

    Pros and cons of funding stocks and shares your ISA?

    Pros

    • Overly flexible as you assume total control of when, where, and how much to invest
    • Most are highly diversified into funds, bonds, and stocks effectively minimizing risks
    • Expert managed funds ensure you don’t need prior experience trading with stockbrokers
    • Shields up to £20,000 of your funds from taxation annually
    • You can use the investments here as collateral with some lenders if you need urgent cash

    Cons

    • Bad investments can eat into your deposits
    • Management and trading costs if not well-checked tend to reduce your overall returns
    • Volatile markets make it hard to estimate possible earnings and plan for it
    • They are highly illiquid

    Criteria used to come up with this list:

    Some of the factors we took into consideration when vetting different ISA funds and coming up with what we consider the best stocks and shares investor for 2020 include:

    • Annual average returns
    • Number and type of funds invested here
    • Management fees
    • Market watch advice, analytic tools, and research
    • Minimum deposit and investment amount required
    • Inter-share and stock ISA transfer policies and charges
    • Reputation and FSCCS regulation

    Best stocks and shares investment ISAs

    1. Moneyfarm Stock and shares ISA

    Moneyfarm describes their stock and shares ISA as ‘an easy-access and tax efficient’ managed portfolio that’s specifically designed to fit your changing lifestyle.

    Launched in 2016, the stock and shares portfolio has consistently outperformed other types of ISA in both the low, medium, and high risk investment classes.The ISA has one of its strengths as keeping the ISA management fees at a minimum while maintaining one of the most diversified portfolios. These portfolios are also designed in consideration of everyone’s risk levels. The company further maintains a highly transparent fee structure that is dependent on your invested amounts.

    The first £10,000 is, for instance, charged 0.75% annual fees, amounts below £50,000 are charged 0.60%, 0.50% for investments £50,000-£100,000, and 0.35% for any investment above £100,000. These annual fees cover investment advice, investment management, custodial fees, and all relevant trading fees with no hidden costs.

    Our Rating

    • Consistent good performance and competitive returns for the past four years
    • Highly transparent fee structure with no hidden fees
    • Readily available customer support available on phone , chat, and via emails
    • You don’t have control over how and where your funds are invested

    2. Hargreaves Lansdown Vantage ISA

    Taking up the top spot is Hargreaves Lansdown’s vantage ISA. We consider Hargreaves the overall best shares and stock investment ISA provider. It consistently posts impressive average return rates year after year, maintains a highly advanced platform, and highly transparent management and transaction fees.

    Here you have the option of tailor-making your investment portfolio and the freedom of diversifying it into such markets as the bonds, shares, multi-national funds, investment trusts, and ETFs. Their website is rich with research data and commentaries about the different investment vehicles, as well as, key analytical tools to help with investment decision making. These are then mirrored in their equally agile mobile apps. The investor maintains a highly transparent fee structure where investments below £25,000, £1 million, and £2 million attract 0.45%, 0.25%, and 0.1% annual management fee respectively, funds above £2 million are managed for free. This comprehensiveness and transparency saw the investor named the Best Direct (investment) Platform for 2018.

    • Highly transparent
    • Riddled with analytical and research tools that inform the best buy or sell decisions
    • Relatively inexpensive management fees
    • Requires prior stock trading experience and thus not beginner friendly

    3. Wealthsimple stocks and shares ISA

    Wealthsimple is a robo-adviser implying that all activities here are automated. Opening ISA funded stocks and shares investment account is relatively straightforward and wholly online. It starts with filling a simple questionnaire that’s specially designed to help the system gauge your risk tolerance, equity market interest, and time limit to your investment goals. It then uses your answers to invest your funds in one of the nine pre-set investment portfolios.

    The annual management fees at Wealthsimple are as low as 0.7% for investments below £100,000 and 0.5% for anything else above this. The investor is also currently running a promotion where the system promises to manage up to £10,000 of your first year’s deposit free of charge. There is also no minimum investment required to invest here.

    • 100% passive revenue-generating stream
    • Their portfolio rebalancing feature minimizes your risk exposure
    • Offers goal-oriented investment plans
    • You have no control of when and where your funds are invested

    4. Fidelity stocks and shares ISA

    Fidelity International is an established finance and investment industry player with a solid reputation built over its 5 decades of existence. This was largely built on transparency, reliability, and affordability that the company hoped to transfer into its recently launched stocks and shares ISA venture.

    Opening ISA that invests in the stock markets at Fidelity is straightforward and the minimum investment requirements start from £50 per month. If you have a fair amount of experience in stock trading, you can choose their self-managed investment option while beginners settle with the expertly managed option. The investor presents you with a large pool of funds, ETFs, Trusts and equities to choose from when creating your investment portfolio.

    Investments below £7,500 attract an annual 0.45% fee while those below £250,000 and £1 million have an annual management fee or 0.35% and 0.20% respectively, and no fees for investments above £1 million. The expert-managed portfolio, on the other hand, attracts a fixed 1.5% management fee with transactional charges averaging 0.33%.

    Our Rating

    • Well adapted for both beginners and experienced investors
    • Affordable minimum investment amounts
    • Diversified investment options
    • Considerably expensive compared to most robo-advisers

    5. Interactive investor stocks and shares ISA

    Interactive Investor describes itself as the best shares and stock platform for frequent traders, but how true is this statement.

    First off, the investment company has one of the largest pools, over 40,000, of both local and international investment options to choose from. This is complemented by its innovative platform that allows for easy shares and stock ISA creation and even faster account access and management. You only need a smartphone or a computerized device to access and manage your account from anywhere in the world.

    The minimum deposit here starts from £100 for lump sum deposits and £25 for monthly contributions. Note that unlike most other shares and stock investors whose fees are expressed as a percentage of the invested amounts, Interactive Investors charges are either monthly or per trade fees. The quarterly administration fee, for instance, stands at £22.50 while the monthly charge for buying and selling different investments starts at £10 per month and drops down to £6 if you made ten trades in the previous month (frequent trader).

    • Transparent fee structure
    • Relatively affordable minimum deposits
    • FCA regulated and FSCS protected
    • Fixed charge management fee not favorable for low volume traders
    • Not beginner friendly

    6. Nutmeg stocks and shares

    Nutmeg is another powerful robo advisor that accepts ISA funded stocks and shares investments. Unlike its wealth simple counterpart that accommodates low-income traders, Nutmeg is biased towards medium-to-high income traders, as evidenced by its relatively high minimum investment demand of £500.

    It, nonetheless , maintains the low-cost feature in addition to stepping out of the pure robo-advisor comfort to feature a non-managed fixed allocation portfolio. The portfolio can be drawn from a wide range of low-cost exchange-traded funds. The annual management fee for the fully managed portfolios starts from 0.75% for investments below £100,000 and 0.35% for those that tear above this level. Fixed allocations on the other hand are charged 0.45% for investments below £100,000 and 0.25% for those above this level.

    • Offers you a choice between managed and self-managed funds
    • Relatively inexpensive
    • Has a powerful investment portfolio creation tool
    • Limited research and analytical tools

    7. Scottish Friendly My Plan ISA

    If you are looking for a relatively diversified investment stocks and shares trading platform to invest your ISA savings, you will like Scottish Friendly’s My Choice plan. Registering an ISA here is quite straightforward, and so is managing it through their online platform. Its £10 minimum deposit requirement makes it suitable for low-income earners while their selection of low-risk/low-return investment options appeals to the risk-averse traders.

    Here, you have the option of investing in one of the nine funds listed on their website. These range low to high-risk investments. Investments with the robo advisor are also protected by FSCS, plus you stand to benefit from the ongoing £45 promotion given to individuals that open and fund their ISA.

    • FSCS protected deposits and investments
    • Affordable minimum deposits
    • Beginner friendly
    • A limited number of investments to choose from
    • Limited analytical tools and research to inform buy/sell decisions

    8. Investec Click & Invest shares and stock ISA

    Looking for a fully managed stocks and shares investment option? Consider Investec Click &Invest’s managed shares and stock ISA. Here, experienced stock traders guide you through the process of creating an investment portfolio and also manage it on your behalf.

    You will still be able to track the expert manager’s activities and monitor the performance of the ISA online and via their mobile apps. The minimum deposit to open the ISA is £2,500 with the annual management fees ranging from 0.65% for investments below £100,000, 0.50% for the next £150,000, and 0.35% for anything above £250,000. There also are transaction charges that average 0.81%.

    Our Rating

    • Wholly passive income
    • Expert management almost always translates to higher than average returns
    • Transparent pricing model
    • Limited investment options with only five funds available
    • Prohibitive initial investment demand

    Factors to put into consideration when choosing the best stocks and shares ISA

    • Prior stock trading experience: Do you have a history of trading? Rather, how confident are you with your trading skills? Do you have enough time to adequately manage the portfolio? The answer to this question should be enough to help you determine whether you need a fully-managed account, robo-advisor or self-managed stocks and shares ISA.
    • Tools and research: What emphasis has your preferred stocks and shares ISA trader paid to market research and integration of premium market analysis tools? An ideal ISA provider should have as many analytical trading tools as possible.
    • Affordability: Your ideal stocks and shares ISA provider should guarantee all-round affordability. Starting from affordable minimum initial deposit,  the annual management fees, and extending to the underlying transaction charges.
    • The number of investment options: How many funds, ETFs, bonds, and equity markets does a stocks and shares ISA provider has access to? The larger the number of investment options, the greater the possibility of diversification and, in turn, the lower the risk exposure.

    Bottom line

    Shares and stock ISA investments present you with the most effective and tax-free way of growing your savings and speeding up the actualization of your financial goals. Even when faced with the undying threat of volatilities, they still manage to post impressive returns, better than the safe-haven cash ISA. How much you make with the instant access ISA and the multiplier effect achieved with your goal-oriented ISAs is, however, dependent on a host of factors. And key among them is your choice of shares and stock ISA provider.

    MoneyFarm

    Our Rating

    MoneyFarm - ISA rates
    • Transfer out your savings when you need to
    • Invest in highly diversified portfolios
    • A personal adviser to help you get started with your investment
    • Expert portfolio management
    MoneyFarm - ISA rates

    Glossary Of ISA Terms

    Trading Platforms Glossary
    Cash ISA

    A cash ISA is a form of Personal Savings Allowance that works like ordinary savings account safe for the fact that you don’t pay tax on interests earned. It is tax-free savings account for UK citizens. The maximum you can invest in this ISA for the year 2020 is £20,000

    ISA Glossary
    Stock and Shares ISA

    A share and stock ISA is a tax-free investment account provided by a brokerage that lets you invest in a wide range of securities including individual shares and stocks, trusts, and funds. Tax-free means that you don’t get to pay dividend tax or capital gains tax on the shares and stock incomes. The maximum you can invest in this ISA for the year 2020 is £20,000

    Trading Platforms Glossary
    Innovative Finance ISA

    Innovative Finance ISA is a tax-free investment account that lets you invest in the peer to peer lending platforms. The maximum you can invest in this ISA for the year 2020 is £20,000

    ISA Glossary
    Junior ISA

    A junior ISA is a tax-free and long term Child Trust Fund that a parent or guardian can open for their underage children. A 16-year old can also open a Junior ISA but will only access the funds therein once they turn 18. The maximum you can invest in this ISA for the year 2020 is £4,368

    ISA Glossary
    Property ISA

    A property ISA is simply a share and stock ISA that will only invest in residential real estate properties. It is a share and stock ISA that buys solely into residential property portfolios.

    Trading Platforms Glossary
    Lifetime ISA

    A lifetime ISA is a savings account available to individuals between 18 and 40 years who are looking to save for a comfortable retirement. A Lifetime ISA account holder can deposit £4,000 into the account for 2020, and with every contribution, the government tops it up with a 25% bonus. You will not be able to contribute to the ISA once you reach 50 years and the funds can be used for retirement or re-channeled towards purchasing your first home.

    ISA Glossary
    Easy Access ISA

    An easy access ISA is simply a form of cash ISA that makes room for regular withdrawals of earned profits. It is mostly associated with cash ISAs that pay variable terms and allows you to withdraw the tax-free income gained here regularly. The maximum you can invest in this ISA for the year 2020 is £20,000

    ISA Glossary
    Fixed-Rate ISA

    A fixed-rate ISA is a form of Cash ISA that pays fixed interest rates on savings. The funds in the account have to be locked for a predetermined period of time – usually between 1 and 5 years- with premature withdrawals attracting heavy penalties.

    ISA Glossary
    Retirement ISA

    A retirement ISA is a savings account available to individuals between 18 and 40 years who are looking to save for a comfortable retirement. A retirement ISA account holder can deposit £4,000 into the account for 2020, and with every contribution, the government tops it up with a 25% bonus. You will not be able to contribute to the ISA once you reach 50 years and the funds can be used for retirement or rechanneled towards purchasing your first home.

    ISA Glossary
    Help-To-Buy ISAs

    A Help To Buy ISA is a special saving account designed by the U.K. government to help its citizens save for a mortgage deposit for their first home. You can only save up to £200 per month into the help to buy ISA with the government topping you up with an additional 25% bonus. Plus, help to buy ISA is only available to individuals and couples looking to buy their first home.

    FAQs

    What are stocks and shares ISA?

    This refers to individual savings account (ISA) deposits that have been invested in the stocks and shares market. You may open the account directly from a stocks and shares ISA provider or by channeling funds from other ISAs like lifetime of junior accounts to a stocks and shares markets investor.

    Who can open stocks and shares isa?

    stocks and shares ISAs are treated as Individual savings accounts and can, therefore, be opened by any United Kingdom resident above 18 years. Parents can also open a Junior ISA for their children and channel the deposits to a stocks and shares trader.

    What is the difference between stocks and shares ISA and Cash ISA?

    Cash ISA is tax-free cash savings that attract low interests, often below 3%, while shares and stock ISA refer to the tax-free deposits into the stock and money markets. Shares ISA has a higher earning potential with more attractive annual returns but is considered riskier than Cash ISA.

    How much can I invest in shares and stock ISA?

    Shares and Stock ISA providers have the right to express their discretion when determining the minimum investment/deposit amount acceptable on their platforms. The government has however set £20,000 as the maximum anyone can deposit into a stocks and shares ISA for the financial year 2020/2021.

    What are the average returns for stocks and shares ISA?

    How much you make from your stocks and shares ISA is primarily dependent on such factors as your choice of s stock trader and your initial deposit. Most investments companies will, however, earn you in excess of 10% as the gross average return.

    How can I withdraw money from a stocks and shares ISA?

    If you opened an instant access stocks and shares ISA, returns on your investment will be available for withdrawal as soon as they are realized or in line with the investment company policies. Withdrawing the principal amount may however take time and starts with a notification to the shares and stock investment company of your intention to exit that in turn initiates a sell order on any open shares and stock trades.

    Can I switch stocks and shares ISA providers?

    Yes, most shares and stock ISA providers make it possible to transfer your investments from one Investment Company to another. You might, however, want to first confirm whether the stocks and shares ISA receiver will be able to accept and handle all your open trades. You are also discouraged from initiating the transfer by way of withdrawing from one ISA provider and depositing in the next as this is considered double investment and not covered by tax exemption rules. Instead, consider providing your trading company with the transfer details and have them initiate the transfer. They will probably charge exit/transfer fee but your investment remains protected by the tax-free rules.

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    Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, commodities, forex, indices, bonds, and cryptocurrency investments. She holds a Masters degree in Economics with years of experience as a banker-cum-investment analyst. She is currently the chief editor, learnbonds.com where she specializes in spotting investment opportunities in the emerging financial technology scene and coming up with practical strategies for their exploitation. She also helps her clients identify and take advantage of investment opportunities in the disruptive Fintech world.

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