Rates for easy access cash ISAs are still in the doldrums, languishing at less than 1.3% today. For many of us, 2018 is time to start looking at alternatives. This is not mahogany boardroom table stuff – I’m talking about a typical starting amount of £25-£50 a month. You can get access to your money whenever you want so it’s not locked away.
If you don’t feel confident about picking shares or investments, you can still take part. Picking individual shares, or just following one type of product or one country, is a lot more risky because you are 100% exposed to one, or just a few, things. Many of my ISA picks below will pre-assemble a mixed bag of investments for you which come from lots of different countries and invest in lots of different firms – you’ll probably end up with exposure to about a few hundred investments but you won’t be the one trawling through making these individual decisions.
What could I make? And what could I lose?
Broad ballpark, I think you’re doing well if a mixed portfolio of shares returns an average of about 5% - 6% a year after fees. But of course, you have to be willing to ride out the lows and the highs. In 2008 the UK market fell by about 30%. The following year it made most of that back again. Last year it went up by about 12%.
Returns depend on what you buy and no-one has a crystal ball, but at least this provides some context. If you’re investing for at least 5 years, I would expect the stock market to do better than cash. The longer the timeframe the more certain I feel about this.
What’s my ISA type?
If you’d rather drink bleach than read the financial pages or want someone to just take care of it for you, then have a look at a ‘robo advisor’. I suggest Moneyfarm, Wealthify or Nutmeg. If you’re more comfortable with a bigger, established brand, Aviva has a decent DIY ISA option. Investec Click & Invest is a new-ish service. You need £10,000 to get going so it’s not for everyone. Finally Vanguard is a great way to get started with minimum fuss.
If you want to be able to pick and control your own portfolios, Hargreaves Lansdown has a broad range and market-leading customer service. Interactive Investor has a fixed fee for portfolios of £75k+ and offers access to more markets than most will want. Finally, AJ Bell Youinvest has an evident stockbroking heritage and rich content. These guys know their pensions stuff too.
For more reading, or to see how other investors rate these providers and more, visit our new Best Buys pages here, and have a happy (and straightforward) ISA season.
Holly’s summary of ISA picks to suit all types