Are you an adult looking for a way to invest your money in the stock market? A stocks and shares Individual Savings Account (ISA) may be perfect for you, and these are more popular than a range of other ISAS - and for good reason.
With stocks and Shares ISA, you can access a range of investment products like equities, and enjoy these while protecting your investments from taxation.
The main issue is that many people think ISAs are complex, and this viewpoint isn’t helped by the web of options available.
In truth, this type of savings and investments accounts simply works to grow your money in a hands-off way that stays tax-free.
In this guide, we cover the best stocks and shares ISAs today, and shared the reasons that these investment funds remain so popular. If you are looking to open your Stocks and Shares ISA, but aren't sure where to start, read on for all you need to know.
Table of Contents:
|Service Provider||Rating||Sign up|
|*1. eToro||★★★★★||Click Here|
|2. XTB Online Trading||★★★★★||Click Here|
|3. FinecoBank||★★★★★||Click Here|
|4. Vanguard||★★★★★||Click Here|
|5. Hargreaves Lansdown||★★★★★||Click Here|
|6. Halifax||★★★★★||Click Here|
*eToro disclaimer: eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
1. eToro – Best for Copy-Traded, Aggressive Portfolios
eToro may seem like a strange option to start with, as they do not actually provide a stocks and shares ISA account, but instead, a solid investment platform that has a great reputation.
This platform does, however, suit investors who want a slightly more aggressive alternative for their surplus capital, and are looking for a reliable option for investment funds.
eToro doesn’t charge any commissions on a per-trade basis, but as I’ve written more than once, in economics there’s no such thing as a free lunch.
So any “0% commission” offering will certainly mean more active management time spent, on your side of the fence, or fees made up for in some other way, somewhere down the line.
Experience and Management Mirror Stocks and Shares ISAs
The main reason to consider this option is that eToro is that it allows you to take a slightly more hands-on approach to create savings and investment accounts, and this can mirror a traditional investment ISA offered by stocks and shares ISA providers.
With eToro, you are essentially giving up some of the trading expertise-resource powering your portfolio (by copy-trading successful traders on the eToro platform, who have proven track records, but not as deep as someone like Vanguard), in order to potentially gain higher returns over a medium-to-long period of time in the future.
Tax-Friendly and Secure
So all in all, this suits investors with greater risk appetite and shorter time horizons. And anything invested that is less than £12,300 annually falls under the capital gains tax allowance.
As for security, they are fully licensed by the FCA, with lots of flexibility in payment options - allowing funding using e-wallets rather than just bank cards or bank transfers.
2. XTB Online Trading - Great Tools
XTB is another popular name in the world of investment and brings to you one of the best platforms in the industry, which has won some pretty stellar awards through the years. This company started out primarily in the forex and CFD world, but they steadily expand and add more for investors to take advantage of.
While again, they do not offer traditional stocks and shares ISAs in specific accounts, there are nonetheless a number of great ways to boost and manage your investment portfolio.
Very Flexible and Versatile
No matter which type of account you want or need, you can get it here. The entire experience is meant to be tailored to your needs, as XTB uses xStation5 or the mobile version for their trading desk platform. This platform is completely customizable, allowing you to trade your way. You don’t have to sort through endless details that are irrelevant to you. Set it up and adjust it the way you want it to be. It’s really that simple!
There are no account management fees or trading fee charges for using their trading platform, meaning that you do not have to worry that you will lose money simply by being on the site. This is great for maximizing your potential profit and offers benefits for private investors.
Fast and Effective
The platform is also known for expedient execution speeds, which certainly sets it apart. Quick trading isn’t always imperative, it simply depends on what you are trading in your share and ISA accounts. But it’s nice to know the speed is where when you want it. You will also appreciate trade calculators, charts trading, and even performance statistics included here.
If you’re looking for a well-known company, XTB is that company. In the European markets, they are a top choice. They’ve been operating in the investment industry for about 20 years now. In that time, they’ve worked their way up to one of the largest global brokers that is stock exchange listed. They even have physical offices in at least 13 countries throughout the region. This includes UK, France, German, Chile, and more.
At XTB, it’s not just about the capabilities. That’s obviously a big part of it, but their values lie in building trust, providing quality service to their clients, and giving them an all-around great experience in doing so. This is how they stand out in the industry.
3. FinecoBank Review – Lower Account Minimums
FinecoBank is one of the best stocks and shares ISAs and has earned a sterling reputation within the industry. A large element of this comes from low fees compared to the range of options to help the DIY investor build a diversified portfolio.
High Fees Compared to Other ISA Providers
Compared to Vanguard's 0.15% annual account management fee, Fineco Bank charges not far from the worst, at 0.25% (based on the value of your portfolio), and this high platform fee can be seriously off-putting to many investors, though it does reduce the need to manage your own portfolio.
In addition, only trading in ETFs is free. Doing share dealing costs just under £3.00 per trade for UK shares and just over this for US shares, which overall makes this a less budget-friendly option than Vanguard and other investment ISA providers, at least on the front end of things.
No Exit Fee and Low Minimum Deposit
Despite these charges and expenses, it is important to note the fact that FinecoBank doesn’t charge an exit fee if you want to transfer your fund account with them to a different ISA in the future. In addition, opening an account requires less than half as much capital as Vanguard, at a minimum account deposit of £100.
Wide Range of Investment Options
Fineco exposes you to thousands of different shares and ETFs, with your option to custom-tailor your portfolio. This puts you in the driver's seat when it comes to managing your investment account, and ensures diversification.
Great Mobile App
The mobile app is well-designed, letting you get a viewport of your balances, or even make adjustments to its selections, with interesting features such as its global fund screener which is designed to snoop out investment opportunities.
Overall, we consider FinecoBank to be the closest contender to Vanguard for the best-performing stocks and shares ISA in the UK for 2023.
4. Vanguard Review – Best Stocks and Shares ISA for ETF Investing
Great for First-Time Investors
Vanguard is a great first step a new investor with significant savings should consider if they are drawn to the financial markets. There is no prerequisite technical knowledge required, nor do you need to devote time to research - this provider is an expert at allocating your funds into strategic indexes and ETFs.
Essentially, this means that Vanguard will trade shares for you, making these the perfect stocks and shares ISA for investors who are new to the stock market, and who are looking to be a little more hands-off.
Vanguard also boasts a reputation as one of the most credible and popular investment providers on the international fund stage, with the added bonus of allowing you to invest directly without going through your employer.
Great Range of Funds
This is also a great option for investors looking to maximize their choice; there are 75 funds are available, each of which is actively managed by the Vanguard team. This specific stock and shares ISA is one of their most cost-effective products.
Low Fees and Charges
Low fees and charges are another great features of this ISA provider; you will only need to pay 0.15% yearly in account costs to trade funds. In addition, individual trades made by Vanguard on your behalf are not subjected to trading fees as with the bulk of alternative providers.
As for minimum deposits, this range is between a lump sum of £500 or higher or a monthly subscription of £100.
In order, these conditions rank Vanguard as one of the most budget-friendly services for long-position investment. Despite the actual range of offered individual shares being limited, Vanguard has a strong performance rap sheet.
Great for Newbies
So if you’re seeking investments in stocks and shares ISA, but do not have prerequisite knowledge of choosing between the different stocks, it’s strongly recommended that you consider Vanguard. For readers who don’t know, Vanguard is among the UK’s most popular index fund providers too. So if you want to focus on stocks, bonds, or both - Vanguard provides tons of different portfolios.
Overall, this grants a fully passive route into the financial stock markets, because your specific holdings are managed by Vanguard’s team of experts. This bleeding-edge fund service provider only recently entered the UK stocks and shares ISA stage, so you can grow wealth inherent tax reliefs. Which makes the associated investment fees worthwhile.
5. Hargreaves Lansdown Review – Old Competitor
Hargreaves Lansdown has been a market leader in the UK brokerage industry for decades - and there are a number of good reasons for this reputation.
In addition to a long-developed research department and first-rate products in a range of indices, the platform also provides stocks and shares ISAs.
Two Investing Options
New investors have two routes in opting for Hargreaves Lansdown stocks and shares ISAs - D.I.Y. or pre-made portfolios.
Choosing a DIY portfolio offers access to more than 2,500 shares, funds, and trusts, giving you a hands-on option for managing your own investments and deciding where your money goes.
Handily, the platform also provides ready-made shortlists containing the most commonly used selections according to specific investment objectives such as funds for retirement, established companies, and those seeking income for retirement.
Hargreaves Lansdown Pre-Made Portfolios are pre-made portfolios of funds from the UK’s largest retail investment platform. The portfolios are created by expert fund managers who select a selection of funds based on their risk profile, your individual goals, and the type of investments you are looking for.
You will have access to a variety of different funds, including index funds, sector funds, and actively managed funds. The portfolios are tailored to meet your individual needs and can be changed or adjusted as your goals and financial situation change over time.
Opening an account in a Hargreaves Lansdown stocks and shares ISA requires a minimum deposit of £100. Or, you can choose to do a minimum monthly deposit of £25 per month for a minimum of four months.
Pre-made portfolios however require a minimum deposit of £1,000. So not only are you getting a higher barrier-to-entry than you would with Vanguard, but you’re also paying a heftier annual commission at 0.45%, with quite remarkably high share dealing charges. These can even reach as much as £11.95.
6. Halifax Review – Simple Choice for Beginners
A Halifax Stocks and Shares ISA is a type of tax-efficient investment account, which allows you to benefit from tax relief on your investments. This means that any profits or gains you make are not subject to capital gains tax or income tax, making it a great choice for those looking to make the most of their money.
If you are looking for a stocks and shares ISA that allows you to keep things simple, Halifax Bank could be your go-to, at rates that roughly match or undercut some of its more comprehensive competitors in the space like Hargreaves, though still sit below the standards of Vanguard.
No Annual Management Platform Fee
Halifax charges no annual management platform fee for its Stocks and Shares ISA, but there is a dealing fee for each trade made. This fee is currently £5.50 per trade or 0.1% of the value of the trade (whichever is higher).
Fees on Trades
Unlike Vanguard, however, individual trades are not commission-free bar AI premium, of £12.50 per trade.
You also face surplus charges if you purchase non-UK listed shares, which means this platform quickly stacks up in compounded premiums, as a shares and stocks ISA investment service - particularly if small amounts are being invested.
Nonetheless, you need to be a customer of Halifax or Lloyds TSB (which is the parent company) in order to use the broker. The focus is on long-term investment, and the stocks and shares ISA is set up to be a long-term investment ISA, rather than used for short-term gain.
Good Choice of Products
In a world that is inundated with too many options, Halifax focuses things into a rather small basket of investment choices, including three pre-made portfolios. You are exposed to about 2,000 mutual funds, 300 investment trusts, and over 500 ETFs. With no fees for exiting early, if you choose to transfer to another ISA in the future.
Halifax also offers a range of pre-made portfolios that are designed to meet the needs of different types of investors. These portfolios are diversified and include a mix of investments such as shares, bonds, funds, and ETFs. Each portfolio can be tailored to suit your risk profile and investment goals, making it easier to achieve your financial objectives.
Top Best Stocks and Shares ISAs - Buying Guide 📚
This section is good for beginners who are still learning how stocks and shares ISAs work. It should also help you to discern between the top stocks and shares ISA to use:
Individual Savings Accounts (ISAs) let you grow investment-powered savings without paying any taxes on capital gains. ISAs became available in the UK in 1999 to encourage people to save.
They provide earnings through direct interest gained on your untaxed savings, as well as investing in stocks and shares without any tax liability for returns made.
Today, there is a range of different types of ISA, including innovative finance ISAs which are based on money loaned to small businesses. In addition, the introduction of the Lifetime ISA features government bonuses to help people save enough for retirement or buying a new home.
What are the benefits of an ISA?
For UK residents, ISAs are a solid approach to saving - indeed, they remove any unnecessary tax burdens on investments.
- ☑️ The key advantage of ISAs are it is tax-free: investors can earn a tax-free income from investment revenue, as long as they stay within the annual ISA allowance.
- ☑️ The secondary advantage is developing the habit of saving - you can use your investment ISA to build good savings habits that see you net long-term benefits.
Whether you have a specific saving target you want to achieve, or you just want a full emergency fund reserved for life’s unexpected moments, an ISA can offer a straightforward way to do this.
Several different types of ISAs exist so it’s easy to quickly find it harder to figure out which ISA is best for you. Below, we provided an overview of how the different types work.
The 5 Types of ISA Explained
There are five main types ISA:
- Cash ISAs
- Stocks & Shares ISAs
- Lifetime ISAs
- Innovative Finance ISAs
- Junior ISAs
☑️ Cash ISA
A Cash ISA is mostly similar to a standard savings account. These are open to UK residents aged 16 or older, letting you save and earn interest. The main advantage is you won’t have to pay any tax on these interest gains. By comparison, most building societies or banks charge income tax for any earnings over £1,000.
Although many people consider Cash ISAs to be a more secure route because it isn’t subject to changes in the market, economic factors do kick in. If the rate of inflation is faster than your interest, then your savings could actually diminish a bit.
☑️ Investment ISAs: Stocks and Shares
With a Stocks and Shares ISA or investment ISA, your funds are used for investments that have low risks, rather than primarily earning by interest. This means your money is allocated to investments in different securities such as bonds, shares, commodities, and even property.
Once again, there are no taxes on capital gains, including for any dividend earnings, though you are exposed to market risks and there is also no guarantee that you will get higher returns than a cash ISA would give.
Many savers use this kind of ISA in order to test out the effect of the law of Compounding - wishes where market profits are automatically reinvested, in a similar way to a business reinvesting its earnings into itself, and to break into trading and stocks and shares without having to handle trading fees, or have a good knowledge of the stock market.
☑️ Lifetime ISA
Investing into a Lifetime ISA helps you to save for your first property and/or retirement, again without taxes on capital gains. Any savings of this kind automatically gains a 25% bonus - which means £1 added to every £4 paid into the account, for up to a grand each year.
☑️ Innovative Finance ISA
An Innovative Finance ISA turns you into a money-lender - earning a fixed rate of interest to individuals and businesses who need money for their operations. You bill this out using a peer-to-peer lending platform, which again is tax-free.
The risk of this is a borrower defaulting, and there are no protections by the Financial Services Compensation Scheme.
☑️ Junior ISA
Junior ISAs (JISAs) give children away to start saving from early on. Launched in 2011 as a way for the government to replace the Child Trust Funds, Junior ISAs offer tax-efficient savings for your kids. These can be opened at any point, as long as the child is under 18, is a UK resident, and isn’t already subscribed to a Child Trust Fund.
Junior ISAs have an annual Junior ISA allowance cap - wish for the last year was a maximum added to the fund of £9,000.
Types of Junior ISA
Junior ISA comes in two different forms: Junior Cash ISAs and Junior Stocks & Shares ISAs. Both of these have an annual maximum. But unlike adult ISAs, of which you can open a new account each tax year, your kid is limited to only one Junior Cash ISA and one Junior Stocks and Shares ISA account during their childhood.
The main thing to note is that the only person who has actual ownership of the Junior ISA account is your child (not even you!). This means that when they reach 18, they can dip into their money and their Junior ISA automatically converts into an adult ISA so that they can continue to build their wealth into the future in a tax-efficient manner.
If you’re not pleased with the capital gains your child is receiving or think that fees are too high, you have the option to transfer your current Junior ISA to a different provider. Just be sure that your choice offers the optimal child ISA rates. If this is the transfer happening across Junior Cash ISAs from different providers or the same between different Junior Stocks and Shares ISAs, you have to transfer the total balance.
However, if you decide to alternate between a Junior Cash ISA and a Junior Stocks and Shares ISA, you can opt to transfer part of the balance or all of it. And if your child is subscribed to the Child Trust Fund, you can transfer the full benefits of this into either kind of Junior ISA, on the condition that you use the government transfer form. Once the Trust Fund transfer has happened, the account will be closed.
How Can I Withdraw S&S ISA Funds?
Stocks & shares ISAs require you to sell off shares, funds, or bonds enough to meet the withdrawal request amount. This will then be reimbursed to you as cash. It may take a couple of days for the sale to be completed.
What Happens if I Withdraw Funds from my Cash ISA?
If you choose to withdraw funds from your Cash ISA, you will be subject to capital gains tax on any profits or gains made. You may also be subject to income tax if the withdrawal exceeds your personal allowance. It is important to remember that any withdrawals will reduce the amount of money available for investments in that tax year.
Can I Have More Than One ISA?
Technically, you can have multiple ISAs, but it is important to note that there are limitations and restrictions here. You can only have one of each type of ISA in a single year - that is one Cash ISA< one Stocks and Shares ISA, and one lifetime ISA. You also need to ensure that the total amount paid in does not exceed your annual allowance or you may be charged.
It’s also possible to do transfers from an ISA account open from a different year - this is particularly helpful if you accumulated multiple ISAs from previous tax years and want to merge them into a more easily manageable account.