We’ve faced some of the most difficult economic challenges in a decade — high inflation, higher interest rates, higher energy prices and a much higher cost-of-living in general. In such an environment, it’s tempting to give ourselves a bit more financial elbow room and stop investing but that’s a false economy – the best way to offset inflation is to invest for the long term and the best way to do that is to use your ISA allowance every year. Basically, the tax man lets you invest up to £20k a year and not pay any tax on the gains or the income – so what’s not to like?
The best way to increase your returns is to keep costs down. That means keeping an eye on all costs such as the annual platform cost, trading costs and fund charges. It’s good to be on a platform that has a wide range of investments. Fund charges for actively managed funds are around 0.75% per year and you’re likely to pay 0.25% for an equivalent tracker fund or exchange-traded fund (ETF), which are funds that are traded on the stock market.
Top 5 platforms for a £10k ISA
We crunched the numbers for an investment of £10,000 with just funds or just exchanged-traded funds (ETFs) or other exchange-traded investments. The top five platforms for ISAs are as follows:
| Platform | Annual cost (funds only) | Platform | Annual cost (ETFs only) |
|---|---|---|---|
| Vanguard | £15 | Vanguard | £15 |
| AJ Bell | £25 | AJ Bell | £25 |
| Close Brothers | £25 | Close Brothers | £25 |
| The Big Exchange | £25 | Charles Stanley Direct | £35 |
| Charles Stanley Direct | £35 | Bestinvest | £40 |
Vanguard
The Vanguard direct to consumer platform comes from one of the largest fund groups in the world. Investors can choose from blended funds (LifeStrategy and Target Retirement range), index and active funds.
The platform is restricted in asset choice as only Vanguard investments are available. However, it is as cheap as chips and provides plenty of tools and information to help investors.
AJ Bell
AJ Bell is an investor favourite in the industry. It’s competitively priced at 0.25% (to start), and has a wide range of investments to choose from including funds, ETFs, equities and bonds.
There are also plenty of research tools and information to help investors. There’s a quick rank and screener for all types of investment, as well as a favourite fund list. It also publishes Share magazine. Customers can also access the platform via app and other devices such as Amazon Echo making it easy to keep in touch with their investments.
Close Brothers
Close Brothers offers a competitively priced ISA service with a wide choice of investment options. Its online portal is easy to use and allows customers to create a more detailed view of their overall financial picture by adding assets (or debts) not held with Close. The ISA can also be viewed on the go with the Close Brothers Asset Management App.
The Big Exchange
The Big Exchange launched in 2020, making it one of the newer investment platforms. It was co-founded by the Big Issue, who remain the largest shareholder. The Big Exchange only provides access to investments that have a positive impact on the world. It aims to give ethically minded investors the opportunity to make their money work harder for them as well as the planet and the people on it.
It has a range of ready-made investment portfolios for new investors or a wider range of investment funds that meet its own in-house impact criteria.
Charles Stanley
Charles Stanley provides a competitive ISA with the broad range of investment options that would be expected from a firm of its heritage. It is working hard to increase its client base, not just with new customers, but is also trying to attract those who are new to investing.
The service, and in particular the support around it, is built with these new investors in mind. There is a variety of support available through its beginner’s investor guide, including a range of case studies to help navigate the investment selection available. The app has also been upgraded to provide more investment help and customers can also contact support staff in its highly rated customer service centre.
Bestinvest
The Bestinvest service was refreshed last year and offers a broad variety of products, investments and services. It is well known for its strong and independent research, providing investors with tools to help them make informed choices and ready-made portfolios to simplify investment choice. Bestinvest also has a range of advice options, as well as a discretionary arm, for investors who want to hand over the reins at some point or for more complicated investment needs.
Round-up
We can put £20,000 away into a Stocks & Shares ISA every year. These platforms are competitively priced and good homes for your money. Though interest rates have been better recently in Cash ISAs, inflation is also high so it will erode the value of your capital over time. The investment platforms mentioned above provide you with a great place to make your money work harder for you and protect your hard-earned cash from inflation.
Photo by Mitchell Luo on Unsplash
