Best Stocks and Shares ISA for beginners

Table of Contents

This is our guide to the best Stocks and Shares ISA for beginners.

Our team of finance experts cover what a Stocks and Shares ISA actually is, how they work, the investments you can hold within them and the gains that may be possible over time.

We’ll also show you how to open a Stocks and Shares ISA, the fees and charges you can expect and all of the ISA rules you need to know.

We recommend beginners start with a robo-advisor or a ready-made portfolio in your investment ISA. But, we also cover the best Stocks and Shares ISA for beginners who want to build their own portfolio. 

Table of Contents

Let’s get into it.

Best Stocks and Shares ISAs for beginners

Our overall best Stocks and Shares ISAs for beginners based on ease of use, investment choice, cost and customer feedback.

Moneyfarm

Moneyfarm has one of the best performance track records of the main robo-advisors combined with low charges which reduce as your portfolio grows. The more you invest, the lower the percentage fees.

It also offers free guidance from investment consultants and socially responsible options, too. Moneyfarm’s customer service is great and its app is one of the best on the market.

Plus, you can now add individual stocks to your ready-made portfolio if you wish – perfect for beginners.

Moneyfarm is regulated by the FCA and has FSCS protection.

InvestEngine

InvestEngine is the cheapest stocks and shares ISA on the market, charging just 0.25% platform fees on Managed Portfolios no matter the size of your investment.

It only offers ETFs, so no shares or mutual funds, but you can build your own portfolio totally free from platform and dealing charges. Plus, if you have a Managed Portfolio you can still add your own ETF picks to your portfolio for free.

We tested their ISA transfer process and it was smooth, taking around 10 working days to transfer an existing Stocks and Shares ISA. Their customer support is very good, too.

Capital at risk if you invest. InvestEngine is regulated by the FCA and has FSCS protection.

Best Stocks and Shares ISA for beginners to choose your own investments

If you’d prefer to choose your own investments in your Stocks and Shares ISA, these are our top picks for the best ‘DIY’ platforms.

Interactive Investor

Due to its monthly subscription pricing instead of charging as a percentage of your portfolio, Interactive Investor is one of the lowest cost ISA providers for large amounts. Fees stay the same even as your portfolio grows in size.

It has more than 40,000 shares, bonds and funds to invest in. There’s also a range of investment ideas and funds lists to help you decide what to invest in. Plus, dealing fees are lower than the other major ISA providers and regular monthly investing is free.

Interactive Investor has an ‘excellent’ Trustpilot rating of 4.7 and gets great customer feedback. Its customer support wait time averages under 1 minute, so help is on hand quickly if you need it.

Interactive Investor is regulated by the FCA and has FSCS protection.

InvestEngine

Build your own ETF portfolio with InvestEngine and you won’t pay any platform fees at all. 

There are more than 590 ETFs to choose from and their web platform and app both make it very easy to navigate their ETF range. But, as they only offer ETFs, you cannot invest in shares, mutual funds or bonds.

Capital at risk if you invest. InvestEngine is regulated by the FCA and has FSCS protection.

What is a Stocks and Shares ISA?

A stocks and shares ISA is a type of Individual Savings Account (ISA) which allows you to invest in shares, funds and bonds. It’s also sometimes known as an investment ISA.

An ISA is a government approved savings or investment account which allows you to save or invest without paying tax on income or gains received within the account. This makes ISAs a great way to invest and build your portfolio over time.

The government wants to encourage people to save money, particularly for retirement, which is why it approves ISAs as a tax-free way to buy shares and invest your money. 

For people wanting to save or invest for the long term, opening an ISA is usually one of the best options to get started. 

ISA Rules

There are 4 types of ISA that you can open:

  • Cash ISA
  • Stocks and Shares ISA
  • Lifetime ISA
  • Innovative Finance ISA

Within a stock and Shares ISA you can invest in:

  • Shares (sometimes known as stock)
  • Bonds
  • Funds

The types of funds you can invest in include mutual funds (unit trusts), investment trusts and Exchange Traded Funds (ETFs).

You can open one new ISA of each type per year, except for a Lifetime ISA which you can only open once. But there’s no limit to the total number of ISAs you can hold of each type, so long as you don’t pay into more than one of each type in a single year.

You’re also able to transfer existing ISAs to other providers, and that includes the ability to transfer Stocks and Shares ISAs.

There’s also a Junior ISA for children which can be opened by a parent or guardian. Read more in our guide to the best Junior Stocks and Shares ISAs.

Annual ISA Allowance

You can contribute up to £20,000 per year across your ISAs. This can be split between a Cash ISA, Stocks and Shares ISA, Innovative Finance ISA and a Lifetime ISA.

But, Lifetime ISAs have an annual limit of £4,000, which counts as part of your overall £20,000 annual allowance.

The annual allowance runs from 5th April to the 6th April each year and can be changed by the government, and as mentioned above you can only pay into one of each type of ISA in a given year.

For example, you could open a new Cash ISA and a new Stocks and Shares ISA in one year. You can then split your annual allowance of £20,000 between the two of them if you wish.

In the next year, you could open a new Cash ISA and a new Stocks and Shares ISA. But, you can then only pay into one of the two Stocks and Shares ISAs in each year going forwards.

Similarly, you can only pay into one of your two Cash ISAs in any given year.

Stocks and Shares ISA Summary

Here’s what you need to know to get started with an investment ISA for beginners:

  • You can open one new Stocks and Shares ISA each year
  • The annual contribution allowance is £20,000 across all of your ISAs
  • You can invest in shares, bonds and funds in a Stocks and Shares ISA (dependent on your provider)
  • Gains and income generated within an ISA are free from capital gains and income tax for most people
  • You’re able to transfer your Stocks and Shares ISA from one provider to another if you wish, for example to a cheaper provider
  • Most providers allow you to set up a direct debit or standing order to make regular monthly contributions to your ISA account

If you seek to maximise your annual allowance and pay in as much as you can each year to a Stocks and Shares ISA, you could build up a sizeable investment portfolio.

Because the income and gains are tax-free (for most people) you can reinvest all of these proceeds which means more of your money is working for you, compared to a non-ISA investment account where you may have to pay tax.

Picture of Talal's View

Talal’s View

CFA Qualified Investment Advisor

If you invest the maximum £20,000 per year into a Stocks and Shares ISA and get an annual return of 8%, it will take you 19 years to become an ISA millionaire*. That’s an example at the top end of what’s possible, but the sooner you start investing the higher your long term returns are likely to be.

Broadly speaking, you can either invest your money yourself by picking investments in an ISA or you can put your money into a ready-made portfolio.

If you don’t have the time to manage your own investments in a Stocks and Shares ISA, we recommend Moneyfarm

But, if you do want to build your own investment portfolio in an ISA, we recommend Interactive Investor.

Why invest through a Stocks and Shares ISA?

The key benefit of a Stock and Shares ISA compared to a standard investment account is in the tax savings.

As we outlined above, investment gains made in a Stocks and Shares ISA are free from capital gains tax. Likewise, any income received is free from income or dividend tax. 

This means you keep all of the profits and income from your ISA for yourself without tax being taken off. Over time, if you keep reinvesting the gains and income you may make, you can build up your investment portfolio faster than if you had to pay tax on them. 

You may have heard of compound returns or compound interest, which is where any returns or income you receive on an investment or savings account is immediately reinvested. As a result, you earn a return on your returns over time, rather than withdrawing those returns.

Well, if you invest in a non-ISA account (such as a General Investment Account) you may have to pay tax on any gains or income you make. This reduces the compounding effect as not all of your returns are reinvested – some go to the taxman.

For most people then, opening an investment ISA is one of the best options to consider when starting out as a new investor.

Recent changes in tax rates have also brought more people into the scope of capital gains and income tax. For capital gains, the annual exempt amount for individuals was reduced by more than half in 2023-24 from £12,300 to £6,000. 

Similarly, the dividend allowance before dividend tax was due has been reduced to £1,000 in the current tax year when it was as high as £5,000 in the 2017-18 tax year.

So, investment ISAs are increasingly worthwhile for many people. If you’re new to investing they’re a great place to get started with one of the best Stocks and Shares ISA for beginners. We recommend Moneyfarm if you don’t want to pick your own investments, and Interactive Investor if you do.

How to invest through a Stocks and Shares ISA

It’s a straightforward process to start investing through a Stocks and Shares ISA, but you will need to decide how and what you want to invest in. 

To get started, you’ll need to go through the following steps:

  1. Decide which Stocks and Shares ISA provider is best for you
  2. Open a Stocks and Shares ISA with the provider, providing your personal information and ID documents as requested (usually takes no more than a few days)
  3. Fund your ISA account (more on minimum investments below)
  4. Set up a regular contribution if you wish to
  5. Choose what to invest in and start investing

So although the above process is relatively simple, the key question you’ll need to answer is what you want to invest in. 

How to decide what to invest in

We outline the three main ways you can get started with investing through an investment ISA.

1. Robo-advisors and ready-made portfolios

If you’re a total beginner we recommend starting with a robo-advisor such as Moneyfarm, which is our top pick for best stocks and shares ISA for beginners. 

Professional investment managers will then look after your money for you. More on how this works below.

2. Pick your own investments

But, if you do want to pick your own investments you’ll need to do some research and decide where you want to put your money. You can invest in shares, funds or bonds and there are, quite literally, tens of thousands to choose from.

This is why we suggest you consider starting out with a robo-advisor, such as Moneyfarm, and you can consider making your own investment decisions further down the line.

But, Interactive Investor is our top pick for best Stocks and Shares ISA for beginners who want to choose their own investments. It has lots of helpful guides and funds lists to help you get started.

3. Get financial advice

If you want a more personalised recommendation of what to invest in, you can seek professional financial advice from a regulated advisor. 

This will come with a fee, but you will get a full breakdown of your financial position and a recommendation of what to invest in, and why it’s appropriate for you. 

You can also pay for annual portfolio reviews with your financial advisor where they will recommend if you should buy or sell any investments, and ensure that your portfolio is still appropriate for you.

We recommend Unbiased if you want to find a financial advisor. 

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Ethical investing

Beyond just choosing whether to invest in shares, funds or ETFs (or a combo of the three), you may also want to consider the ethical impact of your investments. 

Ethical investing has been getting a lot of attention in recent years. It’s also sometimes known as ‘impact investing’, socially responsible investing (SRI) or ESG investing (Ethical, Sustainability and Governance).

Whatever you prefer calling it, there’s no doubt it’s a growing part of investors’ concerns. For more on this, check out our guide to the best Ethical Stocks and Shares ISAs.

How do managed stocks and shares ISAs work?

With managed Stocks and Shares ISAs the hard work is done for you. Investment professionals put your money into a ready-made portfolio which they manage over time with the aim of growing its value.

Each portfolio they offer has a different level of risk attached to it. 

It’s easy to get started – you go through the process to open an ISA account with a robo-advisor, as we outlined above, and then you’ll be asked to complete a questionnaire based on your attitude towards risk.

The robo-advisor takes this information and decides which ready-made portfolio is right for you based on your answers. Your money is then put into this portfolio and professional investment managers look after it over time.

Picture of Talal's View

Talal’s View

CFA Qualified Investment Advisor

Robo-advisors tend to follow the standard theory of portfolio management, with what are called long-only portfolios. A long-only portfolio just means that they only buy investments, they cannot short-sell stocks and shares (bet against their prices).

When deciding risk levels, they will allocate the portfolio’s funds between equities (shares, via ETFs) and bonds (corporate and government debt). The more equity in the portfolio, the higher risk it is perceived to be, as equities are typically a more volatile investment than bonds. For lower risk portfolios bonds will take up a larger slice of the allocation, particularly government bonds as these are considered super-safe investments.

There’s more that goes on behind the scenes, such as country allocation and liquidity management. But portfolios offered by robo-advisors are already set up in accordance with these general principles and your money will be put into one of them once you’ve completed the questionnaire. This is what makes them ‘ready-made’ portfolios.

Robo-advisors are a low-cost, convenient way to get your money invested without you having to spend time doing your own research and rebalancing your portfolio yourself.

Our top pick robo-advisor investment ISA for beginners is Moneyfarm, and they make it very easy to get started.

Moneyfarm's questionnaire in the app
Moneyfarm’s risk questionnaire

Once you’ve completed the questionnaire you’ll be presented wth a recommended portfolio.

Best Investment ISA for beginners

Moneyfarm is our top pick. It’s easy to get started, has a strong performance record and low fees which reduce as your portfolio grows.

Moneyfarm is regulated by the FCA and has FSCS protection.

Read more about robo-advisors and ready-made portfolios in our guide to the best robo-advisors in the UK.

Other types of investment account

Earlier in this guide to the best Stocks and Shares ISA for beginners we mentioned General Investment Accounts (GIAs). A GIA is another type of investment account, but one that doesn’t come with any tax incentives.

But, we also mentioned how the purpose of the tax-incentives with ISAs is to encourage you to save for your future. Well, if you want to save for the longer term you should consider setting up a private pension. These come with their own tax incentives and rules.

Below we take a look at the other types of account you can open to invest for your future.

General Investment Account

A GIA is considered a ‘standard’ investment account. It does not have the tax incentives that a Stocks and Shares ISA does.

But, this doesn’t mean you should rule out opening a GIA – they have their own benefits and features that you should consider.

First, they’re not constrained by annual allowances or limits. This means you can deposit and invest an unlimited amount through a GIA, unlike an ISA.

Also, there’s no limit to the number of GIAs you can set up or pay into. You could, for example, open a different GIA with different providers depending on what and how you want to invest.

This brings us onto another benefit of a GIA – there is a wider range of assets classes and investments that you can invest in. As well as investing in individual stocks, such as buying Manchester United shares, it also includes fractional shares (owning a percentage of a single share in a company) and Contracts for Difference (CFDs).

CFDs are highly risky derivative financial instruments which allow you to both trade with leverage and to ‘short’ assets (speculate against their price). Using CFDs should not be considered by beginner investors and you should always ensure you fully understand the risks involved with any investing you do. 

Remember, when investing through a GIA you may need to pay tax on any gains or income received, so always check your tax position.

Our top pick general investment account is eToro’s trading account.

eToro

eToro is our top-rated investment app, it’s easy to use, has lots of innovative features and allows you to trade commission-free.

Capital at risk if you invest.

Find out more about GIAs in our guide to the best investment apps in the UK

Private Pensions

A private pension is any pension that’s not a workplace pension (set up by your employer) or the state pension (administered by the government).

Pensions come with their own set of tax incentives and investment rules. In fact, they have arguably much greater tax incentives than ISAs.

All contributions into private pensions are topped up with a 25% government bonus. Higher rate and additional rate taxpayers can also claim extra tax relief on contributions. 

The annual pension allowance is also higher than the annual ISA allowance. It’s £60,000 or your total annual income – whichever is lower. Note that you can contribute more than £60,000 (or your salary if lower) but you won’t get tax relief on any portion above this amount.

Not only that, but the same tax-efficient status is granted to your investments inside a pension. There’s no capital gains or income tax to pay on any gains or income generated within them (for almost everyone).

The features of a private pension don’t stop there, though. There’s a much wider range of investments that you can hold in a private pension compared to an ISA, including physical gold. 

You should consider a Self-Invested Personal Pension (SIPP) if you want to choose how to invest your pension contributions. Or, if you own a small business, you should consider a Small Self Administered Scheme (SSAS). 

Both a SIPP and a SSAS are also able to borrow money in the form of a pension loan to fund investments – a complicated and potentially risky area of pension investing, but one that is often used to invest in commercial property.

Our top picks for SIPP providers are AJ Bell if you want to choose your own investments, or Moneyfarm if you want experts to manage your pension for you.

Read our guide to the best SIPP providers for more details, or go straight to our guide to the cheapest SIPP.

Junior ISAs

If you’re the parent or guardian of a child you can open a Junior ISA for them. This is a type of ISA designed for saving for a child’s future.

Junior ISAs come with the same tax incentives as adult ISAs – no tax on gains or income generated within them.

The annual allowance is lower than for adults, though, at £9,000 per year. Only a parent or guardian can set up a Junior ISA but, once opened, anyone can contribute to it, such as grandparents.

For all the details, read our guide to the best Junior Stocks and Shares ISAs.

How we chose the best stocks and shares ISA for beginners

Putting your money into the stock market shouldn’t be taken lightly. Our team at Generation Money has over 30 years of professional finance and investment experience and we’ve extensively tested each of the platforms in this guide.

To come up with our list of the best Stocks and Shares ISA for beginners we looked at a range of criteria. The main factors are:

  • Safety – each of the providers on our list is FCA regulated and FSCS protected
  • Customer service and customer feedback
  • Ease of use
  • Range of investments
  • Fees

We put our money where our mouths are and, between us, we have investment accounts with all of the providers on this list. 

Picture of Alex's View

Alex’s View

Founder, Generation Money

The second ever ISA I opened was with Moneyfarm, soon after I finished my Chartered Accountancy exams. I remember completing their questionnaire for the first time and being impressed at how easy it was to get started. Based on the questionnaire I was allocated to Portfolio 6, Moneyfarm’s second highest risk portfolio – which won’t be for everyone!

Over the years I’ve been impressed with how well designed their app is, their great customer support and the clear portfolio performance and breakdowns you get. Not only is Moneyfarm a great investment ISA for beginners, it’s also brilliant if you simply don’t have the time to manage your own investments.

Minimum investments for Stocks and Shares ISAs

With our top pick robo-advisor, Moneyfarm, you’ll need a minimum of £500 to get started.

InvestEngine’s minimum investment is lower, at £100. Don’t forget, with our exclusive link you can get a Welcome Bonus of up to £50 when you invest £100 or more with InvestEngine.

Up to £50 welcome bonus & up to £2,500 ISA bonus

Over 610 ETFs to invest in. Commission-free.

Use our exclusive link to get a free welcome bonus of up to £50 AND an additional bonus of up to £2,500 when you invest or transfer an ISA at InvestEngine.

Ts&Cs apply. Capital at risk if you invest.

Up To £50 Welcome Bonus & £2,500 ISA Bonus

OFFER: Use our exclusive link to get a free welcome bonus of up to £50 AND an additional bonus of up to £2,500 when you invest or transfer an ISA at InvestEngine.

Ts&Cs apply. Capital at risk if you invest.

There’s no minimum deposit to open an account with Interactive Investor. For regular investing, the minimum direct debit is just £25 per month, and avoids all dealing fees.

The minimum investment with Interactive Investor depends on what you want to invest in. Some funds, for example, have minimum investment amounts but buying shares only requires that you have enough cash to afford the share price of a single share.

Stocks and Shares ISAs fees and charges

Keeping costs to a minimum is another key to maximising your long term returns in an investment portfolio. We took fees into account when deciding the best Stocks and Shares ISA for beginners, as we do with all of our platform guides. 

Stocks and Shares ISAs typically come with at least one type of fee you’ll have to pay. Below we outline the main fees to watch out for.

Custody Fees

These are fees charged by a provider for looking after your investments. They tend to be an annual percentage of the value of your investments, and often the percentage charge reduces with higher portfolio values.

Some providers, notably Interactive Investor, charge a monthly subscription fee instead of an annual percentage custody fee. For larger investment portfolios, fixed subscription prices become cheaper.

Management Fees

You’ll typically see management fees charged by robo-advisors and on ready-made portfolios.

Management fees are usually also a percentage charge on your total investments, and they seek to cover the costs of having a team of professional fund managers who oversee the portfolios on offer.

Robo-advisors will typically charge only a management fee, and not a separate custody fee.

Dealing Fees

If you pick your own investments, you will often be charged a dealing fee (or commission) each time you buy or sell an asset. 

It’s important to take dealing fees into account if you think you’ll be a frequent trader, as dealing costs can add up throughout a year. 

Not all providers charge dealing fees, though – InvestEngine allows you to build your own portfolio free from dealing and platform fees.

If you regularly invest by setting up a direct debit with Interactive Investor, you’ll also avoid all dealing fees (FX charges may still apply on foreign shares).

Underlying Fund Costs

Sometimes known as ongoing fund charges, these are the fees charged by the fund managers who operate the mutual funds, investment trusts and ETFs that you may invest in.

These are independent of your Stocks and Shares ISA provider, although some providers negotiate discounted charges for their clients. 

As the name suggests, only funds charge these fees so if you directly invest in shares you won’t incur them.

Transfer Fees

Rather than a profit-making exercise, as they sometimes were in the past, transfer fees are the costs involved in transferring your ISA investments from one provider to another.

You can transfer a stocks and shares portfolio without having to sell any of your investments if your new provider offers the same investments. This will usually minimise any transfer fees payable, and is known as an ‘in specie’ transfer. 

If your new provider does not offer the same investments as your current provider, your current investments will need to be sold and the cash proceeds will be transferred to your new provider. 

Selling your investments may incur dealing fees, which are part of the transfer cost. You may also have to pay more dealing fees to recreate your portfolio with your new provider. 

Are Stocks and Shares ISAs safe?

Stocks and Shares ISAs are considered one of the safest ways to invest your money. 

To offer a Stocks and Shares ISA, the provider must be registered with and authorised by the Financial Conduct Authority (FCA). 

There are additional regulatory checks and procedures an investment provider must comply with to offer a Stocks and Shares ISA compared to a General Investment Account. 

This is because ISAs have tax incentives which are approved by HMRC, and ISA providers must also complete compliance checks directly with HMRC.

Stocks and Shares ISA providers are also covered by the Financial Services Compensation Scheme (FSCS). This is a government-backed scheme which protects up to £85,000 of your money in the event that your provider goes out of business.

On top of that, your cash and investments are administered by professional ‘custodians’ and your money is deposited with regulated banks. This keeps your money separate from your provider’s own funds.

As with all investing, though, your capital is at risk. This means the value of your investments can go down as well as up. But, over the long term, stocks and shares have historically risen in value. This is why it’s important to have a long term view when investing for the first time.

Best Stocks and Shares ISAs for beginners – Final verdict

That covers the best Stocks and Shares ISAs for beginners. 

Stocks and Shares ISAs have great tax incentives that help to grow your investments over time compared to non-ISA investment accounts. You can contribute up to £20,000 per year into a Stocks and Shares ISA (or £4,000 for a Lifetime ISA) which can be put into a range of investments.

Regular contributions and consistent investing over time has in the past outperformed the returns you could’ve got from savings.

If you don’t want to pick your own investments, we recommend Moneyfarm as the best robo-advisor platform for your Stocks and Shares ISA.

Best Investment ISA for beginners

Moneyfarm is our top pick. It’s easy to get started, has a strong performance record and low fees which reduce as your portfolio grows.

Moneyfarm is regulated by the FCA and has FSCS protection.

If you’re particularly keen on minimising costs, though, you may prefer InvestEngine. Don’t forget to use our exclusive InvestEngine link to get a Welcome Bonus of up to £50 if you invest £100 or more. T&Cs apply.

For picking your own investments, our top choice is Interactive Investor which has more than 40,000 shares, funds and bonds to invest in. They also have great customer service and a free regular investing service which avoids dealing fees.

Interactive Investor

Interactive Investor has more than 40,000 shares, bonds and funds to invest in. There’s also a range of investment ideas and funds lists to help you decide what to invest in.

Plus, dealing fees are lower than the other major ISA providers and regular monthly investing is free. It also has great customer feedback.

Interactive Investor is regulated by the FCA and has FSCS protection.

*Excluding fees and assuming fixed monthly contributions of £1,667 (£20k ISA limit split into 12 monthly deposits) for the duration.

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