Cheapest Stocks and Shares ISA

Table of Contents

This is our guide to the cheapest Stocks and Shares ISA.

Our team of finance experts cover which is the cheapest ISA platform for a range of different scenarios and investments. 

We also cover what a Stocks and Shares ISA actually is, how they work, the types of fees and charges you can expect and the investments you can hold within them.

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

Use the table of contents to skip ahead to the most relevant section for you or read on as we explain the cheapest Stocks and Shares ISAs for different needs. Let’s get into it.

Table of Contents

Cheapest Stocks and Shares ISA

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.

So, InvestEngine is the cheapest Stocks and Shares ISA overall with zero platform fees if you want to build your own portfolio. But you can only invest in Exchange Traded Funds (ETFs – more on these later in this guide) with them.

If you want professionals to take care of your ISA investments for you but still have the option to add your own pick of shares, funds and bonds then Moneyfarm is our top pick for best value Managed ISA.

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*, mutual funds and bonds to your ready-made portfolio if you wish. Its dealing fees are low, too.

Moneyfarm is regulated by the FCA and has FSCS protection.

*Moneyfarm’s share dealing service (including mutual funds, ETFs and bonds) is in its early access stage. Whilst we have access to it, not all customers will be able to use it so we haven’t included it in our main cost models yet. Based on current pricing, though, it is one of the lowest cost Stocks and Shares ISAs for a diversified portfolio.

Cheapest Stocks and Shares ISAs for choosing your own investments

If you want to build your own portfolio from mutual funds, shares, bonds and investment trusts then you’ll need to look beyond InvestEngine. We cover the cheapest ISA platforms for doing so below.

Interactive Investor

Interactive Investor is the cheapest Stocks and Shares ISA platform for most people who want to invest in mixed portfolios. 

This is because it charges fixed monthly fees, which become a smaller percentage of your portfolio as your portfolio grows in value. So, if you want to invest in a combination of shares, funds and bonds then Interactive Investor usually works out cheapest.

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.

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

It’s worth noting that for mixed portfolios of funds, shares and ETFs worth up to £24,000, AJ Bell is often the cheapest ISA platform.

If you have more than £24,000 then Interactive Investor is cheaper – particularly for funds (more on this later) and it gets relatively cheaper the larger your portfolio.

That covers our overall top picks for the cheapest stocks and shares ISAs. Next, we look at the cheapest ISA platforms for specific investments. 

To do this, our team of finance experts (who have over 30 years of professional finance and investment experience) modelled the impact of costs with various ISA platforms for different types of investments. These include index funds, mutual funds, individual stocks and shares and bonds.

Read on for our winners.

Cheapest Stocks and Shares ISA for ETFs and index funds

Exchange Traded Funds (ETFs) are low-cost funds which tend to track the performance of a major stock index, such as the S&P 500. They’re sometimes known as index funds (although not all ETFs are index funds). 

Because they track an index, effectively replicating that index in the ETF, they don’t require fund management teams to make investment decisions. So, they tend to be much cheaper than mutual funds and investment trusts.

InvestEngine provides the cheapest Stocks and Shares ISA for investing in ETFs and index funds.

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 remember – 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.

But remember – you can only invest in ETFs with InvestEngine, which is fine if you’re happy building a portfolio solely from ETFs. For mixed portfolios, Interactive Investor is usually the cheapest option.

Cheapest Stocks and Shares ISAs for mutual funds

When many investors talk about funds, they’re referring to mutual funds (sometimes known as unit trusts). 

These are run by fund managers who make investment decisions with the intention to outperform the stock market, or to at least match a specific benchmark index. More on what mutual funds are later in this guide.

If you want to invest in mutual funds, then the cheapest Stocks and Shares ISA for you depends on how much you have to invest.

Up to £57,552 in mutual funds: AJ Bell

For up to £57,552 in mutual funds, AJ Bell is the cheapest Stocks and Shares ISA. It charges 0.25% on mutual fund portfolios worth up to £250k. AJ Bell’s dealing fees on funds are low, too, at £1.50. 

Read more on why AJ Bell is our top pick for Best SIPP Provider.

More than £57,552 in mutual funds: Interactive Investor

Interactive Investor charges a fixed monthly subscription fee of £4.99 (£59.88 per year) for up to £50,000 of investments. For investments worth more than £50,000 it charges a monthly fee of £11.99 (£143.88 per year). 

Because Interactive Investor’s fee is fixed, its annual fee becomes a lower proportion of your portfolio as your investments grow.

Picture of Talal's View

Talal’s View

CFA Qualified Investment Advisor

If you have £50,001 of funds invested with Interactive Investor its annual charge of £143.88 for its Investor Plan works out as 0.29%.

But, if you have £100,000 invested then Interactive Investor’s charge works out to 0.14% – which is significantly cheaper than AJ Bell, Hargreaves Lansdown and Bestinvest.

Example: Based on an ISA portfolio of £100,000 invested in funds with Interactive Investor for 10 years and earning an annual return of 8%, you would save £3,556 on fees compared to AJ Bell, £6,686 compared to Bestinvest and a whopping £7,796 compared to Hargreaves Lansdown (ignoring dealing fees).

Interactive Investor’s dealing fees on mutual funds are slightly higher than AJ Bell at £3.99. But, you get one free trade per month if your portfolio is valued at under £50k and 2 free trades per month if you have a portfolio above £50k.

Get £200 cashback or £100 in free trades

SIPP: Open or transfer a SIPP by 30th April and get £200 cashback.

ISA: New customers who open an Interactive Investor ISA or Trading Account by 30th April will get £100 in free trades.

Terms apply. Capital at risk if you invest.

Get £200 cashback and £100 in free trades​

SIPP: Open or transfer a SIPP by 30th April and get £200 cashback.

ISA: New customers who open an Interactive Investor ISA or Trading Account by 30th April will get £100 in free trades.

Terms apply. Capital at risk if you invest.

Cheapest Stocks and Shares ISAs for investing in shares

If you want to start stock-picking to build a portfolio made up of individual stocks and shares then we cover the cheapest Stocks and Shares ISAs for you below. 

Note that this also applies to investment trusts which are charged in the same way as for shares by investment platforms.

Our analysis splits shares investing into US and non-US shares because Bestinvest charges a lower platform fee for US shares which makes it cheaper for smaller amounts.

But, for any mix of shares (US and non-US) valued at more than £21,000, AJ Bell is the cheapest Stocks and Shares ISA platform (excluding dealing fees).

Cheapest ISA platform for shares

For more than £21,000 in shares AJ Bell is the cheapest platform.

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

AJ Bell also has a huge range of UK, US and other international shares to choose from. 

For a mixed shares portfolio (US and non-US shares) worth less than £21,000, the cheapest ISA platform depends on how much is invested in US shares vs non-US shares. We look at some example portfolios to see which is the cheapest Stocks and Shares ISA:


Shares Portfolio

Amount
Platform Fees
AJ BellInteractive InvestorHargreaves LansdownBestinvest
Non-US shares£2,000£5N/A£9£8
US shares£3,000£8N/A£14£6
Total£5,000£13£60£23£14

Shares Portfolio

Amount
Platform Fees
AJ BellInteractive InvestorHargreaves LansdownBestinvest
Non-US shares£4,000£10N/A£16£16
US shares£6,000£15N/A£24£12
Total£10,000£25£60£36£28

Shares Portfolio

Amount
Platform Fees
AJ BellInteractive InvestorHargreaves LansdownBestinvest
Non-US shares£2,000£5N/A£9£8
US shares£8,000£20N/A£36£16
Total£10,000£25£60£45£24

Shares Portfolio

Amount
Platform Fees
AJ BellInteractive InvestorHargreaves LansdownBestinvest
Non-US shares£5,000£13N/A£23£20
US shares£10,000£25N/A£45£20
Total£15,000£38£60£45£40

Non-US Stocks and Shares

So, if your share portfolio is made up of just non-US shares, for example UK and European shares, here are the cheapest platforms.


Amount of non-US shares
Annual Platform Charges
AJ BellInteractive InvestorHargreaves LansdownBestinvest
£5,000£13£60£23£20
£10,000£25£60£45£40
£18,000£42£60£45£72
£25,000£42£60£45£100
£50,000£42£144£45£200
£100,000£42£144£45£400
£250,000£42£144£45£1,000
£300,000£42£144£45£1,100
£500,000£42£144£45£1,500
£1,000,000£42£144£45£2,000

As you can see from our analysis, for a non-US share portfolio of any size, AJ Bell is the cheapest ISA platform. This is because of its cap of £42 on annual share charges.

It should be noted, though, that the difference between AJ Bell and Hargreaves Lansdown is only £2 per year beyond a portfolio size of £18,000. 

On its own, a £2 annual saving is probably not worth switching from Hargreaves Lansdown to AJ Bell unless you hold other assets that would also save money by switching.

US shares

Bestinvest prices US shares lower than non-US shares, charging 0.20% on up to £500k of US shares. So, if you’re keen to build a portfolio made up of US shares we cover the cheapest ISA platforms based on the size of your US shares portfolio below:


Amount of US shares
Annual Platform Charges
AJ BellInteractive InvestorHargreaves LansdownBestinvest
£5,000£13£60£23£10
£10,000£25£60£45£20
£18,000£42£60£45£36
£21,000£42£60£45£42
£25,000£42£60£45£50
£50,000£42£144£45£100
£100,000£42£144£45£200
£250,000£42£144£45£500
£300,000£42£144£45£600
£500,000£42£144£45£1,000
£1,000,000£42£144£45£1,500

Bestinvest is the cheapest Stocks and Shares ISA provider for holding US shares up to £21,000 in value.

For £21,000 or more in US shares AJ Bell is the cheapest ISA platform due to its annual cap of £42 on shares (which also applies to ETFs, investments trusts and bonds).

Cheapest Stocks and Shares ISAs for bonds

As you get closer to retirement age, you may be more interested in fixed-income investing. 

Bonds are a fixed-income product where you effectively lend money to a government or corporation in return for interest payments. 

Typically, bonds are seen as less volatile investments than equities and are an asset to be considered for those seeking an income from their investments.

For any amount of bonds, AJ Bell is the cheapest Stocks and Shares ISA provider.

This is again due to its cap of £42 on annual charges for shares, ETFs, investment trusts and bonds.

Cheapest ISA platform for bonds

For holding any amount of bonds, AJ Bell is the cheapest platform.

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

That covers all of our cheapest Stocks and Shares ISA providers for a range of scenarios. Remember, you can transfer your Stocks and Shares ISA between providers.

So, if you start off with one provider and later on your portfolio grows to a size which makes another provider cheaper, then you can just switch from one to the other.

For example, a £50k mutual funds portfolio is cheapest to hold with AJ Bell. But a few years later your portfolio may be worth £60k, in which case Interactive Investor is cheaper and you can switch to them.

Stocks and Shares ISA Cashback and Offers

Below is a round-up of the current investment ISA platform offers (as of February 2024). We aim to update this when offers are updated, added or removed but cannot guarantee their availability.

ISA PlatformOfferLink
InvestEngineExclusive: Up to £50 welcome bonus when you open an account and deposit at least £100 using our link. T&Cs apply.Visit InvestEngine
MoneyfarmNew customers, or customers with an unfunded account, who open a Moneyfarm portfolio by 11th April 2024 will get up to £750 cashback. Ts&Cs apply.Visit Moneyfarm
Wombat*Get a free £10 bonus to invest when you sign up.Visit Wombat

*We haven’t included Wombat in the main section of this guide as it’s a newer platform and not as well-developed as the others we’ve featured. But, it’s a great investment app and offers a Stocks and Shares ISA. Read more about Wombat in our guide to the best investment apps in the UK.

Find all the latest ISA offers in our ISA Cashback guide.

Cheapest ISA Platforms – Fees Summary

Here’s a breakdown of the platform and dealing fees charged by the Stocks and Shares ISA providers in this guide (as of February 2024). It’s how we worked out the cheapest ISA platforms for various investment cases.

ISA ProviderAnnual platform feesDealing fees
AJ BellShares: 0.25% (max. £3.50 p/month)

Funds:
Up to £250k: 0.25%
£250k-500k: 0.10%
Over £500k: No charge
Shares: £5 or £3.50 if 10+ share trades in prior month

Funds: £1.50
Bestinvest1Ready-made portfolios & US shares:
Up £500k: 0.20%
£500k-£1m: 0.10%
Over £1m: No charge

All other investments:
Up to £250k: 0.40%
£250k-500k: 0.20%
£500k-£1m: 0.10%
Over £1m: No charge
Non-US Shares, ETFs and Investment Trusts: £4.95

US Shares: 0.95% FX fee

Funds: Free
Hargreaves LansdownShares, ETFs, investment trusts and bonds: 0.45% (capped at £45 per year)

Funds:
Up to £250,000: 0.45%
£250,000 – £1m: 0.25%
£1m – £2m: 0.10%
£2m+: 0%
Shares, ETFs and Investment Trust dealing fee based on number of deals in prior month:
0 – 9: £11.95
10 – 20: £8.95
20+: £5.95

Funds: Free
Interactive InvestorSubscription fees:
Investor Essentials: £4.99 per month (max. investment of £50k)
Investor: £11.99 per month (min. £50k)
Super Investor: £19.99 per month
£3.99 on all Plans

1 free monthly trade with Investor plan, 2 with Super Investor

Non-US international shares charged at £9.99 per transaction for all accounts except Super Investor which is £5.99

Dividend reinvestment £0.99 for all plans

Regular investing (min. £25 per month) is free
InvestEngine0.25% for Managed Portfolios

Free for DIY portfolios (ETFs only)
N/A
Moneyfarm1,2Actively Managed Portfolios:
£0 – £10,000: 0.75%
£10,001 – £20,000: 0.70%
£20,001 – £50,000: 0.65%
£50,001 – £100,000: 0.60%
£101,000 – £250,000: 0.45%
£250,001 – £500,000: 0.40%
Over £500,000: 0.35%

DIY Shares, funds, bonds and ETFs: 0.35% (capped at £45)
N/A for Managed Portfolio

£3.95 on shares, funds, ETFs and bond trades

0.70% FX conversion fee

1The fee applied to your balance based on the Actively Managed Portfolio bands above will apply to your entire balance. If you have a balance of £25,000, for example, you will be charged 0.65% on the entire £25,000.
2Moneyfarm’s share dealing service (including mutual funds, ETFs and bonds) is in its early access stage. Whilst we have access to it, not all customers will be able to use it so we have not included it in our main cost models yet.

That’s a summary of the charges of the main ISA platforms. Next, we discuss what these charges actually mean and how they work in more detail.

Stocks and Shares ISAs fees and charges

Keeping costs to a minimum is one of the keys to maximising your long term returns in an investment portfolio.

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 in more detail.

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 into account dealing fees 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 costs, 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. 

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 the cheapest ISA platform for your needs:

  • 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 ISA platform
  • 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.

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

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. We recommend Moneyfarm if you don’t want to pick your own investments, and Interactive Investor if you do.

Get £200 cashback or £100 in free trades

SIPP: Open or transfer a SIPP by 30th April and get £200 cashback.

ISA: New customers who open an Interactive Investor ISA or Trading Account by 30th April will get £100 in free trades.

Terms apply. Capital at risk if you invest.

Get £200 cashback and £100 in free trades​

SIPP: Open or transfer a SIPP by 30th April and get £200 cashback.

ISA: New customers who open an Interactive Investor ISA or Trading Account by 30th April will get £100 in free trades.

Terms apply. Capital at risk if you invest.

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 by 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. 

Speak To An Expert

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If you’re unsure of your options or financial position you should seek professional advice. Unbiased has over 27,000 financial experts – simply enter your details and they will match you to the best financial advisor for your needs, including a no-fee initial consultation

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 for a fully managed investment ISA is Moneyfarm, and they make it very easy to get started.

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

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 charge becomes.

Plus, you can soon buy individual stocks, mutual funds and bonds with low dealing fees.

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.

Best Stocks and Shares ISA for beginners

Cost is very important when deciding which provider to open an ISA with when you’re investing for the long term. 

But it’s not the only factor to consider if you’re opening a Stocks and Shares ISA for the first time. 

In our detailed guide to the best Stocks and Shares ISA for beginners we provide all you need to know to pick the right investment ISA for your needs.

Other types of investment account

Earlier in this guide to the cheapest Stocks and Shares ISA 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 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. These include fractional shares (owning a percentage of a 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 (bet 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. Find out more in our guide to the best investment apps in the UK to find out more about GIAs. 

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 salary – whichever is lower. 

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 Private 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 provider for more details, or head straight to our guide to the cheapest SIPP.

Junior ISAs

If you’re the parent or guardian to 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

Th government announced the creation of a British ISA in its March 2024 budget. However, it’s not expected to be available until 2025.

Minimum investments for Stocks and Shares ISAs

The cheapest Stocks and Shares ISA in our guide, InvestEngine, has a minimum deposit of £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.

With our best value investment ISA, Moneyfarm, you’ll need a minimum of £500 to get started.

There’s no minimum deposit to open an account with Interactive Investor, which is our top pick for cheapest Stocks and Shares ISA for mixed portfolios. 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.

Here’s a summary of the providers in our guide:

ISA PlatformMinimum investment
AJ Bell£1 or £25 per month for regular investing
Bestinvest£50 but £100 minimum investment for funds
Hargreaves Lansdown£100 or £25 per month for regular investing
Interactive InvestorNo minimum deposit, £25 per month for regular investing
InvestEngine£100
Moneyfarm£500

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 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.

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.

Cheapest Stocks and Shares ISA – Final verdict

That covers the cheapest 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. 

Costs can play a huge part in your long term net returns, potentially reducing your investment portfolio value by thousands if you stick with an expensive provider. 

If you don’t want to pick your own investments, InvestEngine is the cheapest Stocks and Shares ISA, charging just 0.25% on Managed Portfolios. It’s also the cheapest ETF platform.

InvestEngine

InvestEngine is the cheapest Stocks and Shares ISA for Managed Portfolios, where experts look after your investments for you.

It’s also the cheapest ISA platform for investing in ETFs – no platform or dealing fees apply when building your own ETF portfolio.

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

We recommend Moneyfarm as the best value ISA platform as it provides competitively priced Actively Managed portfolios alongside low-cost dealing in shares, bonds, funds and ETFs.

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 charge becomes.

Plus, you can soon buy individual stocks, mutual funds and bonds with low dealing fees.

Moneyfarm is regulated by the FCA and has FSCS protection.

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 charge fixed monthly fees no matter the size of your investment portfolio. 

This means they get relatively cheaper the more you invest. Interactive Investor also has great customer service and a free regular investing service which avoids dealing fees.

Interactive Investor

Interactive Investor is the cheapest Stocks and Shares ISA platform for most people who want to invest in mixed portfolios (a combination of funds, shares and bonds). 

It charges fixed monthly fees which become a smaller percentage of your portfolio as your portfolio grows in value. It also has excellent customer feedback and fast customer support.

There are more than 40,000 shares, bonds and funds to invest in and dealing fees are lower than other major ISA providers. Regular monthly investing is fee-free.

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

Get up to £750 cashback

Invest or transfer to Moneyfarm by 11th April 2024 to get up to £750 cashback. Ts&Cs apply.
Capital at risk if you invest. FCA regulated and FSCS protected.

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Get £200 cashback with Interactive Investor

Get £200 cashback when you invest or transfer a SIPP to Interactive Investor. Terms apply.

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

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