How to identify the best ISA stocks and shares

With so many options, it can be challenging to decide which stocks and shares are best for you

We describe the process for comparing providers.

About one in five adults in the UK (17%) have never heard of an ISA for stocks and shares. According to research by Opinium and The Investment Association, 25% of those who have say they don't know anything about the investment product.

Those who currently own investment products and the general UK population differ significantly; only 2% of investors claim to have never heard of an ISA for stocks and shares.

Finding the best type for their situation can be difficult, even for people who are somewhat knowledgeable about stocks and share ISAs.

I'll cover everything you need to know in this guide to help you choose the best stocks and shares to invest in.

An ISA for stocks and shares: what is it?

With an ISA for stocks and shares, savers can invest in bonds, funds, shares, and investment trusts without paying taxes on any profits or income from the assets kept in the account.

As long as they don't spend all of their ISA funds elsewhere (for instance, by saving in a cash ISA), anyone over the age of 18 who is considered a UK resident for tax purposes is eligible to open a stocks and shares ISA and invest up to £20,000 in it each tax year (6 April to 5 April).

For whom is an ISA for stocks and shares intended?

It's crucial to consider your financial objectives and the duration of your investment in order to identify the best stocks and shares ISA for you.

Bestinvest personal finance analyst Alice Haine states: "Those with a five-year or longer time horizon are best suited for stocks and shares ISAs.

This is because, although they can be erratic in the short term, financial marketsparticularly stockshave historically produced real returns that are higher than the impact of inflation over the long run.

If your goal is not to buy within the next five years or so, for example, a stocks and shares ISA might be worth investing in for a house deposit.

Given that five years is a relatively short time horizon, you might want to put more money into bonds and other less risky investments. Although there may be fewer possible returns than with stocks, there is also a lower chance of losing money.

Stocks and shares ISAs, on the other hand, are suitable for long-term objectives such as retirement investing. Since this is still decades away, you can afford to invest more of your money in stocks, which have a higher risk of loss than bonds but also have higher potential returns in the long run.

Darrow Wealth Management, for instance, found that the SandP 500 returned 9 and a half percent annually on average between 1997 and 2024. The return of the US Aggregate Bond index was 4.1 percent. Both show total returns, including dividend income.

You might want to increase your investments in lower-risk assets, such as bonds, and decrease the proportion of your stocks and shares ISA that is invested in equities as your desired retirement date approaches.

How to identify top stocks and shares in an ISA.

You can begin evaluating whether you want to choose your stocks and shares ISA investments yourself or hire a fund manager to do it for you after determining your investment objective and time horizon.

Do-it-yourself investing versus pre-made portfolios.

Investing independently allows do-it-yourselfers to spend time researching, choosing assets that align with their risk tolerance, and tracking their own performance. Building your own portfolio will be possible, and you can usually select from individual stocks, funds, bonds, exchange-traded funds (ETFs), and investment trusts.

DIY investment platforms such as AJ Bell, Hargreaves Lansdown, and Bestinvest allow you to create your own stock and share ISA.

Alternatively, investing in a fully managed portfolioalso known as a ready-made portfoliois an option.

A portfolio manager will create a varied portfolio of assets in these off-the-shelf investment portfolios, usually suited to varying risk levels, and then periodically rebalance and modify the mix. So, you could pick between medium risk (balanced), higher risk (adventurous), or lower risk (usually referred to as cautious).

Investing in a pre-made stock and share ISA portfolio is possible through platforms such as Nutmeg, Wealthify, and Moneyfarm. The reason they are sometimes referred to as robo-advisers is that they automate certain aspects of the investing process.

Both ready-made and do-it-yourself options are available on many investment platforms. The best option for you will rely on how much time and effort you are willing to devote to managing your ISA for stocks and shares. Doing it yourself could give you more control. Ready-made may be a better option for you if you're content to invest and go.

Examine the different ISA providers.

We examine the costs and fees of some of the most well-known platforms for managed and do-it-yourself stock and share ISAs.

Data accurate as of May 15, 2025.

What is the smallest sum I can invest in an ISA for stocks and shares?

While some are relatively low, the majority of stocks and shares ISAs require a minimum deposit to open.

For instance, the Bestinvests stocks and shares ISA requires a minimum initial deposit of £50. You can open an ISA for stocks and shares with Hargreaves Lansdown for 100 or with a monthly direct debit of £25. However, fidelity begins at 1,000.

Individuals can invest in an ISA without having to make large deposits; instead, they can make regular contributions on an as-needed basis or through regular deposits, like monthly or quarterly.

Establishing a consistent savings plan is an easy way to achieve this. To fully utilize their ISA allowance, a person could set up a 1,666 monthly direct debit, which would come to just under 20,000 over a 12-month period.

In a separate article, we examine lump sum versus regular investing.

As stated by Bestinvests Haines: "Monthly or quarterly investing capitalizes on pound-cost averaging.

As a result, investors can purchase smaller amounts at regular intervals regardless of the price at any given time, as opposed to investing a large sum at one time, like during a purported dip or when markets are rising and optimism is high. Short- and medium-term effects of volatility are somewhat mitigated by this.

What are the steps to take out of an ISA for stocks and shares?

In order to take money out of an ISA for stocks and shares, you must sell off your investments. You can easily accomplish this online by using its app or your investment platform. Keep in mind, however, that not all stock and share ISAs permit flexible withdrawals.

How do you define flexible withdrawals?

You can take money out of your ISA and put it back into your ISA without it affecting your current year's 20,000 allowance if you have a flexible withdrawal.

Within the same tax year, "flexible withdrawals" can be refunded, and they can only be refunded into the same flexible ISA from which they were taken outnot another ISA, even if it is also flexible.

You cannot return withdrawals from an ISA that isn't flexible because they won't be credited to your annual allowance. In actuality, that portion of your allowance is lost.

Your remaining ISA allowance will vary based on whether your ISA is flexible or not, for instance, if you deposit £10,000 into it and choose to withdraw £5,000 during the same tax year.

Should your ISA be non-flexible, the withdrawal will not be reflected in your annual allowance. Your remaining allowance is 10,000 (rather than 15,000), even though you currently only have 5,000 in your ISA. You have essentially lost £5,000 of your yearly allowance.

Is it worthwhile to invest in stocks and share ISAs?

ISAs for stocks and shares offer several advantages that make them a compelling option for investors or savers aspiring to invest.

Though capital is at risk when investing, they can provide a way to make more than a cash ISA. According to Moneyfacts data, the average stocks & shares ISA fund grew by 11.86% between February 2024 and February 2025. The Moneyfacts average cash ISA rate, on the other hand, returned 3 to 80 percent during the same time period.

Also, there are tax advantages. Self-assessment tax returns can be difficult to file, especially if you have to include capital gains or investment income, which can be difficult to figure out.

The procedure is made a little bit easier by the fact that income or gains from investments held within an ISA are completely tax-free and do not need to be reported on a return.

Those choosing an investment ISA should not be alarmed if they require additional time to choose an investment. They can just keep their money in cash at first and decide what to invest later.

"Building an investment portfolio from scratch can be difficult enough without adding a ticking clock to the process as the end of the tax year draws near," says Bestinvests Haine.

"No one ought to experience pressure to make rash financial decisions they might come to regret. Therefore, to ensure you don't miss out, you should first secure their ISA allowance with cash and then invest it later.

When you invest, keep in mind that you run the risk of receiving less money than you invested.