I need to pick my own investments
This depends largely on which route you choose to go down to select your investment ISA. You can pick and buy your own investments via a platform like TD Investing or IG, if you’re confident in making your own investment decisions. Alternatively, a tracker fund that simply follows a market like the FTSE 100 is a more convenient way to buy lots of investments at once and could be more suitable for novice investors. Some services will pick your investments for you, based on your attitude to risk, and manage them every day in return for an annual fee. Don’t assume these services come at a premium, often they’re comparable, or even cheaper than the do-it-yourself route.
My money will be locked away
Not the case. You can withdraw money from most investment ISAs at any time, although some providers will charge you for each withdrawal, while others include the cost within their annual management fee. Check the small print before you sign up to a service.
You need to be loaded to invest
In the past, many professional investment managers only took on clients with more than £100k to invest, but now technology is helping to change that. Today, anyone can get access to an investment expert, who will build you an ISA with as little as £1 and manage it for you every day. Fees may have also been a barrier to investing in the past. Traditional wealth manager fees are typically 2.56%* per year and were not always made clear to the customer, leaving some people unsure as to what they were paying. Today, digital wealth management services are available for typically less than 1% per year and the fee structures are transparent, so the cost of investing is clear.
It’s riskier than savings
It’s true that all investing involves some risk and you could get back less than you originally put in, but investment ISAs also provide an opportunity to earn higher returns than you can get with a cash ISA, so consider whether you are willing to take an element of risk in pursuit of better potential growth. If you give investing try, the important thing is to see it as a long-term strategy to give yourself the best chance of inflation-beating returns.
Please remember that the value of your investments can go down as well as up and you can get back less than you invested.
The tax treatment depends on your individual circumstances and maybe subject to change in the future.
*Grant Thornton survey, 2016
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.