An investment ISA is a stocks and shares investment account. It's a tax efficient home for your savings, because you can use your ISA allowance. That means that if you earn money on your investments, you won't pay income tax on it.

Over 18s in the UK get an ISA allowance of 20,000 per person (2019-20 tax year). You can only pay into one investment ISA per tax year. But you can open a new one each year.

You can either use all of your ISA allowance for a stocks and shares ISA or you can split it between different types of ISAs.

What's the difference between a cash ISA and an investment ISA?

They're very different. A cash ISA is a savings account where you don't pay tax on the interest.

But with a stocks and shares ISA, you're investing your money. You don't pay tax on the returns of your investments.

Should you invest in a stocks and shares ISA?

You could earn more by putting your money in an investment ISA than you could by putting it in a cash ISA. But it's important to understand that you could also lose some or all of the money you invest too. That's because investing in stocks and shares is risky. The stock market is unpredictable and there are no guarantees.

If you're thinking of investing in stocks and shares, our comparison table is a good way to find the best stocks and shares ISA for your needs.

Our stocks and shares isa comparison shows you which companies let you use your ISA allowance to invest with. It also shows you the number of funds you can choose from to build your investment ISA.

To help you find the best performing stocks and shares ISA, you might also like to read our guide on investment ISAs for more information.

Pros of investment ISAs

There are lots of reasons why you might like to get a stock and shares ISA. Some of the benefits include:

  • The return on your investment could be a lot higher than what you could earn from interest on a cash ISA

  • Because you invest using your ISA allowance, any stocks and shares ISA returns you make are free from income tax

  • You can invest in several markets.

Cons of investment ISAs

There are also downsides to investing in shares with an ISA. These include:

What investments can I use my ISA allowance for?

You can use your ISA allowance with any of the following investments:

Before you decide on your investments, you should check the stocks and shares ISA performance tables. You'll find these on each investment company's website. But remember, just because they've performed well in the past, it doesn't mean they will in the future.

How to choose the best stocks and shares ISA for you

There are different types of ISA investment to choose from. When you're looking for the best investment ISA, your experience and knowledge of the stock market should be a factor.

If you don't know how to pick the right funds to invest your ISA in, or you're a beginner, then an investment fund might be the best option for you. This is controlled by a fund manager. They pool your money in with other investors' money, and control where it's invested. They'll choose what they believe are the best shares to invest in.

If you do know how you want to invest your ISA, then a self-select ISA might be best for you. With one of these, you can tailor your ISA stocks and shares investments. You can include individual shares and funds from a wide range of markets.

How long should I invest for?

Investing is for the long-term. If you decide to start a stock ISA or shares ISA, it's a good idea to invest for at least five years if you can. That's so that any bumps in the market have time to even out, so you don't lose money.

What do I have to pay for with an investment ISA?

With stocks and shares ISAs you'll have to pay for whichever platform you're using, and also for the funds you buy and sell. You might also have to pay a fund manager charge, and transfer fees if you move your stocks and shares ISA.

Watch out for charges, because they can eat into your investment returns.

What happens when I want to stop investing?

At some point, you might decide you don't want to take risks with your money anymore. For example, you might make this decision when you're coming up to retirement age. When this happens, you can transfer the money from your stock and shares ISA to a cash ISA.

It's better to do a transfer than withdraw the money. If you withdraw it, you'll lose the tax-free benefits.

A transfer can take a few weeks and you might have to pay a closing fee if your cash ISA is with a different provider.

Are there any specialist stocks and shares ISAs?

Yes. You, when you're thinking of getting a stocks & shares isa, you could look into the following options:

Investment ISA FAQs

Q

Is my money protected in an investment ISA?

A

Yes, but only if the investment is registered with the FSCS, then your investment will be protected up to 50,000.

Q

How many investment ISAs can I have?

A

You can only pay into one investment ISA each tax year, but you can open and pay into a new investment ISA in each future tax year.

Q

How can I track the performance of my investment ISA?

A

Most let you track the performance online or you could also ask your financial advisor for a valuation if you invested through one. Read this guide for more.

Q

Is a good return guaranteed in an investment ISA?

A

No, you could lose money in an investment ISA due to the volatility of the stock market.

Q

Can I transfer my cash ISA into an investment ISA?

A

Yes, but only if the company accepts ISA transfers. There may also be charges for transferring into an investment ISA, find out more here.

Q

Can I invest in a cash ISA too?

A

You can save into a cash ISA, innovative finance ISA and a stocks and shares ISA in each tax year, but only up to 20,000 between all three types.

About our investment ISAs comparison

Q

Who do we include in this comparison?

A

We include investment ISAs from our panel. They are regulated by the Financial Conduct Authority (FCA).

Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.