Help! Confused which ISA to open

[Helga55]

Absolute newbie to investing, but finally at a point in life where I have a little spare cash to put away each month and not worry about needing for at least 5 years, so am looking to open an ISA of some description, as this seems to be the best way of increasing my money over time. But am overwhelmed with whether to open a cash ISA or S&S ISA, have read through a few company websites, looked at what my banks offer (Barclays & Lloyds) but would like some easy to understand advice 🙂

I have 5k to immediately invest

I can add 100-200 a month going forward, but does this need to be a fixed payment each month, or can I add when I have the money?

I like the idea of using one of my banks so everything is in one place, but is this just lazy of me?

I don’t want to choose my own investments, so it really is just to put money away each month in the hope it grows (till I have enough to pay a good chunk off the mortgage)

Are the S&S ISA’s all pretty much the same wherever I go, or is there one which I should look at first?

I do pay into a pension (I am self employed) not much, but don’t want to put all my eggs in one basket

I buy a few premium bonds each month, £25/£50, not looking to increase this, it’s more a bit of fun incase I might win 😁 rather than the lottery

I do have a savings fund/buffer, so no need to increase this atm

Am sure there’s a few more queries that I’ll have, but any advice right now would be much appreciated x

Im a complete beginner and use trading 212 and invest in vanguard FTSE all world. I just buy £175's worth every month.

Hey - this is a great place to get to!

I follow Sammy aka UptheGains on insta. He’s got some good posts with advice.

i started recently too and invested £1500 . I downloaded the AJ Bell (Dodl) app and browsed the S & S and read the different level of risks associated with each. I ended up with ‘ moderately adventurous’. I put £35 a month into it. It’s as much as I can do and as much as I’m comfortable with.

im sure there will be others along with more valid advice but just want to say I relate to your sense of ‘unknown’ about it all! I just did it anyway though!

Thanks, good to know I’m not the only one looking to expand my investment horizons! Will check those guys out

If you don't want to make investment decisions, you can just buy into a tracker fund to follow the stock market. Cash avoids risks, but over time interest will never keep up with inflation. As you are looking to invest long term, you can afford to ride out market movement in stocks and shares. You don't have to make fixed monthly contributions if that doesn't work for you.

I use money box. I have a cash isa and then invest the interest from that into a stocks and shares isa. It has different ways that you can add to it. Monthly payments, adhoc payments and even rounding up the pennies from my main banks purchases. I real like it and it does seem to simplify things a bit. I like that I can see my cash isa and s&s together under the same umbrella.

If you might need the money in the next 5 years, stick to saving in a cash ISA. Choose the one with the highest interest, but remember in the long term it's unlikely to beat inflation.

If you can put it away for at least 5 years, invest in a stocks and shares ISA. Over the long term this will almost certainly beat inflation by quite a bit, but it will go up and down. Choose here is a 2-stage process. First choose the ISA company (platform) - look for a low platform.fee (the cost for holding the account) and low trading fees (cost for buying and selling shares). Then you have to choose what investments to buy within the account. Broad-based index funds are generally recommended for beginners, or most platforms have some ready-made packages of investments at various risk levels. Again, look for a low fee. Fees eat into your profits. Active funds (with a fund manager choosing what to buy and sell, and when) have higher fees than passive ones (have a set grouo of investments representative of the market segment, and trading is automatically done by computer).

Barclays is free to buy and hold funds. You would need to check the minimum funding amount. Buy low cost tracker or multi asset fund (eg Vanguard lifestrategy). World trackers are heavily weighted to US tech stocks so not as diversified as you may want.

If you decide to stick to cash ISAs do not automatically use your high st bank. Look at MSE website for best rates. We have a couple with Vida at the moment that mature in the next couple of weeks so we need to decide what to do. The Bank if England meet on Thursday to determine interest rates, and they are forecast to put them up again, so we are hanging on till after then to see what the ISA rates do after that before deciding. If you go on BBC Sounds and search for Martin Lewis ISAs he has several podcasts explaining all about them.

Thanks, didn’t think about MSE, will check that out

Hi all, I am new to this too. I want to open a cash ISA too as ive recently been gifted some money. Can I put in my yearly 20k max this month and still get the 5% return for the full year (2026-2027). Also if I wanted to access my funds in an emergency would there be a penalty to withdraw?

You will get interest while money is there so eg 5 months worth not 12.
Check the withdrawal penalty if any in the t and c.

@Asvan You will get 5% for each day it’s in there.

If your 40 or under and want to buy a house you could consider a LISA but it can only be used as a house deposit or when you retire so is very tied up. You get a 25% return of what you put in each year and can get up to 1k per year for the 4k max allowed to be invested each year.

The best return long term will be stocks and shares ISA. However the money peaks and troughs and it really needs to be left alone. When Trump introduced the tariffs a couple of years ago our funds dipped by 20%. They recovered, the money is in there ok long term and we do not need it for any particular reason.

If you want guaranteed safety then you need a cash ISA.

We do have premium bonds but they were the only ever added to if we had maxed out our ISA allowance and had made extra pension payments.

@Lincslady53 DH prediction is ISA rates won’t change but we will see.

You will get 5% for each day it’s in there.

You absolutely won't! Nowhere is paying 5% a day. Only a few are paying 5% a year - and those are fixed term, fixed rate ones. You have to leave the cash in for the whole term.

If you may want to withdraw earlier you need an easy-access ISA. Those are paying in the 4 percents. That's an annual rate, so if you take the money out earlier you'll only get a proportion of the interest.

Hi, I’d recommend following the free Rebel Finance School. Written by Alan and Katie Donegan.
https://www.google.com/goto?url=CAESYQHrOzAV_u6du8y1L7PZUrq9O69yJ39FlmxDBc4KQcPZp1-cx61M2DV7MW9oQzFQI67_Gkkzy6n2bZdRqcIjrgQ3Tsh4Aspf02-4trkaE3T9VqDv9idLb1QdghAnuW_xs14
It’s a fantastic course. I’m with Vanguard and have a FTSE global all cap fund for my stocks and shares ISA.

If you choose an easy access or limited access ISA then interest accumulates daily and is added to the account monthly or annually. Best rates are a bit under 5% with a boosted starter rate. If you may want to take money out and then add back in the same tax year then look for a flexible ISA. Once the bonus period is over then transfer to a new ISA. Moneyfacts has the full range of available accounts.

Rates in excess of 5% are for fixed term accounts. You can access the money early but with a hefty penalty of 90+ days interest depending on the provider and account term. Best avoided if you think you may want access. You can have more than one ISA so could split into separate accounts as long as you don't breach the £20k limit.

Interest does not count towards your ISA allowance and you get a new allowance at the beginning of each tax year in April. Moneysavingexpert website is a good place to read up on the rules.

For stocks and shares, we have used Fidelity. There are lots of funds to choose from that invest in different companies, and they have their own funds that you can invest in, which is easy. You can also choose between income and growth. You can move money around easily, and park some in cash funds for a while if it feels jittery.
For cash ISAs I just look at various websites to find the best return, previously had ISAs in Loanoad, Virgin, Santander. I quite like to have lots of different accounts to reduce risk overall.

Do you want to save, or do you want to invest? If you want to save, stick it in a Cash ISA with the best interest rate. See MoneySavingExpert.com.

If you want to invest, then you need a platform and then decide whether you are interested in individual shares or funds. I use Trading 212 as it is a fee free platform. My investments are mostly in global index funds. If you invest, you have to be aware that prices can go down as well as up! I would strongly recommend Rebel Finance School on YouTube as an introduction to investing.