How to Set Up a Stocks and Shares ISA
WE were all beginners once, so this is a quick guide to opening a Stocks and Shares ISA.
Getting started with investing can be daunting. The sheer amount of information available is overwhelming – but don’t think S&S ISAs are too complicated to bother with.
Things don’t have to be hard.
Follow these easy steps and you’ll soon be investing for your future…
1. Don’t go to your bank.
The charges are far too high and they only sell you their products.
2. Instead open your S&S ISA at an online broker.
This is the cheapest option. Each broker has a platform charge (It’ll be either a percentage of the money you’ve got in your ISA, or a flat fee).
A percentage charge is usually cheapest until your ISA pot grows to a certain level.
Plus, there can be a fee for buying and selling investments.
Choose your broker from this great list here.
3. Add some cash
You can put in a maximum of £20,000 until April 5. Every tax year you get a new limit to invest.
4. Choose your investments
This is the hard bit. There are so many things to buy and it all depends on personal taste.
I’m a big fan of the Vanguard Lifestrategy funds.
They are a very cheap basket of global investments that offer good diversification.
The beauty of these is they’re a simple way to invest because they rebalance by themselves. All you need to do is drip-feed money in and let them work away.
The core of my S&S ISA is invested in the Lifestrategy 80% Acc fund. This version has 80% in shares and 20% in bonds which is a good balance for me.
The Acc bit in the fund’s name stands for “accumulation”. It means dividends are automatically reinvested within the fund. I like this because it makes things even easier.
The annual charge for holding these funds is 0.24%.
5. Make regular investments
Setting up regular purchases in your S&S ISA is a good idea. The stockmarket constantly moves up and down but if you buy every month, you’ll pay a more average price over the course of a year.
6. Think long term
You should plan to hold your S&S ISA for at least 10 years. If you think you’ll need the money sooner, you’d be better off with an ordinary savings account.
Also, don’t panic when your investments go down. You only ever lose money if you sell at a loss.
Just keep calm, stick to the plan of making regular buys, and things will get better.
Remember, time is on your side.