Self Select ISA

By: EconomyWatch   Date: 30 September 2009

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A self select ISA is a tax free investment option in which you can pick stocks and shares of your choice. The portfolio can include standard unit trusts, individual shares, exchange traded funds and investment trusts. Like an equity ISA, the returns from self select ISAs or stocks and shares ISAs do not attract capital gain tax.

Stocks and Shares ISAs – What You Need to Know

When you opt for a self select ISA, you should consider certain things, including where to invest and what to look for. Let us see them in detail.

Investment Vehicles: With the exception of AIM and OFEX, one can invest in shares listed in recognized international stock exchanges. Other vehicles include unit trusts, ETFs, OEICs, investment trusts, corporate bonds and government bonds. You can also opt for investment management houses and stock brokers that offer self select ISAs. You can seek the help of a stock broker or a portfolio manager who would make the investment decisions for you. If you do not want to spend much on a portfolio manager, you can opt for ‘execution only’ services in which the provider will allow you to select the investment vehicles and trade on your own.

What to Look For: When you choose a self select ISA provider, ensure that the provider offers investments in international markets. Some of the providers offer only UK shares. Also ensure that the provider offers a combination of bonds, shares and other investment vehicles. You can look for Exchange Traded Funds that are cheaper than index tracker funds.

Costs: Cost is another important factor to consider in self select ISAs. When you buy shares, your provider will levy dealing charges on a per transaction basis and charge an annual payment for the ISA wrapper. They may also charge you inactivity fees and other charges, including transfer fees, dividend reinvestment fees and closing charges.

It is better to consider a self select ISA if you want to build a portfolio of shares and in the higher-rate tax band. You should be mentally prepared to lose your returns when opting for a stocks and shares ISA.


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Most Popular in ISA Individual Saving Account

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