How can you cut the cost of investing your ISA?

What fees to I pay?

Many brokers charge an annual administration fee just for having an ISA with them. On top of this there are initial fees on unit trusts, which can be anything up to 5% of your investment, while investment trusts and equities incur trading costs of about £10 per trade.

How can I reduce these costs?

"ISA investors need to make sure they avoid trading the tax efficiency of ISAs for additional fees," says Rebecca O'Keeffe, head of investment at Interactive Investor.

She says you should pick your broker carefully as this can dramatically shrink your charges. When shopping around "compare both the headline number of trading commission costs and establish whether there are ISA, management or inactivity fees associated with your account", adds O'Keeffe.

Discount brokers allow you to invest your stocks and shares ISA without paying annual administration charges. Many of them also bulk-buy unit trusts then pass the savings on to you when you invest by reducing the initial charge. They also tend to charge rock-bottom trading charges when you invest in assets via the stockmarket, such as equities or investment trusts.

What else should I watch out for?

When you are choosing a broker check whether you are able to reinvest dividends at a reasonable rate and, if you are intending to make regular investments, check if you can get a fee reduction as a regular investor.

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