Last-minute Isa tips

If you are still unsure how to invest this year’s Isa allowance or which type of Isa to take out, it’s time to make your mind up.

At 11.59pm on Tuesday 5 April, the door will shut once again and any subsequent deposits will count towards your 2016/17 allocation.


Options for last-minute stocks and shares Isa investors are very flexible, as most Isa providers have a cash facility, typically called something like cash reserve. 

Once your money is in the Isa cash facility, it can remain there until you’ve decided how to invest it, but it won’t make a return until you do.

Given that the annual individual savings account (Isa) limit is £15,240, rather than throwing a large lump sum into the market, you are better off drip-feeding money in on a monthly basis; this way, you are limiting the impact of any market falls on your capital.

Here are some ideas for your stocks and shares Isa:

Cautious option

If you would prefer to take a cautious approach and do not want all of your money going into shares, Gavin Haynes, managing director at Whitechurch Securities, highlights the £9.1 billion Newton Real Return fund as “a good defensive holding for a first-time investor”.

The fund is managed by Iain Stewart, who aims to beat cash returns by 4% a year on a rolling, three-year basis.

The fund is diversified across different asset classes, including cash and international bonds, as well as some shares. It comes with an ongoing annual charge of 1.04%.

Mr Haynes says: “Iain Stewart is a proven and effective asset allocator who is supported by strong resources and has demonstrated good use of a wide range of strategies to enhance returns and control risk.”


Tracker equity funds

Tracker funds are the lowest cost and simplest way to gain stock market exposure.

If you haven’t made any investments before and prefer to stick with domestic UK companies, start with HSBC FTSE All Share index fund for low-cost exposure to UK equities. This aims to replicate the index of all companies listed on the main market of the London Stock Exchange.

If you prefer to invest on a global basis, Fidelity Index World is a good low-cost option. Given its worldwide remit, the fund has investments in some of the planet’s biggest household names, including technology giants Apple and Microsoft. It has very low annual ongoing charges of 0.15% and gives good diversification across different equity markets worldwide.

If you already have a tracker based on British stocks, then it may be worth finding a global tracker that excludes them so you don’t double up.

Vanguard FTSE Developed World ex-UK Equity Index fund is a cheap option, with an ongoing charge of 0.15%.

Active equity funds

Among actively managed funds, which are run by professional fund managers who aim to beat stock market performance, Mr Haynes picks CF Woodford Equity Income fund as a good option for novice investors. This fund gives exposure to UK equities and is run by one of the UK’s most celebrated investors, Neil Woodford.

He aims to deliver income as well as capital growth by investing in dividend paying UK firms such as profit-sharing corporations. His approach is defensive in nature as the companies in which he invests typically possess very strong balance sheets. The fund’s annual charge can be as low as 0.75%.

You can spread risks further by selecting a global equity fund which will invest in companies listed around the world. Fundsmith Equity fund is a good choice for investors looking for extra diversification. Managed by Terry Smith, his approach is to be a long- term investor, not a short-term trader.

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