Top ISA tips from our experts

06 February 2023

6 minute read

Whether you still have some of your ISA allowance to use up before the end of the tax year on April 5th, or are planning how to invest your fresh allowance from April 6th, here are some expert nuggets on ISAs from starting early, investing regularly and diversifying.

Who's it for? All investors

The value of investments can fall as well as rise and you could get back less than you invest. If you're not sure about investing, seek independent advice. Tax rules can change in future. Their effects on you will depend on your individual circumstances.

What you’ll learn:

  • Why ISAs mean you don’t need to worry about exceeding annual dividend and CGT allowances
  • How you don’t need £20,000 to get started with ISAs
  • That the tax advantages can be just what’s required to keep your investment habit going.

Clare Francis - Barclays Director of Savings and Investments

"Using ISAs makes things a bit simpler"

I’ve been investing using ISAs for nearly 20 years and each year endeavour to use up as much of my annual allowance as I can afford.

A key reason I use an ISA for my investments is that the returns I receive are tax-free. It’s possible to invest outside an ISA without paying tax, making use of the annual dividend and capital gains tax allowances. However, you must not exceed them, otherwise there could be some tax to pay. If your money’s invested in an ISA you don’t have to worry about this so it makes things a bit simpler.

Because I’ve been investing for a while, I’ve built up quite a diversified portfolio. Most of my money is invested in funds of different types and across different countries.

When it comes to working out how much I can invest I first look at how much I’ve got in cash savings and what I might need that money for in the short term.

Last year I had an extension built on my home which drained my cash savings, so my main focus at the moment is rebuilding those. However, I have set up a direct debit so that I’m putting money into my investment ISA every month. It’s not much but at least I know I’m continuing to put a bit away for the longer term, while making sure I’ve got the security of having savings in place for any unexpected expenditure.

I’m hoping I’ll be able to increase the amount I invest next year though as I’m at a point in my life where I’m starting to think about when I’ll be able to retire, so want to invest as much as possible over the coming years in the hope it means I’ll be in a position to retire when I’m about 60. I’ve also got an 8-year-old son and would like to be able to help him financially if he decides to go to university.

The most important thing for me is being able to have choice and that’s why investing is a key part of how I manage my money.

Mike Haslam – Wealth Manager

"Don’t be put off by the size of the ISA allowance - you can start small"

My tip for investing in an ISA is not to be put off by the adverts you see, telling you that you can “invest up to £20,000”. I certainly don’t have £20,000 to invest, and most investors don’t. You can start small. Think about saving monthly.

My first job in the City was with a stockbroker, processing applications for Personal Equity Plans, known as PEPs. PEPs were similar to ISAs, which replaced them in 1999 (that shows how long I’ve been in the industry!).

Back then, before the rise of the internet (yes, I really am that old) investors typically cut out an application form from a newspaper and sent it to a stockbroker along with a cheque. So there was I, earning a very basic wage, opening envelopes each containing a cheque for £9,000, the maximum permitted investment into a PEP. I could only dream of having so much money.

That put me off investing as I thought it was all about having enough money to send off a large cheque to a stockbroker every year. I didn’t know then about regular investing and that I could save smaller amounts each month (rather than huge lump sums) into the very same investments that these seemingly ‘rich’ individuals were also buying into.

Today, it seems that monthly, or regular saving is a very simple first step into investing, especially as I can now set up a savings scheme with just a few clicks on my phone. I wish it had been that easy all those years ago.

Rob Smith - Head of Behavioural Finance

"Starting sooner can help maximise growth"

Setting up automatic investments is perhaps one of the best value for money actions investors can take. Firstly, it means that you only have to make one decision rather than many, which is always helpful when life may get in the way of you making the next investment.

Secondly, it means that you will not have to decide if it is a good time to invest with each instalment. This is arguably the main benefit and is a significant reason why many would-be investors remain in cash for the long-term and miss out on potential returns.

Investing over time will mean that you even out the ups and downs of the market, so if prices do fall then you can buy more, and if prices increase you still get invested rather than waiting for the market to ‘come back’ which it may never do.

Another tip is, though it’s appealing to invest in the UK stock market, either directly through names of recognisable domestic companies or through well-known UK focused funds, don’t forget there is a whole world to invest in. Whilst some investment in the UK may be sensible, it only represents a small proportion of global capital markets, and it is skewed in terms of the types of companies that are listed. It’s a good idea to spread your investments across many continents as it will likely reduce risk and maximise your chances of investing in the best growing markets.

Will Hobbs - Chief Investment Officer, Barclays Wealth Management & Investments

"Take the plunge and stick with it"

The most important point about investing generally as well as via ISAs will sound somewhat counterintuitive to many – time in the market is way more important than timing the market. This essentially means that for all of us thinking about deploying our hard earned savings into the market, we need to try and ignore what has happened in the last day, week, month or year.

We may feel more emotionally comfortable buying when the price of access has fallen a little. However, the reality is that price falls and rises, in the context of mostly efficient markets, tend to reflect new information (good or bad).

Getting invested as soon as possible is the first point, with any savings that you can reasonably comfortably spare. However, the next part is sticking with it – also easier said than done. The tax advantages provided by staying invested in a stocks and shares ISA are a very helpful inducement to do just that.

The more days, months and years that I can be invested in a diversified mix of assets, the more chances I’m giving myself to collect the various, unpredictable surges in human ingenuity and innovation that accrue to the owners of companies – which is us as soon as we take the plunge and invest (and stay invested).

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The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.

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If you've used your ISA allowance this tax year, you can open a regular Investment Account or transfer in another ISA to us.1


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