Yes, we rate the Interactive Investor ISA as very good, especially for high-value accounts as the account costs do not rise with your portfolio value. Plus, there are DIY and managed ISA options. However, for smaller accounts the fixed monthly fee is expensive.
Interactive Investor won the 2022 Good Money Guide award for best stocks and shares ISA account as they offer one of the cheapest investment ISAs that provides access to over 40,000 shares and 3,000 funds, as well as investment trusts, ETFs and bonds. They are a good choice for people that want to take control of what they invest in.
The stocks and shares ISA is a way to invest in the markets through a government-approved tax-free wrapper. Individuals can invest up to £20,000 per annum in their stocks and shares ISA or indeed across several other ISAs.
In an ISA there are no capital gains taxes on trading profits and no tax is levied on the income from stock dividends or bond coupon payments. Stocks and Shares ISAs are open to all UK residents aged 18 or over, who can open a new Stocks and Shares ISA each year.
There are many securities, both domestic and international that are ISA eligible. However, an ISA can only contain pounds sterling which means that if you trade in overseas securities you will incur FX conversion charges.
II does not charge any additional fees for a Stocks and Shares ISA, over and above its standard trading account charges. Whilst competitors Hargreaves Landsdown and AJ Bell both charge annual custody fees based on the value of your holdings.
A mix of DIY and Managed ISAs
Interactive Investor, offers both a self-self stocks and shares ISA and a managed option.
The ii Managed ISA is a new offering from Interactive Investor, that allows customers to hold their investments within a tax-free ISA account managed by Interactive Investors’ experts.
The new product is designed to combine the tax benefits of a Stocks & Shares ISA with professional investment management from Interactive Investor.
The Managed ISA is designed for investors who want to hold investments in a tax-efficient ISA wrapper, but who don’t have the time, or inclination, to research and select investments themselves.
By using the Managed ISA, investors can let Interactive Investors’ professionals handle the investment decisions.
How does the managed ii ISA work?
Getting started with the Interactive Investor Managed ISA involves few simple steps.
- Select your risk level by answering some quick questions about your investment goals and risk tolerance.
- Based on your inputs, Interactive Investor will recommend a managed portfolio matched to your risk profile.
You will then need to open and fund the account, which can all be done online at ii. - Interactive Investors’ experts will then monitor and adjust the portfolio over time to keep it aligned with your stated investment objectives.
For clients that are already on the ii Investor plan, the Managed ISA is included in their current monthly subscription fee of £11.99 per month, which includes one commission-free trade. Additional trades are charged at £3.99 each.
Managed ISAs versus DIY
The key benefits include:
- Time savings by not having to research/pick investments yourself
- Professional expertise from ii managing your ISA portfolio
- The convenience of a managed solution included in your existing ii subscription
- Ability to view and track your managed investments anytime
- Tax-free growth potential by holding in an ISA account
Usually the main draw back of managed ISAs is that you can’t pick your own investments. However, you can run your own investments along side ii’s managed ISA.
How does the II managed ISA compare to the competition?
Interactive Investor believes that their flat monthly fee charging structure will save ISA investors money over the long term.
According to calculations on their website, £50,000 held in an ISA with the platform for 30 years, would have grown to almost £1.20 million, assuming a growth rate of 5.0% per annum, in a mixed portfolio of funds and shares.
That’s up to £45,000 more than you would have returned at rivals like Hargreaves Lansdown, AJ Bell, Fidelity, and Barclays Smart Investor, according to the Interactive Investor data.
In terms of ISA fees Hargreaves Lansdown offers a a tiered fee structure based on the value and type of investments held.
Those fees start at 0.45% for sums up to £250,000 invested in funds, falling to 0.1% between £1.0 and £2.0 million, with no charges levied for investment amounts over £2.0 million.
There are no additional fund dealing charges.
Money that’s invested in UK and international shares and ETFs, in a Hargreaves Lansdown ISA, attracts a maximum monthly fee of £3.75 and trading charges start at £11.95 per deal, with volume discounts down to £5.95 applied one month in arrears.
AJ Bell levies a fee of 0.25% of the first £250,000 invested. However, that scales down to zero if you have more than £500,000 in your account.
Share deals, including ETFs, are charged at £5.00 per trade, which falls to £3.50 if you traded 10 times or more in the prior month. Whilst fund trades cost £1.50 a pop.
Wealthify, a hybrid investing platform, backed by Aviva, offers fees that average out around 0.76% per annum.
That includes all dealing and administrative charges, the creation of a personal savings plan, built by their in-house experts, and ongoing adjustments to the portfolio, to keep that plan on track.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
You can contact Richard at richard@goodmoneyguide.com
