If you’re having trouble deciding what to invest in your ISA this guide looks at ISA investing ideas across five asset classes and highlight some of the best investments in each one so you can build a diverse ISA portfolio.
Each year ISA investors get the opportunity to add to their tax-free portfolios but it’s not just a case of squirrelling away up to Β£20,000 in a tax-free wrapper, because there is also the small matter of how to make that money work efficiently for you, within the ISA.
Deciding how to allocate your ISA allowance, and into what asset classes, indices, sectors and individual stocks, is not an easy task. Itβs one thatβs not been made any easier by inflation, and thanks to higher interest rates, the return of cash (in cash ISAs), is a viable alternative to risk assets.
1. Shares
Stock and share ISAs have become increasingly popular with self-determined investors. Thatβs not so surprising when you consider that over the last five years, an investment into SPY, the S&P 500 tracker has returned in excess of +80%, whilst chip maker Nvidia has delivered a +1,700% return to shareholders in that time.
Risk and reward are intimately linked of course, and trying to balance the two is another part of the investing jigsaw. The good news for ISA investors, who are often saving for the longer term, is that time in the market is definitely on your side.
Research by Bank of America found that the longer you are invested in the stock market the less likely you are to suffer negative returns.
Looking at data back to 1929 the bank found that if you stay in the market for ten years then, on average, you have just a 6.0% chance of negative returns. Compared to a 26.0% chance if you keep your money invested in stocks for just one year.
One way to answer that is to look at what ISA investors at the UK’s largest stockbroker, Hargreaves Lansdown, are doing, the 5 most popular stocks bought on HL over the last week have been:
- Nvidia
- Vanguard
- Rolls Royce
- Tesla
- MicroStrategy
All are relatively high risk, wich the exception of Rolls Royce.
2. Bonds
Bonds are effectively government or corporate IOUs, they have been safe haven and an important source of income for investors for decades.
However, recent gyrations in bond markets have left investors with tough choices.
During covid, bond yields fell to zero or lower, however, since then bond prices have fallen and yields have risen, as interest rates rose to counter inflation.
However, the sharp fall in bond prices does mean that investors can now find quality bonds below par, (or their redemption price), once again.
Of course, its not just government bonds that offer attractive yields Corporate bonds can do too.
However, the issue for most ISA investors is that many corporate bonds are not denominated in retail tranches. Instead, they often come in Β£100,000 or $100,000 clips which puts them beyond the reach of many ISA holders.
Thankfully there are what are known as retail bonds, which are typically structured in units of Β£1000.00Β and which were introduced specifically to appeal to retail investors.
These bonds have been issued by names such as BT Group, Legal and General, HSBC Glaxo Smithkline, Wessex Water, Lloyds Bank and others.
3. ETFs
ETFs or Exchange Traded Funds have become one the most most popular asset classesΒ among investors. Not every ETF is ISA eligible, however.
For example, US-listed ETFs, which donβt produce Key Information Documents, or KIIDs, are off limits to UK retail investors, luckily, the are still plenty of eligible ETFs to choose from.
Interactive Investor produces a monthly list of the most purchased ETFs among its ISA and SIPP investors. Which, in September, included sterling-based S&P 500 tracker funds, FTSE 100 tracker funds, and an all-word equity fund among others.
The top ten ETFs bought on Interactive Investor in December 2024 have been:
- Vanguard S&P 500 UCITS ETF GBP (LSE:VUSA)
- Vanguard S&P 500 ETF USD Acc GBP (LSE:VUAG)
- iShares Core MSCI World ETF USD Acc GBP (LSE:SWDA)
- Invesco EQQQ NASDAQ-100 ETF GBP (LSE:EQQQ)
- iShares Physical Gold ETC GBP (LSE:SGLN)
- Vanguard FTSE All-World UCITS ETF GBP (LSE:VWRL)
- Vanguard FTSE All-World UCITS ETF GBP (LSE:VWRL)
- iVanguard FTSE All-World ETF USD Acc GBP (LSE:VWRP)
- iShares S&P 500 Info Tech Sect ETF$Acc GBP (LSE:IITU)
- iShares Core FTSE 100 ETF GBP Dist (LSE:ISF)
4. Funds
Managed funds have taken a bit of a back seat in recent years thanks to the growth in and rising popularity of ETFs. However, there is still quite a healthy fund sector out there.
Fund specialists Trustnet lists 628 managed funds in its UK databases, and just over 4500 funds when taking into account other geographies.
When assessing managed funds we need to think about the fund’s performance, the track record of the managers, the fund style and objectives, the liquidity of and costs within the fund etc.
One way to try and distil that information down into something more manageable is to utilise specialist fund research.
The most popular funds bought through the AJ Bell fund platform have been:
- Fidelity Index World
- HSBC FTSE All World Index
- Vanguard LifeStrategy 100% Equity
- Royal London Short Term Money Market
- Vanguard LifeStrategy 80% Equity
- Vanguard Sterling Short Term Money Market
- Vanguard FTSE Global All Cap Index
- BlackRock Sterling Liquidity
- L&G Global Technology Index Trust
- L&G Global 100 Index Trust
5. Investment Trusts
Unlike managed funds and ETFs investment trusts are closed-end funds. that is the number of shares or units in the trust is fixed rather than floating. And the share price of the investment trusts reflects the performance of the managers and the valuation of the assets that the investment trust owns and the supply and demand or fund flows in to and out the trust.
Trustnet lists 278 UK investment trusts in its database,Β and they are a varied cross-section of asset classes and management styles. Spanning equities, property,Β mixed assets, hedging, commodities/energy and money markets.
A popular way to look at investment trusts is to consider the discount of the NAV or net asset value of a trust, relative to its underlying share price of the trust. The thinking here is that a wide discount to net assets should narrow over time and that by buying assets at a discount you may get your hands on a bargain.
Of course, there may well be very valid reasons why an investment trust trades at a substantial discount to NAV.
When we pick ISA investments we are usually investing for the long term and choosing assets to perform well over five, ten, and fifteen-year time horizons is a very different skill to timing stocks and other assets for short-term trading, Investing over the longer term can provide us with the opportunity to diversify. However at the same time to focus on particular investment styles such as growth or income, and to have a good look at how much risk we want in our portfolios. Often that judgement is determined by our age and here are in our investment journey.

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