Stocks and Shares ISA for beginner

LouP25

Hi all, in the last few days I researched the best stocks & shares ISA, and so many people mention Freetrade as being the best. I already have a Freetrade account. But I'm a bit scared to open Stock & Shares ISA with it because a) I never had s&s ISA before b) for some reason I'm sceptical like it's too good/cheap to be true. I'm just thinking if Freetrade can offer good ISAs, why Vanguard cannot do the same in terms of for example allowing us choose individual stocks. I wanted any encouragement/advice on Freetrade stock & shares ISA as my first ever ISA. I want to put in some amounts each week or so, max £20000 per year I'm aware of. Thank you!

wmb194

LouP25 said:

Hi all, in the last few days I researched the best stocks & shares ISA, and so many people mention Freetrade as being the best. I already have a Freetrade account. But I'm a bit scared to open Stock & Shares ISA with it because a) I never had s&s ISA before b) for some reason I'm sceptical like it's too good/cheap to be true. I'm just thinking if Freetrade can offer good ISAs, why Vanguard cannot do the same in terms of for example allowing us choose individual stocks. I wanted any encouragement/advice on Freetrade stock & shares ISA as my first ever ISA. I want to put in some amounts each week or so, max £20000 per year I'm aware of. Thank you!

Freetrade's Isa has a £3pm fee or it's included free in the £10pm 'Plus' account upgrade so it might not be the cheapest. An Isa in and of itself isn't anything amazingly special, it's just a tax wrapper, and different brokers simply offer different things. If you decide you're not happy with the account you can usually transfer its holdings* to another broker.

The thing to bear in mind with Freetrade is that it's an early stage company. It's been able to raise quite a lot of money to keep it going - recently another c.£8m in November 2021 via Crowdcube - but if this sort of thing makes you anxious you should look at bigger, more established players. Having said this it is covered by the FSCS so if it does go bust the worst case should be that you'll lose access to your investments for some months whilst they're transferred to another broker.

*As long as the broker wants to deal in those holdings, that is e.g., Vanguard probably wouldn't want to accept anything other than its own funds/ETFs.

ChesterDog

Your ISA would be much the same as your existing Freetrade account (specific charges and some investment restrictions aside), but with no taxation.

LouP25

wmb194 said:

The thing to bear in mind with Freetrade is that it's an early stage company. It's been able to raise quite a lot of money to keep it going - recently another c.£8m in November 2021 via Crowdcube - but if this sort of thing makes you anxious you should look at bigger, more established players. Having said this it is covered by the FSCS so if it does go bust the worst case should be that you'll lose access to your investments for some months whilst they're transferred to another broker.

Exactly this. I am anxious that it is new company. Looking for a tax wrapper is giving me about of a "headache", it was the first thing at have came to my mind as I woke up today )))) I think I'll go with more established company. Thank yo for your time responding.

LouP25

ChesterDog said:

Your ISA would be much the same as your existing Freetrade account (specific charges and some investment restrictions aside), but with no taxation.

I have an account but nothing is invested in it yet. So far I invested thousands into my pension provider, nowhere else.

Billycock

LouP25 said:

wmb194 said:

The thing to bear in mind with Freetrade is that it's an early stage company. It's been able to raise quite a lot of money to keep it going - recently another c.£8m in November 2021 via Crowdcube - but if this sort of thing makes you anxious you should look at bigger, more established players. Having said this it is covered by the FSCS so if it does go bust the worst case should be that you'll lose access to your investments for some months whilst they're transferred to another broker.

Exactly this. I am anxious that it is new company. Looking for a tax wrapper is giving me about of a "headache", it was the first thing at have came to my mind as I woke up today )))) I think I'll go with more established company. Thank yo for your time responding.

You don't actually look for a tax wrapper as such. ISA's, SIPP's etc are tax wrappers, therefore for example any investments held in a stocks and shares isa with any provider (Vanguard, HL, Fidelity, AJBell etc) are tax free 

george4064

For security and peace of mind, I’d go with an established investment platform for your S&S ISA.

GeoffTF

LouP25 said:

I'm just thinking if Freetrade can offer good ISAs, why Vanguard cannot do the same in terms of for example allowing us choose individual stocks.

Vanguard provides a free account in the US, where the competition is ferocious, but it has chosen not to do so here. Most of the UK market pays much higher fees than Vanguard charges. Vanguard does not have to be particularly cheap to win lots of business over here. Vanguard is spending heavily on advertising to win that business.

Freetrade says it has £1 billion Assets Under Management. It does not have any problems raising money via crowd funding. It is unlikely to go bust. It is much more likely to be bought out. If you have less than  £85K in Freetrade, your investments are completely safe. The worst that can happen is that you will be locked out of your account for several months. If you cannot stand that, you should not be investing in equities anyway.

LouP25

Billycock said:

You don't actually look for a tax wrapper as such. ISA's, SIPP's etc are tax wrappers, therefore for example any investments held in a stocks and shares isa with any provider (Vanguard, HL, Fidelity, AJBell etc) are tax free 

For the sake of learning about s&s ISAs, I decided to use Freetrade as they are definitely the cheapest. I want to experiment/learn about what companies I actually want to invest. My second choice is AJBell or Interactive Investor, which I will use later on, or even to transfer my hopefully grown up portfolio from Freetrade. 

I was thinking to start without ISA at all, as my growings will be less than £12000 allowance anyway,  but I'm not sure if I need to pay tax if I decide to transfer later from GIA to ISA.

droopsnoot

LouP25 said:

I was thinking to start without ISA at all, as my growings will be less than £12000 allowance anyway,  but I'm not sure if I need to pay tax if I decide to transfer later from GIA to ISA.

If your GIA has risen in value, as I understand it when you transfer that to an ISA, you will be liable for capital gains tax, and while you have the GIA you may need to declare it on your self-assessment. Given the option, I'd start it in the ISA if you can.

LouP25

droopsnoot said:

If your GIA has risen in value, as I understand it when you transfer that to an ISA, you will be liable for capital gains tax, and while you have the GIA you may need to declare it on your self-assessment. Given the option, I'd start it in the ISA if you can.

thank you for this! Yes, I will start with isa Freetrade option.