Stocks and shares Isas: how to choose where to invest

theguardian.com:

You can put up to £20,000 in an investment Isa before 6 April and you won’t pay tax on the profits. Choosing a fund rather than individual stocks and shares means you can invest in dozens of companies and spread your risk, while targeting inflation-beating returns.

The stock market may be your only chance of keeping pace with the rising cost of living, if you can hold your nerve when markets face a bumpy ride. But as a general rule of thumb, the sooner you need your money, the less risk you should take, as you won’t have as much time to ride out the highs and lows of the market.

Laura Suter, the head of personal finance at AJ Bell, says: “Someone’s pension that they don’t plan to touch for 30 years will have different funds from an investment pot that’ll go towards a new car in five years’ time.”

There are plenty of ways to assess a fund’s risk. It may be gauged, for example, by how sharply its performance moves up and down, shown on a graph on the investment provider’s website.

If you’re happy taking a relatively high level of risk, you can choose a fund solely invested in shares. But if you want to reduce risk, a fund invested in a variety of assets, including corporate and government bonds and some cash, may be more suitable.

Investment Isas are available from high street banks and investment providers, but with thousands of funds to choose from, knowing where to start can be daunting.

However, there are lots of experts who follow performance and their guidance can help you narrow down your choices.

You can find lists of expert fund picks on a variety of websites, alongside a variety of research tools if you want to dig any deeper into a particular fund. For example, check out Interactive Investor’s Super 60, Hargreaves