take careof tomorrow.your guide to ISAs

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what is an ISA?

the ISA rules and allowances

why have an ISA?

getting started

the Interactive Investor ISA

what next?

2 welcome

welcome to Interactive Investor’s guide to ISAs.you’re in good companyISAs have been around in their current form since 1999. The latest available numbers from HMRC show some 23.2 million adult ISAs, as at April 2012 – and Junior ISAs take up is growing, with some 432,000 accounts being contributed to in the 2013/4 tax year.

In this guide we will give you an introduction to what an ISA is, how it works, and why you might use one. We’ll also explain how investing with an Interactive Investor Shares ISA can help you achieve your financial goals. We will give you some useful guidance on getting started along the way too. Whether you’re new to ISAs, have only used Cash ISAs in the past, or are looking to make more of your Shares ISA, we hope you’ll find this guide useful.

You can also learn more about ISAs and investing at our website www.iii.co.uk.

As a provider of Shares ISAs and other investment services – you won’t be surprised that we’re fans of investing. We’re keen to help investors, experienced and starting out, become better investors so they can reap the financial rewards and enjoyment that taking charge of your own finances can bring. But we also recognise that making your own investment decisions isn’t right for everyone. So it’s important you understand the risk as well as the opportunities that investing brings.

All stock market investments, and any income they provide, can go down in value as well as up, so you could get back less than you invested. Investing is also better suited to a timeframe of five years or more, where you have a better opportunity to even out market peaks and troughs. By understanding both your attitude to risk, and your potential to cope financially with losses, you’ll be better able to make sound decisions.

ISAs are a tax effective way of investing: however do bear in mind that those benefits could change in the future and that their value to you will depend on your personal circumstances.

If you’re in any doubt about whether an ISA or investing is right for you, please seek independent advice.

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what is an ISA?

the ISA rules and allowances

why have an ISA?

getting started

the Interactive Investor ISA

what next?

4 what is an ISA?

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what is an ISA?An ISA is simply a tax-efficient place in which to hold your preferred mix of cash and investments, such as equities, bonds and funds. The maximum amount you can contribute each tax year is set by the Government and is typically increased each year to allow for inflation.

ISAs come in two varieties – Cash and Stocks & Shares (typically known as a Shares or Investment ISA), and in two sizes – Junior ISA and adult ISA.

Cash, Shares… or both?Whether you choose a Cash ISA or a Shares ISA will be down to your personal circumstances and goals, financial objectives and approach to risk. Do remember, though, it’s not a case of one or the other, many people hold both a Cash ISA and a Shares ISA. That’s because it’s a good idea to have a savings pot you can quickly dip into should you need to, alongside those longer-term savings that you’re putting away for tomorrow.

However, holding too much of your longer-term savings in cash can mean your money isn’t working as hard for you as it could be. Investing in shares, funds or other investments gives you the potential for higher returns, and faster growth, but means you’ll be taking on a different set of risks. Getting the right balance to suit your personal ambitions, objectives and circumstances is the key. And for many people (around 4.5million according to most recent available HMRC statistics) that means using a Cash ISA for accessible savings and a Shares ISA for the longer term.

5 what is an ISA?

6 what is an ISA?

a couple of ISA myths…myth 1 – ISAs are something you open, or pay into, only at the end of one tax year or the start of the next one.

This comes from the last-minute rush (and accompanying media clamour) to avoid ‘missing the ISA deadline’ and not using your allowance for that year. In fact, you can open, and pay into an ISA at any time in the year.

Whilst a lot of people do arrange their ISA around this time, it’s better to plan your ISA as part of your overall savings and investments. That way, you’re ahead of the game and can pay in whenever it suits you best. Your ISA manager keeps track of what you’ve paid in so you don’t inadvertently pay in more than your annual allowance.

So if you get a bonus from your employer in July, release some equity from your home in September, or have some other windfall during the year, an ISA should be one of the places you consider as a good home for that money.

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myth 2 – You have to pay in the full annual allowance in one go.

An ISA allowance is a bit like a speed limit – it’s a maximum not a target!

You can pay whatever you can afford into an ISA (up to the annual limit), although many ISA providers do have a minimum investment requirement.

You can also choose to pay in a regular amount each month and this can help you budget – and keep your savings on track. When you’re doing this in a Shares ISA you also avoid the question of ‘when is the right time to buy?’ Investing monthly means that, over time, you average out the price you pay for the investment.

You don’t have to use up your allowance all at once – or even at all. However, do be aware that any unused allowance in one year can’t be carried forward to the next one.

8 the ISA rules and allowances

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69 the ISA rules and allowances

the ISA rules and allowances.Here’s a summary of the key features of each type of ISA.

Cash ISA Shares ISA Junior ISA

Available to UK residents 16+ 18+ Born on or after 3 January 2011*

Annual allowance: 2014/15 Up to £15,000 in total, any combination Up to £4,000 in total, in any combination

2015/16 Up to £15,240 in total, any combination Up to £4,080 in total, in any combination

Tax-free income Interest paid gross Net of 10% dividend tax

Interest paid gross, dividends net of 10% tax

Tax-free capital growth Cash

Shares

Cash withdrawal Can range from Instant Access to Fixed Term

Instant Access on cash balances or once sales have been ‘settled’

Cash - can range from Instant Access to Fixed Term Shares - Instant Access

Move funds between Cash and Shares

Available from Interactive Investor

Cash

Shares

*See page 14 for further qualification details.

✓ ✓ ✓

✓✓

x x

✓ ✓ ✓

✓xx ✓

10 the ISA rules and allowances

good forCash ISA

• Tax-free interest on cash savings.

• A secure home for savings that you may want to use at short notice or don’t want to put at risk.

• Providing a monthly income (where you choose an account that pays interest monthly).

Shares ISA• Money you can invest with the aim of taking a longer-term view (typically 5 years or more) in order to

get the potential for better returns than with cash savings You can have a Shares ISA as well as a Cash ISA if you haven’t used your full allowance in a Cash ISA.

• Where you’re comfortable with the fact that the value of your investments can go both up and down and that you may get back less than you invested.

• Growth that’s tax-free for higher and additional-rate tax payers, tax savings on the income your investments generate.

Junior ISA• Parents who want to provide a good start to a child’s financial future.

• Grandparents, friends and family who want to contribute too – can be a nice way to give a birthday or Christmas present that could grow in value as the child grows.

• Involving the child in understanding money and investing – they can take control of the account from age 16.

• Growth that’s tax-free and ‘locked away’ until age 18 as neither you, nor your child, can use the money until then.

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not so good forCash ISA

• Keeping up with inflation – your money can fall in value in real terms when the interest rate you earn is lower than the rate of inflation.

• Quick access without penalties where you have opted for a fixed-rate or fixed-term Cash ISA.

• Consistent returns – variable interest rates can change at short notice. And ‘introductory bonuses’ last only for a fixed period.

Shares ISA• Money you can’t risk losing.

• Generating a regular, monthly, income – investments typically pay income every six months, and income is not guaranteed.

• Immediate access to the money you’ve invested. If you needed that money straight away you may have to sell when the price is at a low point and potentially wait at least two working days to receive the proceeds. Cash already in your investment account can, however, be withdrawn immediately.

Junior ISA• Money that might be needed before age 18.

• Money you might want to retain control over – your child takes sole control of the account from age 18, when it will automatically convert to an adult ISA.

• Short-term savings that are likely to be used soon after age 18, e.g. for university fees or buying a car. If you’re starting out when your child is a teenager, you may want to consider a Cash Junior ISA rather than investing in Shares or lower-risk investments, such as bonds.

12 the ISA rules and allowances

the flexibilityto take care of tomorrow – whatever it bringsThings change. The best laid plans include the ability to respond to changes. That needs to be equally true of your ISA.

As your needs, priorities and personal circumstances change over time, your investment approach will change too. Because your ISA is just a protective wrapper around your investments, keeping them tax-efficient, it’s as flexible as you need it to be.

flexible investingSome investments will have a primary focus on providing income (paid out as dividends to investors), whilst others are better suited to providing capital growth. You can use your ISA to invest for growth, invest for income, take a middle path, or change course as your life changes – it’s all under your control.

For example, you might start out in your earlier years looking for capital growth and be able to take a more adventurous approach. Then, perhaps as you’re approaching retirement or changing your working pattern, you might start moving to lower-risk asset classes and more towards income generation.

An Interactive Investor Shares ISA gives you that flexibility, and that can be especially useful at retirement. Because income drawn from your ISA is not ‘earned income’ it doesn’t attract income tax. A growing trend has been to plan an ISA with this in mind, whilst providing the flexibility to draw income or capital from it should you need to.

and flexibility for your cash savingsThat flexibility also extends to transferring savings from a Cash ISA to a Shares ISA… and back again. It means you can respond to changes in your circumstances by moving ISA savings to investments and investment to savings, safe in the knowledge that your money stays within the tax-efficient environment.

You don’t always have to transfer the whole ISA – so once you’ve built up a sufficient amount in a Cash ISA, for example, you could choose to move any amount over and above this to invest in a Shares ISA. Some ISA providers will only allow you to move the whole account, so do check their terms before arranging a transfer. Do remember, though, that Cash and Shares ISAs are different: only transfer cash from your ISA where you’re happy to take the additional risk that comes with investing.

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Whatever your investment objective, it’s important to have a balanced portfolio, with investments spread across different asset classes, including cash, funds and equities. For some tips on points to consider, take a look at our knowledge centre, where you’ll find some handy guides. Our investment ideas section is a good starting point for some investment inspiration too.

However, once current proposals are approved, you’ll be able to transfer your child’s CTFs to a Junior ISA. Keep an eye on our Junior ISA web page for details.

• Children aged 16+ may also open and contribute to a Cash ISA.• Contributions to a Junior ISA cease at age 18.

31.12.1996

31/12/1996Adult ISA

01/01/1997Eligible for JISA

01/09/2002 to 03/01/2011Child Trust Fund*

01/01/2015Eligible for IISA

*children born in this period but not eligible for a CTF can have a JISA

some things to bear in mind• It’s not a case of having a Cash ISA or a Shares ISA – you can pay into both in the same tax year so long

as the total you pay in doesn’t exceed the annual allowance.• You can have more than one provider for your ISAs – but you can only pay into one Cash ISA and one

Shares ISA each tax year.• You can transfer your ISAs between different providers – some may require you to transfer the whole ISA

value whilst others may let you make partial transfers.• Whilst the changes introduced in 2014 mean you can hold cash in a Shares ISA and not pay tax on the

interest earned, in practice you’re generally better off using a specific Cash ISA for money you’re not looking to invest as interest rates will typically be lower than available in a Cash ISA.

• Eligibility for a Junior ISA depends on when your child was born – and in some cases whether or not they have a Child Trust Fund account*.

14 why have an ISA?

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why have an ISA?ISA tax benefits explainedWhether you’re saving for a specific purpose or investing for your future, holding onto the interest you earn or the profits you make will help your money grow faster. That’s where an ISA comes in.

15 why have an ISA?

Cash ISA Shares ISA

Interest on cash Paid gross, no income tax to pay Paid gross, no income tax to pay

Interest on bonds/gilts N/A Paid gross, no income tax to pay

Rental income from property funds and REITs

N/A Paid gross, no income tax to pay

Dividends from other investments

N/A Paid after deduction of a 10% tax credit. No further income tax to pay

Profits on investments (‘Capital Gains’)

N/A No tax to pay and not counted as part of your Capital Gains Tax allowance

16 why have an ISA?

Tax benefits can sometimes come with strings attached. But with an ISA, and especially following the 2014 changes (sometimes referred to as the NISA changes), the strings are very short ones.

income tax• Dividends paid from stocks and shares are received net of a 10% ‘tax credit’ deducted at source

– which cannot be reclaimed. This is the same whether held in an ISA or not, so for a basic-rate tax payer there’s no advantage.

• For higher-rate and additional-rate tax payers, however, that’s a very useful tax saving of 22.5% and 27.5% respectively.

• When it comes to the time that you want to draw money out of your ISA, there’s also no income tax – making it a good way to top-up income in retirement.

Capital Gains Tax (CGT)• No tax to pay on gains made in your ISA.

• That’s a valuable saving of 18% as a basic rate taxpayer, or 28% as a higher-rate or additional-rate tax payer.

• Any losses made on investments in your ISA can’t be used to offset capital gains on investments outside an ISA.

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and a simpler tax return too…You don’t need to put your ISA income or capital gains on your tax return… it’s just another way an ISA makes your life that extra bit better!

Useful links to further information:

These tax details are based on our understanding of the current rules and regulations. The value of these benefits will depend upon your personal circumstances, and may be subject to change over time.

Take a look at the ‘Tax and Investing’ page on our website to see how taxes affect your investments depending upon how and where you invest.

Please take advice on tax if you have any questions or concerns. Or for the latest details about personal taxation visit the HMRC website.

18 getting started

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getting started.choosing your ISA providerHaving decided whether you want a Cash ISA, Shares ISA or one of each, now’s the time to decide where to open your ISA.

Naturally, we all want a good deal. But a good deal isn’t just about the interest rate or the fees. Here are some things to think about:

Cash ISAFor most savers, the interest rate and accessibility will be the key concerns.

Do you want to be able to pop in to your local branch, or are you happy to pay in and withdraw money online?

Do you want instant access, or can you forego that in return for a better rate of interest?

Look out for any maximum or minimum balance restrictions, limits or penalties on withdrawals, or on how you manage your account.

Cash savings are covered by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person, per organisation, so that’s a few years’ worth of ISA subscriptions. But this limit includes any other accounts you have with the organisation so remember to take those into account too.

Shares ISAWhen it comes to a Shares ISA, it’s a different story.

Shares ISAs are for the longer term – generally five years or more – because that gives you a better chance to even out the ups and downs of the stock market. Of course, you can also take any profits as you go – more of which later. So, unlike cash savings, you’re more likely to want to be able to stay in touch with your investments. That’s most easily done online – so you’ll want a website or app that’s easy to use, reliable and secure.

You also need to think about the fees – you don’t want to be paying more than you need, or for services you don’t need. Nor do you want the cost of investing in a Shares ISA to eat into the investment pot you’ve just successfully grown!

20 getting started

key things to consider will include:The range of investments available to you – and easy ways to find them.

▪ Some ISA providers restrict the range of investments you can hold in their ISA. For example, an ISA provided by a Fund Manager might only allow funds issued by the group.

▪ If, like most ISA investors, you want a mix of investment types – from shares, to funds, bonds and ETFs (or even some of the more adventurous varieties), make sure your provider has them on offer and that it’s easy to choose the specific ones you want.

Can you transfer part of your ISA to another provider, or must you move the whole account?

▪ This can be particularly important if you want to take advantage of the ability to move some of your money from a Cash ISA to a Shares ISA, or back the other way.

The annual cost of your account ▪ Check that the cost of running your account, including administration fees, trading fees and ad hoc

charges, isn’t going to eat into your investments.

▪ Think about how often you’ll be buying or selling investments over a typical year and work out the cost of running your account with different providers.

▪ Some providers charge a percentage of the value of your investments, so as the value goes up, so do your fees.

▪ Others, such as Interactive Investor, charge a flat quarterly (or monthly) fee, so it’s clear from the start what you’ll pay.

▪ Other variable costs can include paying more to trade when you place orders by phone.

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When it comes to trading, a cheaper dealing fee could actually be a poor deal. ▪ Paying more for a purchase, or receiving less on a sale, can cost you more than shaving a couple of

pounds off the dealing fee. What’s the provider’s approach to ensuring you get the best price – and how much might you benefit on a typical purchase or sale?

How and when will you want to access your account? ▪ Being able to manage your ISA online, quickly and easily, means you can be in control. Whether that’s

during the day on a desktop/laptop, on the train using your tablet or smartphone, or maybe both. Before deciding on a provider, have a look at their website and mobile apps to see how easy and intuitive they are to use. And check out user comments on forums and social media.

Service and support – what will help you most? ▪ Just starting out? Guides, tools and investment ideas might be really handy, as well as someone on

hand to answer your questions – and not just until 5 o’clock.

▪ A more experienced investor? The range of investments available, depth of data and advanced tools such as technical and fundamental analysis might be high on your list.

▪ Making your own decisions doesn’t have to mean you’re on your own: active member forums, information about what others are doing with their money, and expert investment ideas can all help your own decision making.

Most providers offer either a Cash ISA or, like Interactive Investor, a Shares ISA. Some also offer Junior ISAs on the same basis.

22 getting started

how might your ISA grow?how your ISA grows will depend on a couple of key things:

• How much you put into a Cash versus a Shares ISA.

• The prevailing interest rates, market growth and investment returns, and any costs or charges associated with your ISA.

You will be well aware that interest rates are currently very low – and the consensus view is they’ll stay that way for a while yet.

At the time of preparing this guide, the average rate available across the top five ‘instant access’ Cash ISAs was 1.76%. (Source: Moneywise.co.uk, Jan 2015)

Let’s compare this to the potential investment return using the FCA’s ‘medium’ growth rate of 5% p.a. That’s not to say this will be the rate of growth you might get of course. As the oft quoted saying goes, ‘past performance is no indication of future performance’.

Here’s how they compare over one year:

£15,000 in a: Cash ISA Shares ISA*

Interest p.a. £264 £ nil

Market growth p.a. £ nil £750

Total £264 £750

*Return before fees/charges

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The real value then comes from investing over time. For example, here’s what your ISA investment of £15,000 could grow to over time, assuming it grew at that same 5% a year:

how your Shares ISA might grow

One-off investments of £15,000 over 15 years

£5,000 paid-in each year over 15 years

capital

growth

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£15,000

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£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

£40,000

£45,000

£50,000

£55,000

£60,000

£65,000

£70,000

£75,000

For illustration purpose only: forecasts are not a reliable indicator of future performance

£750

£1,538

£2,364

£3,233

£4,144

£5,101

£6,107

£7,162

£8,270

£9,433

£10,655

£11,938

£13,285

£14,699

£16,184

£250

£763

£1,538

£2,577

£3,879

£5,444

£7,272

£9,364

£11,718

£14,336

£17,217

£20,361

£23,768

£27,438

£31,372

24 getting started

All these illustrations ignore the impact of inflation and assume the same growth rates/ interest rates throughout. And, of course, these are just illustrations. There are some important points to bear in mind here:

• The cash interest rate is a known commodity, albeit one which changes over time: the investment market returns aren’t.

• Your cash won’t fall in value, except perhaps in its ‘buying power’ where inflation is higher than the interest rate you’re earning.

• Cash ISAs won’t usually have any charges, but your investments will.

• You might not get any investment income.

But the illustrations do serve to show the potential for significantly higher returns available from investing compared to saving.

what investments might you put in your Shares ISA?As you’ve already seen, a Shares ISA isn’t itself an investment but a tax-efficient place to hold the mix of investments you choose.

There are many different types of investments including:

Shares Shares remain a popular investment choice thanks to their potential for returns, and their opportunity to invest directly in individual companies.

A share is an investment in an individual company. Buying even one share gives you part ownership of that company. This entitles you to benefits including receiving dividends and registering your votes in company activities such as annual general meetings.

ETFs ETFs are similar to funds in that they contain a basket of investments: this means the investment risk is more widely spread. Typically they are ‘passive’ investments that track a specific index, such as the FTSE100, the Dow or emerging markets. However, some higher-risk ETFs focus on specific sectors, use asset allocation methods or derivatives to amplify gains and losses.

Government Bonds (Gilts)

Bonds issued by the UK Government are known as gilts. They are generally held to be lower risk than bonds issued by a company, but the same investment criteria apply – consider the potential for them not to be repaid. The longer it is before they mature, the harder it can be to make that assessment.

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Corporate Bonds Riskier than government bonds, the value of corporate bonds depends on: the quality and credit rating of the issuer, the time to run to maturity, inflation and the likely trend in interest rates, and where the bond stands in the pecking order for repayment in the event of a corporate failure.

Funds Essentially, the term fund refers to an investment where private investors pool their money so it can be invested in a number of different companies or enterprises. Funds can include investments such as a unit trust or an open-ended investment company (OEIC). Investing in this way helps investors spread their risk. It also means their investment is managed by a professional fund manager and reduces their dealing costs (as they avoid paying individual dealing costs on a large number of investments).Some investors, particularly those new to it, find it helpful to invest in a fund-of-funds (also known as a Multi-Manager fund) as it makes the task of choosing the right fund a bit easier.

Investment Funds There are many similarities between Investment Trusts and their more popular cousins, Unit Trusts. Both are collective investments where investors’ money is pooled and used to buy aportfolio of stocks or shares, which is professionally managed on their behalf.

Unlike a Unit Trust, the price of an Investment Trust doesn’t always equal the value of its underlying holdings, but reflects the market’s view of the Investment Manager’s future performance.

Lower

Ris

k

Higher

Funds (Unit Trust & OEICs)

Gilts and Bonds

UK Shares and ETFsInternational Shares

AIM Shares

ETCsPreference Shares

Structured ProductsVenture Capital Trusts

Each type of investment (or asset class) offers a different combination of potential and risk. That means you can mix and match the different types to create the blend that balances your aims for growth with the level of risk that feels right for you.

For the more adventurous investor, smaller company shares, such as those listed on AIM (the LSE’s Alternative Investment Market for growing companies) and ISDX, ICAP’s Securities & Derivatives Exchange, can offer higher growth potential but typically come with wider bid/offer spreads (the difference between the price at which you buy and sell the shares) and greater volatility.

Exchange Traded Commodities, giving you access to such assets as gold, oil and those famous ‘pork bellies’ can also be held in a Shares ISA, as can Structured Products and Venture Capital Trusts (VCTs).

Investment Options

26 the Interactive Investor ISA

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627 the Interactive Investor ISA

the Interactive Investor ISA.With an Interactive Investor Shares ISA you can benefit from all the ISA advantages in the way that suits you best. It’s your financial future, so we give you the means to be in control of it.

From providing easy, convenient ways to manage your account, whether at home, work, or on the move, to being a safe, secure place for the investments you choose, you can count on us.

But we don’t just leave you to it… our investment experts are here to provide insightful ideas and thought-provoking comments to inspire you. Our broad community of active investors share their thoughts, ideas and experience, and our website keeps you up to date with investment news, views and events.

At Interactive Investor we believe investing should be straightforward and that you should be the one to benefit from the growth you create. That’s why our Shares ISA puts you fairly and squarely in charge – with charges that are clear, fair and transparent.

We also believe you should be able to work out in advance what you’ll pay. So our charges are clearly set out, and readily available and we charge a flat fee whatever the value of your investment.

a fair, clear and flat investment administration feeBecause we believe you should keep all of that tax-free growth for yourself without your provider taking a cut, we charge a flat investment administration fee of just £20 per quarter.

This one investment quarterly charge covers your investment, ISA, Junior ISA and SIPP account.

no percentage charges on your investmentsMany ISA providers calculate their account administration fee as a percentage of the value of your account: when the value of your investments rise, so do your fees. Others may charge a fee if you don’t trade.

and dealing credit tooWhat’s more, we then give you £20 in dealing credit, the equivalent of two free trades, to use over that same period. That means you could make two standard-rate trades in a quarter and pay no dealing charges (though stamp duty and levies are payable as usual) – or use that dealing credit towards building your portfolio with our Regular Investing and Dividend Reinvestment services.

28 the Interactive Investor ISA

our trading fees are just as straightforwardOur fee for buying and selling investments is just as simple - a flat fee of £10 whatever type of investment you choose, whatever the value, and whether UK or international shares. Make 10 of these trades (sales and purchases) in a month and any trades after that are just £5 each for the rest of that month. (Purchases of UK and Irish shares carry a stamp duty charge which we collect on behalf of, and pay to, the Government, and share sales and purchases of £10,000 or more incur a £1 levy that helps fund the work of the Takeovers Panel.)

Building up your holdings via regular investing and dividend reinvestment is cost effective too. Regular investment purchases are just £1.50 and reinvesting your dividends is 1% of the value, with a maximum of £10. You can also use any unused quarterly dealing credit towards these purchases.

When it comes to specific charges for specific actions, you’ll find us just as clear and fair.

Check out our charges and see how you could save compared to other providers.

service is includedChoosing the right provider for your ISA isn’t just about what it costs to run your account. With Interactive Investor, fast, efficient dealing, ‘best execution’ prices, and an easy to use, reliable trading platform comes as standard.

However you use your account - whether trading online, or ‘on the go’ via tablet or smartphone with our Android© and iOS© apps – telephone support is available or if you prefer you can use our online LiveChat service.

Our customer contact team can also provide one-to-one telephone seminars giving you an introduction to our trading platform, products and services to help build your investing confidence.

Our UK-based helpdesk is open Monday to Friday, 07.45-21:00. You’ll find us to be friendly, helpful and jargon-free.

© Android is a trademark of Google Inc. iPhone and iOS are trademarks of Apple Inc.

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a world of investments to choose from…UK and International shares, funds, ETFs, bonds, gilts, ETCs, and more, are all available to put into your ISA. And all available to purchase at the same flat fee. When investing in funds, you’ll find a range of nearly 4,000 ‘clean’ funds to choose from, all with lower fund management charges.

And a host of ideas to inspire you.

If you’re just starting out, the stock market can be a bit confusing – it’s all very tempting but there’s a bewildering choice.

Whilst Interactive Investor doesn’t provide investment advice, we’re here to help you make good investment choices.

Our investment ideas is a great place to start. Our Fund and Shares selector tools can also help you narrow the field in finding the right investment for you. You’ll find the hub has a great range of ideas, including stock picks from Interactive Investor’s Companies Editor, model growth and income portfolios from Money Observer’s investment experts, and a range of themed or topical portfolios to choose from.

And if you want to hear from other investors, our forums are there for like-minded people to share their thoughts, ideas, views and opinions. Join the conversation and you’ll find a useful source of helpful answers to your questions about investing.

Get started from just £20 a month.

If you prefer to build your ISA portfolio over time, it’s easy to do. Just set up a regular investment and you’ll pay a low £1.50 dealing fee to buy investments (stamp duty may also apply). It’s a great way of keeping to your plan, ensuring you’re on track to achieve your investment goals. We’ll keep a running total of what you’ve paid in to ensure you don’t inadvertently exceed your annual ISA allowance – that includes any lump sums you may add from time to time. All you need to get started is a minimum investment of £20.

Turn investment income into capital.

When you’re investing for the longer term rather than for income, you can add to your existing holdings by using our Dividend Re-investment facility. We’ll automatically re-invest the income from an investment, buying more of those shares. You can choose whether to do this for all of your holdings or just pick the ones where you’d like that to apply.

30 what next?

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631 what next?

what next?open your Interactive Investor ISABy now, we hope you’ve seen how an Interactive Investor Shares ISA can help you achieve your financial goals. Starting a new ISA Account with us is quick and easy… just apply online at our website and you can be up and running in a few minutes.

Step 1 look up your National Insurance Number and have your debit card and bankdetails to hand.

Step 2 click on apply and enter your personal details, including any previous addressesyou may have had in the last three years.

Step 3 complete the application and pay in the contribution you want to make.

That’s it, you’re up and running!

You can then set up any preferences, such as regular investments, receiving alerts, and signing up for our daily or weekly newsletters.

We’re usually able to complete all the necessary security checks online but occasionally may need to ask you for further details. If that’s the case we’ll let you know what other details or documents we need before your account is ready to use.

bring all your ISAs togetherIf you already have an ISA elsewhere, you can bring them all together with us. Having your investments together in one place is not just convenient, it makes good sense too as it enables you to better manage your overall portfolio.

You’ll be able to track them all more easily, and spot any over-exposure to particular companies, sectors or economies more readily. And you’ll save on paperwork too, with just one annual statement and valuation. With our simple, flat fee charging structure, it’s cost effective too: we don’t penalise our customers for holding more investments with us, or charge more as the value of those investments grow.

32 what next?

initiating an ISA transferHaving opened your account, getting the ball rolling is easy.

Download, complete and return our ISA Transfer form – you’ll need a separate form for each ISA (or partial ISA) you want to transfer.

That’s it! We’ll take it from there, liaising with your existing provider to complete the transfer.

Cash ISA transfers should take no longer than 15 days, end to end – and it’s usually shorter than that, but moving investments can take longer. Of course, if you’re planning to make changes to those investments, you may want to sell some or all of them beforehand and transfer the resulting cash balance instead.

We work hard at getting your transfer complete as quickly as possible. Using our best-of-breed processes we aim for an average transfer time of under 10 days from similarly equipped providers, and six weeks from brokers who are still using a manual process. This also depends on the speed at which the transferring provider works.

And that’s important, because once the actual movement of investments have been put in hand you won’t be able to trade them until they are re-registered with us. During this interval the value of your investments could move against you, so the shorter the transfer time the better.

Naturally, we’ll keep you informed throughout the transfer process by sending messages to your online message box and by email. You can read more about transferring your ISA on our website.

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a final wordWe hope this guide has helped you understand more about ISAs and how you can benefit from putting your savings or investments in an ISA.

As we’re a provider of Shares ISAs and other investment services, you won’t be surprised that we’re fans of investing. We’re keen to help all investors, whether experienced or just starting out, become better investors so they can reap the financial rewards and enjoyment that taking charge of your own finances can bring. We also recognise that making your own investment decisions isn’t right for everyone. So it’s important you understand the risk as well as the opportunities that investing brings.

Interactive Investor has a lot more to offer than just ISAs, though naturally we’re great supporters of them and believe they have a role to play for investing – after all, 23 million plus ISA holders can’t all be wrong! We provide a safe, convenient place for investors to hold, monitor and manage their assets; support an active community of like-mind people in achieving their financial goals – throughout their financial life - and help them in creating a firm foundation for their children’s future finances too.

We look forward to helping you achieve your financial goals.

take careof tomorrow.

Interactive Investor Trading Limited, trading as “Interactive Investor”, is authorised and regulated by the Financial Conduct Authority. Registered Office: Standon House, 21 Mansell Street, London E1 8AA, Tel: 0845 200 3637. Registered in England with Company Registration number 3699618.

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