Published: 03:46 EDT, 15 March 2018 | Updated: 13:27 EDT, 15 March 2018
If you already invest, then you’ll know what to do to get your money into an investing Isa before the end of the tax year – but what if you are new to the game?
Firstly, before you look at the ‘how’ and the ‘what’, you need to consider the ‘why’ when it comes to investing.
It shouldn’t be done with your rainy day fund - nor money you will need in the short term - but if you have long-term savings over and above that, then investing makes sense.
Get started: Investing involves some risk but it is the best way to grow your money above inflation over time - and once you get going things become easier
The past 18 years have seen two major stock market crashes and the financial crisis, yet the average cash Isa has returned 0.89 per cent a year above inflation, while the total return from the UK stock market was 3.66 per cent a year above inflation, according to figures from Schroders.
Over the long term not investing in shares means you are passing up the best chance of inflation-beating returns.
Investing makes your money work harder and the longer you do it for, the less likely you are to lose out.
You can also start with a relatively small sum of money, as little as a few hundred pounds as a lump sum, or £50 per month with some services.
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HOW THIS IS MONEY CAN HELP
When it comes to how to invest, for most people the cost of a financial adviser or wealth manager will feel prohibitive for their simple investing needs.
That leaves two main options: get someone to do it for you or do it yourself.
The former has become easier and cheaper in recent years with the advent of online wealth managers, or robo-advisers as they are often called.
These offer tools to help you establish your goals and risk levels and build a portfolio that they will manage for you.
You pay a bit for this, but what you get in return is easy investing.
If you like the idea of this, then read our robo-adviser round-up and visit a few to try out their websites and get a feel for them. Most allow you to use their tools with a no-obligation email sign-up.
If you want to pick investments yourself then it is best to sign up to a DIY investing platform.
These let you buy and hold shares, funds or investment trusts, and you can use our DIY investing platform round-up and comparison tool to help choose the best for you.
The final step is what investments to choose – and this is where most people fall down.
Even if you forgo picking shares yourself (something only really suited to the most committed investors) and go for funds or investment trusts that pool investors’ money to invest in a range of companies, there is a baffling array to choose from.
Most people are not concerned with finding the absolute best investment, but are worried about picking a bad one.
Don’t stop here though, it doesn’t have to be difficult.
The key is to think as broad and simple as possible – and to understand a bit about asset allocation. This sounds complicated but is simply about not putting all your eggs in one basket and how you can take more or less risk with your investments.
At the simplest level there are two main investing elements, shares and bonds – both of which can be bought through funds and trusts, which will spread your money about for you.
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Shares are judged to be riskier but offer greater rewards, while bonds are believed to be safer but offer less opportunity for gains.
Shares involve buying a stake in a company, while bonds involve lending a government or company money for an interest rate return.
The safest bonds are considered to be top grade government bonds in your home currency and fortunately for British investors the UK’s government bonds, known as gilts, make the cut here.
The traditional way of taking less risk with your investment portfolio was to hold more bonds, so a very adventurous portfolio might be 100 per cent shares, while a middle of the road one would be 60 per cent shares and 40 per cent bonds and a low risk one 20 per cent shares and 80 per cent bonds.
The problem for investors at the moment is that bonds pay very little interest and are historically expensive to buy, due to the super-low interest rate world and quantitative easing that followed the financial crisis.
If you want to keep things really simple, it is possible to replace bonds with cash in a good interest-paying savings account.
Keep this separate to other savings pots and think of it as a whole alongside your funds invested in shares, with a greater or lesser proportion of cash based on how much risk you want to take.
When it comes to choosing which funds or investment trusts to use, take advantage of best funds lists produced by DIY investing platforms, which should weed out the bad options. This is Money also has its own 50 best funds list.
There is a choice to make over active funds, where a manager tries to cherry-pick the best investments, or cheaper passive funds that just follow a stock market index.
If you want to go active, then choose a fund or investment trust that is not too expensive and has a manager who you think will add value but not too much risk.
If you choose a passive tracker fund, then aim to keep costs low.
Whichever route you take, a global fund or trust can form the core of your portfolio, which you can then invest more into on a monthly basis, and as you gain confidence you could then start adding smaller satellite investments in other areas if you wish.
That’s the whistlestop tour. For a more in-depth look and some ideas to get started read our How to invest in an Isa guide here.
Investment platforms for easy stocks and shares Isa investing
The cheapest DIY investing platform depends on your investing plans, but for a starter stocks and shares Isa it may be best to go one that is easy to use and gives you a helping hand, writes Simon Lambert.
I’ve road tested these platforms and they deliver on those criteria.
With all of them the cheapest and easiest way to start investing will be in funds, which can be free or cheap to buy and sell.
My suggestions are Hargreaves Lansdown, AJ Bell YouInvest, Interactive Investor and Vanguard.
All offer best funds lists and/or ready-made portfolios.
Hargreaves Lansdown scores highly on being intuitive and easy to use. Finding and investing in funds is simple, as is setting up regular investments and checking up on what you have done. Its app is also very good. It's not cheap, with a 0.45% annual fee but on smaller investment pots percentage charges should not be too high. Fund dealing is free.
AJ Bell is a more pared back experience but still simple to use. It has simple passive portfolios, a good best fund-finding tool and a cheaper 0.25% annual fee. Fund dealing costs £1.50.
Interactive Investor has a different charging model and costs £22.50 a quarter or £90 a year. That fee is given back in free trading credits, which you can use to pay to buy funds, shares, trusts and ETFs. The standard charge to buy or sell all those is £10, or £1 if you set up regular monthly investing. Interactive Investor is simple to use, and has good model portfolios.
A final more restrictive but simple and cheap option is Vanguard. The US giant has set up a UK investing platform but you can only buy its funds. It is cheap with a 0.15% per year fee and has no costs for buying and selling. You can use this to buy Vanguard's simple and cheap passive funds, or its all in one LifeStrategy funds that invest in shares and bonds around the world.
Global fund ideas
A global fund invested in shares around the world makes a good core element for your portfolio.
A tracker or index fund will follow the global index, while an active fund will try to cherry pick the best companies, which could increase your returns but also the chance the manager could get it wrong or their style fall out of favour.
These are ideas, not recommendations - always do your own research:
Fidelity Index World Fund P
This follows the companies that make up the MSCI World Index of developed markets. Ongoing charges: 0.13%
HSBC FTSE All World Index Fund C
This follows a global index that also includes an emerging markets element. Ongoing charges: 0.16%
iShares MSCI ACWI ETF
This follows an index made up of both developed and emerging markets companies. It’s an ETF so you will pay to buy and sell. Ongoing charges: 0.6%
Lindsell Train Global Equity
This fund buys and holds what the well-respected managers Michael Lindsell and Nick Train see as the world’s best companies. Ongoing charges: 0.74%
Terry Smith’s fund invests in the world’s companies he perceives as having an enduring advantage. Performance has been good but it is heavily weighted to the US. Ongoing charges: 0.97%
Witan investment trust
This investment trust targets long-term growth and invests with a variety of fund managers around the world. A third of it is in UK shares. Ongoing charges: 0.86%