Money hacks Picking the best stocks and shares Isa for you

Before you open a stocks and shares Isa, think about what the money is for, says Jason Hollands, the managing director at Bestinvest by Evelyn Partners, an investment platform.

- Hilary Osborne

This type of Isa will only suit you if you have cash that you can afford to put away for a while.“Is it to provide some money in retirement? Are you starting to get together a deposit to put down on a property?” Hollands says. Your goals will help you work out your time horizon, and “unless you're prepared to be in it for at least five years, investing in the stock market is possibly a bit too risky”, he says.

While you can cash in your investment when you want to, you should not treat it as a bank account you can just dip into, Hollands says. For money for emergencies, you need a savings account.

If the money is for a house deposit, you should check whether a lifetime Isa is better for you.

Hollands says some people do not invest because they are overwhelmed by the options, but you do not have to make all the decisions.

Most investment companies and banks offer ready-made portfolios. These will typically contain a mix of investment funds, government bonds or exchange traded funds. ETFs are a basket of shares and sometimes bonds, and usually follow the performance of a stock market index such as the FTSE 100.

‘These portfolios are managed for you and are typically designed to offer different levels of risk.

“In most areas of life, the word risk conjures up an image of a bad thing,” says Hollands. “In the world of investing, there is a relationship between risk and reward, and it’s about taking the right amount of risk”

How much you should take will depend on how long you want to invest for and how much you can tolerate seeing your investment potentially going down in value.