I currently save everything to a standard bank ISA... It gets terrible interest rates (<1.0%) so I am looking for an alternative to the usual bank provided ISA.

Right now I don't have the time or energy to learn a complicated system so really want something hands off and, even though I'm mid thirties I don't particularly want lots of risk.

I've seen things like nutmeg which offer potentially 6-7% hands off - which is massively better than what I currently get. Is something like this a good idea? Is there anything else better without any trade offs?

An alternative, from what I have read, on here, is something FTSE linked that should out perform the ISA mentioned above, but honestly I don't understand much of what I need to get started; so if the "My First Investment" type package is available I'd be greatly interested.

closed as off-topic by Michael, MD-Tech, JoeTaxpayer Jul 17 '17 at 13:49

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  • 2
    You'll have better luck here asking a question about how to go about constructing a low-fee, diversified ISA portfolio than asking for specific investment recommendations (which are off topic). – Chris W. Rea Jul 17 '17 at 16:18
  • @ChrisW.Rea Thanks Chris, I guess its one of those hard things where if you don't know enough, you don't know what to ask for. Everything seems so overwhelming to me at the moment so I'm trying to demystify what I can :) – Chris Jul 17 '17 at 16:43

Your question is actually quite broad, so will try to split it into it's key parts:

  1. Yes, standard bank ISAs pay very poor rates of interest at the moment. They are however basically risk free and should track inflation.

  2. Any investment in the 6-7% return range at the moment will be linked to stock. Stock always carries large risks (~50% swings in capital are pretty standard in the short run. In the long run it generally beats every other asset class by miles). If you can’t handle those types of short terms swings, you shouldn’t get involved.

  3. If you do want to invest in stock, there is a hefty ignorance tax waiting at every corner in terms of how brokers construct their fees. In a nutshell, there is a different best value broker in the UK for virtually every band of capital, and they make their money through people signing up when they are in range x, and not moving their money when they reach band y; or just having a large marketing budget and screwing you from the start (Nutmeg at ~1% a year is def in this category). There isn't much of an obvious way around this if you are adamant you don't want to learn about it - the way the market is constructed is just a total predatory minefield for the complete novice.

  4. There are middle ground style investments between the two extremes you are looking at: bonds, bond funds and mixes of bonds and small amounts of stock (such as the Vanguard income or Conservative Growth funds outlined here), can return more than savings accounts with less risk than stocks, but again its a very diverse field that's hard to give specific advice about without knowing more about what your risk tolerance, timelines and aims are. If you do go down this (or the pure stock fund) route, it will need to be purchased via a broker in an ISA wrapper. The broker charges a platform fee, the fund charges a fund fee. In both cases you want these as low as possible. The Telegraph has a good heat map for the best value ISA platform providers by capital range here. Fund fees are always in the key investor document (KIID), under 'ongoing charges'.

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