Buying an ISA online is not for the faint-hearted

ISAs can be bought online in several ways. But you can choose from a limited range with some only available through traditional channels

To buy ISAs on line is quick and convenient - but not always cheaper than by traditional methods. And by no means do you have the full spectrum the industry can offer at the click of the mouse.

To buy ISAs on line is quick and convenient - but not always cheaper than by traditional methods. And by no means do you have the full spectrum the industry can offer at the click of the mouse.

ISAs can be bought online from the provider, online banks, specialist web-only products and from discount brokers and financial advisers. But you can choose from only a limited range of ISAs, with many only available through the traditional channels. Surprising omissions include Framlington NetNet, a high-profile fund which invests in internet and internet-related industries.

If you know which ISA you want you could log straight onto the provider's website. Fund managers that allow you to buy online include Aberdeen Asset Management, Fidelity, Johnson Fry and M & G.

But there are limitations. You cannot access the full range of Fidelity funds. And if you want to invest in regular monthly payments you must make a paper application.

Another drawback can be costs. Investors who buy their ISA direct from a fund manager are generally hit for heavy charges, up to 5.25 per cent of the initial sum invested plus an annual management fee of 1.5 per cent. Many providers adopt the same approach online.

"Before buying online, check whether cost savings are being passed on to you,' says Martyn Page, head of research at financial advice network Countrywide.

Some fund managers do offer discounts. As the financial year drew to a close Aberdeen was offering a 0.5 per cent discount for online ISA investors and Johnson Fry was offering a 1 per cent discount, on top of other discounts. However, Fidelity, Jupiter and M & G offer no discounts for customers buying ISAs through their websites.

"You should be looking to get 2 per cent off the initial fee for buying online without advice, plus 0.5 per cent off the annual management fee, but unfortunately you rarely will," says Mr Page.

However, the internet can help investors wanting to pay the lowest possible charges for their ISA. One ISA is only available via the internet, netISA at www.netisa.co.uk. The fund tracks the FTSE 100 index, has no initial charges and an annual management fee of just 0.35 per cent. The site also promises no exit fees.

Stocks and shares products are not the only ISAs available online. Savers wanting to avoid the stockmarket can buy mini-cash ISAs over the internet, although again, from a limited number of suppliers. Nationwide and NatWest, for example, require you to complete an application form. You can often download these from the site.

Internet banks inevitably lead the field. Visit www.egg.co.uk and www.smile.co.uk and you can buy a mini-cash ISA online. Egg also offers an investment centre, where customers can choose from around 150 ISA funds. Until April 27 the site offers 1 per cent cashback on ISA purchases, reducing initial charges to 1.5 per cent.

Discount brokers - bucket shops that simply sell the product and offer no advice - are present online. Torquil Clark, at www.tqdirect.co.uk, returns initial commission on ISAs from six different providers. Buy this year's hot fund, Aberdeen Technology, and initial charges of 4.25 per cent will be cut to just 0.25 per cent. You must pay a flat £25 fee.

A much wider list of providers is available at www.interalliance.co.uk, which offers initial of up to 5.25 per cent. Although you can place your order online, you must then forward a cheque or your credit card details direct to the ISA provider.

Chase de Vere claims to be the first financial adviser to sell ISAs online. "Many sites allow you to print out application forms but you still have to post them," says investment adviser Janine Starks.ISAs from a number of providers, but not all, can be found at www.chasedevere.co.uk.

Experienced investors wishing to buy a self-select ISA can also buy online through stockbrokers such as DLJ direct ( www.dljdirect.co.uk) and Killik & Co ( www.killik.co.uk).

Buying online is not for everybody. If you need advice on which ISAs to choose, this is definitely not for you. Nor is it for the nervy, says Ian Beeston, director of The ISA Shop. "Many people are still reluctant to send £7,000 down the line," he says.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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