Mix, match and miss out the middle man

You don't have to pay someone else to manage your tax-free stock market investments. It is cheap and relatively easy to set up a self-select stocks and shares ISA where you choose the shares rather than relying on a fund manager.

"You need to know how the stock market works," warns Justin Urquhart- Stewart, of Barclays Stockbrokers. "But if you do, and want to mix and match your holdings to suit yourself, you could do very well."

Because you are picking individual shares, the risks can be higher than buying into a ready-made portfolio with its wide diversification. Also remember that an ISA is nothing more than a tax-efficient wrapper around your investments, with the same investment limits.

As long as you buy equities listed on a stock exchange recognised by the Inland Revenue, virtually any shares can be included in your ISA. However, not all providers allow overseas holdings, so check carefully with your ISA manager beforehand if you are interested in this area of investment.

Self-select ISAs are offered mainly by stockbrokers, including the banks' share dealing arms. The broker will take care of all the administration. The largest independent brokerage firms are those owned by Greig Middleton and Brewin Dolphin. Other managers include a number of independent financial advisory firms and investment management groups.

If you do not already have a stockbroker, finding one may appear a daunting task. See if you can get a recommendation, otherwise the Association of Private Client Investment Managers and Stockbrokers (APCIMS) can provide a list of brokers in your area. If you don't want any advice on which shares to pick, choose a discount broking firm such as Charles Schwab or the Share Centre.

Opening an account is simple. Fill in the forms, select your holdings worth up to a maximum of pounds 7,000 this year in a maxi ISA, pounds 5,000 thereafter, and then hand over your money.

Costs vary considerably. There are many ways that self-select ISA managers levy charges, making comparison difficult. A rule of thumb is that administrative charges are usually between 0.5 and 1 per cent, so they will rise as your portfolio appreciates in value unless there is a ceiling. Dealing costs usually vary between 0.5 and 2 per cent - most brokers set a pounds 15 minimum. Some ISA plans have fixed charges and these can be more expensive for investors with a large number of stocks or small portfolios. VAT is added to charges and 0.5 per cent stamp duty is paid on share purchases.

"Some firms charge either a percentage of your portfolio's value or a flat fee. Others impose a fee when there is action in your account such as distribution of a dividend, sending out a set of reports and accounts or notices of company meetings, and so on," says Mr Urquhart-Stewart. "If these are important to you, find someone who does not charge for them."

The Share Centre offers some of the lowest rates to private investors and gives them advice on constructing their portfolios. For example, it currently recommends SmithKline Beecham, Prudential, Vodafone, BSkyB, London Bridge Software and Capita as six leading stocks "well set for the next millennium". The broker levies an administrative fee of 0.15 per cent a quarter or at least pounds 7.50, and charges a minimum of pounds 2.50 per deal.

Barclays Stockbrokers, meanwhile, charges 0.5 per cent a year up to a maximum of pounds 200, with an exit fee of pounds 50 if the ISA is closed or transferred. Trades are charged at 1 per cent, with a minimum cost of pounds 15 by phone or pounds 11.99 if over the internet, up to a maximum of pounds 39.99. All equities must be listed in London as it does not yet allow overseas holdings.

Killik & Co, another manager, charges 1.65 per cent on deals, with a minimum commission of pounds 40 and pounds 7.50 per dividend distribution.

n Contacts: APCIMS, 0171-247 7080; Share Centre, 0800 800008; Barclays Stockbrokers, 0800 551177; Charles Schwab, 0121-200 2474; Killik & Co, 0171-461 4400; Greig Middleton, 0171-655 4000; Brewin Dolphin, 0171-248 4400.

News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
News
i100
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
PROMOTED VIDEO
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup