Although ISAs normally allow you access to your money when you want, investment companies expose your money to risk. You therefore don’t want to find yourself in a position of having to sell investments at a time when the market has just fallen.
If you are likely to need the money at short notice (e.g. for an emergency) then you should not invest in investment companies.
Generally, the longer the period you intend to invest, the more risk you can take on, as your investments have time to recover from any setbacks in the short term.
Investment companies are primarily intended as long-term investments. You should be prepared to hold them for at least 5 years, and preferably 10 or more.
If you cannot afford to lose money, you should not invest in investment companies.
ISAs can be used for long-term capital growth or for protecting income from tax. The AIC website can help you narrow down your search for an investment company that is right for you.
The ‘Find and compare investment companies’ section of our site lets you sort investment companies according to your investment needs. You can search by ‘Income’, ‘Growth and Income’ or ‘Growth’ depending on your needs. You can then refine your search by geographical area, asset class or management group.
You should check out how much the ISA provider will charge you for buying and holding investments. Being shares which are traded on stock markets, investment companies can be cheaper to hold than other funds over the long term, though you will need to incur dealing costs and possibly stamp duty.
If you are happy with the risks, and are making your first stocks and shares investments, you will probably want to start with a generalist investment company which invests in a wide range of different sectors. Some of the oldest, and most popular, investment companies can provide easy access to the stock market, and are often very cost effective. Over time, as you build up your portfolio, you can add some more specialist funds.
Investing can be complicated. You should consider taking independent financial advice if you are not sure about how to invest and what type of investments might be best for you. An independant financial adviser can help identify investments that best fit your needs.
Don’t forget Investment companies are long-term investments and you should be prepared to hold them for at least 5 years
Start discovering how investment company ISAs could add a new dimension to your portfolio
Visit the AIC website to learn more about investment companies, find and compare companies and create your own ‘Watchlist’
www.theaic.co.uk
This document is for information only and does not constitute investment advice or a personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment mentioned here. The Association of Investment Companies has taken all reasonable steps to verify the information contained in this document but does not accept responsibility for any errors or omissions or for losses of any nature incurred by any person acting or refraining from action in reliance on such information. This document may not be printed, reproduced or further distributed to any other person or published, in whole or in part, for any purpose.
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