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#39 — Key resources... as referenced in "How to Own the World"


March 4th, 2019

By Andrew Craig

Reading time: ~ 5 minutes

To make decent forward progress with your finances, you will obviously need to use various types of financial account (ISAs, pensions and so on).

In my book I explained why I would not list specific providers of things like ISA or pension accounts or specific funds in the text of the book. The reason being that finance is obviously an incredibly dynamic subject, whereas a book is necessarily a pretty static source of information.

As I said:

"I will not name my favourite ISA providers here since this book is, by its very nature, a static information source. I am well aware of who I think the best ISA providers are at the time of writing but financial services companies are constantly launching new accounts and improved products. As such, you can find specific information about the firms I believe to be the best in the UK market on our website..."

So this is the part of our site where I would like to do just that.

Please note that nothing on this page should be construed to be personal, tailored financial advice. I am just sharing what I hope are some fairly practical opinions and thoughts as I see them.

ISAs

You will have read why I think an ISA account is arguably the most important financial account for most people in the UK.

I would also stress that I personally believe that it is crucial to use a stocks and shares ISA, NOT a cash ISA.

This is because cash ISAs almost certainly return less than real inflation. This means that if you buy / invest in a cash ISA you are guaranteeing the loss of real wealth every year. You are basically paying the bank to use your money (in real terms). Avoid!

As such - once you have saved a certain amount of ‘rainy day’ money in cash (i.e. to tide you over if you lost your job etc… Ideally anywhere between 1 and 12 months’ salary, depending on your own personal circumstances), my strong view is that all other money you invest from that point onwards should be in financial markets of one kind or other and NOT in cash or a cash ISA.

Please do read these two articles if you want to understand these arguments in more detail (a good idea):

  1. The UK’s number one financial blind spot in our Opinion section.
  2. This 2018 / 2019 piece on ISAs and this article I contributed to in This Is Money which they ran on ISA day 2019.

In terms of firms who offer a stocks and shares ISA, there are many that you might consider using. My favourite is the multi-award-winning Hargreaves Lansdown.

I use them myself, quite simply because – in my experience - they have the best customer service of any company I use for anything in the UK (e.g. vs. British Airways, EDF, O2, Apple – you name it – HL are in a league of their own).

Some people think they are a little expensive. My view is that they are worth what is ultimately a pretty small premium. Your financial affairs are extremely important. Given this fact and how relatively complicated these things are for many people, I think that there is great value in using a company where someone intelligent, helpful and articulate answers the phone within a few rings and can help you as compared to wasting hours having to wade through a website with a firm that might be a little bit cheaper. That is just my view.

For the more price sensitive, there are plenty of other good options these days some of which are a little cheaper than HL.

There are many places online where you can compare various stocks and shares ISA accounts (and, indeed, other accounts such as pensions).

One example is the Telegraph’s website. They produce reasonably regular tables comparing ISA providers (here is an example). Please note - this may be behind a pay wall :(

A couple of other key things to consider

I would also note that I think there are more important considerations when choosing an ISA provider than just how "cheap" they are. I have already mentioned the advantage of great customer service above.

In addition - in considering which company to use, you should ensure that whichever firm you chose offers you the option to invest in a sufficiently wide range of funds and stock market investments and that they offer the capability for you to invest regularly by direct debit. This is very important for most people given that monthly investment by direct debit is one of the easiest ways to succeed in investment.

High street banks

I would also repeat something I have written in the past: That most of the mainstream high street banks are a bad place to have an ISA. The ideal ISA account will enable you to buy a massive range of shares or funds and will ensure that you can do so at low cost. If you open an ISA with most of the main high street banks, you will generally only be able to choose from a restricted range of in-house ISA funds. These tend to be limiting in terms of what assets you can end up owning. I believe you can do a far better job with firms like:

These are probably my favourite three options at the time of writing this in April 2019.

What about pensions?

I have written at length about pensions and also on the subject of pensions vs. ISAs in my book.

There are also lots of resources online to help you in this area. Again – the Telegraph website is particularly helpful, but there are plenty of others.

Other ways we can help…

The final thing I would like to say is please do have a look at the "What We Do" section of our website. If you have more questions about things like financial accounts and lots else besides, you might consider subscribing to our Community. This gives you access to a ‘private’ Facebook group where you can get help from Andrew Craig and the Plain English Finance team and also a large number of like minded individuals who are also on the journey to financial freedom.

If you have significant assets and if your affairs are more complicated – for example if you are approaching retirement – you might also consider our Bespoke Service.