Top 5 Tips for Managing Your Stocks and Shares ISA

Making is money is great. Finding ways to reduce your costs through discount codes special offers is also great. However, when it comes to maximising your financial position, these aren’t the only two things you need to focus on. As well as making money and reducing your costs, you need to save. In simple terms, this means putting money aside for a rainy day. Most people do this by opening up a savings account. That’s fine. However, if your savings aren’t earning enough interest, the relative value of your money (i.e., its spending power) can decrease over time due to inflation. Therefore, to be a smart saver, you need a way to beat inflation and make your money grow.

Since 1999, opening an ISA account has been a way to maximise your saving potential. Alongside savings ISAs, there are stocks and shares ISA accounts. These accounts allow you to invest in the stock market using your annual tax-free savings allows. The benefit of this dynamic is that any profits you make via a stocks and shares ISA are sheltered from capital gains tax. For example, in 2021, the annual ISA allowance was £20,000 per tax year. This means you can invest up to £20,000 via a stocks and shares ISA and any profits your assets make won’t be subject to capital gains tax.

How to manage your ISA more effectively

That’s a good deal. However, opening a stocks and shares ISA is just the start of the process. Once you’ve got an account, you need to know how to get the most from it. The following tips will help you manage your ISA and, in turn, give you the best chance of increasing your savings pot.

1. Monitor your allowance

A key part of a stocks and shares ISA is the annual allowance. Make sure you know what the annual allowance is and, in turn, where you are in terms of hitting the limit. Another thing to note is that you can only open one stocks and shares ISA in a single year. Therefore, you need to know what your position is at all times.

2. Monitor your investments

Buying stocks and shares via an ISA account should be seen as a long-term investment. In other words, you’re not dipping in and out of the market. However, that doesn’t mean you shouldn’t be monitoring your shares. Maybe you need to exit a particularly poor position. Maybe you need to increase your investment in a strong holding.

3. Are you taking advantage of your account?

Most brokers have optional extras. You need to make sure you’ve getting the most from your chosen platform. If the broker offers fractional shares, are you investing in them and getting exposure to major companies at an affordable price? If the broker offers premium products that provide better investment conditions, are you using them? These are the questions you need to ask and answer when managing an ISA.

4. Is your portfolio diverse enough?

This is a question that only you can answer. However, as a general principle, it’s important to look at your shares in isolation but also as a collective. Everyone has their own opinions, but it’s generally accepted that you should have a diverse portfolio. This means you should have a mixture of shares in specific companies, exchange-traded funds (such as the S&P 500) and commodities. Again, this is all a matter of preference. However, you need to assess and reassess your portfolio to determine if it’s diverse enough for your long-term goals.

5. Are you getting the best service?

The final thing to consider is whether or not you’re getting the best service. Brokers all have their own strengths and weaknesses. Therefore, you need to review your account, the fees you’re paying, the shares you can access and more. If it’s not working for you, it’s possible to transfer an ISA. Although stocks and shares ISA accounts don’t require constant monitoring, it does pay to stay on top of things. If something isn’t working, make sure you change it sooner rather than later.