We explain the different types of ISA available from Nutmeg
Investment platform Nutmeg has created a stocks and shares ISA, and a lifetime ISA (LISA) that both aim to reimagine your savings. We take a closer look at both, to help you decide whether one might be right for you.
Read on to find out more about these products. Or head straight to Nutmeg’s site, to see it for yourself.
What should I choose – a stocks and shares ISA or a lifetime ISA?
All of Nutmeg’s individual savings account (ISA) products are stocks and shares ISAs, not cash ISAs.
Stocks and shares ISAs differ from regular savings accounts in two ways. While regular savings accounts are taxed, you don’t have to pay tax on interest earned from an ISA but you can only put in £20,000 a year (annual allowance for 2018-2019 tax year).
You could spread your money across more than one ISA, and can enjoy tax-free status for interest earned within your ISAs as long as you don’t invest more than the annual limit.
The lifetime ISA (aka a ‘LISA’) is a government savings initiative to help you buy your first home or save for retirement – it attracts a government bonus (see the table, below), but there are more restrictions. The lifetime ISA is a different product from the “help to buy” ISA, which has a different set of rules.
Nutmeg’s stocks and shares ISA allows you to choose between a fully managed portfolio or a fixed allocation portfolio in which to invest your money in stocks and shares.
Generally, ISAs are a better long-term investment, as you’re more likely to see better returns over a longer period. If you need to regularly access your savings, it’s worth considering a more flexible savings account.
If you’re not sure of the differences between the two and which product is more relevant to you, here’s our comparison.
|Nutmeg Stocks and Shares ISA review||Nutmeg Lifetime ISA review|
|Age restrictions||Must be aged 18 or over.||Must be 18-39 to open one. You can pay in up until the age of 50.|
|Investment bonus||No bonus.||For every £4 you invest, you receive a £1 bonus from the government. Paid monthly.|
|Returns||Returns depends on how your stocks and shares perform.||Returns depend on how your stocks and shares perform.|
|Contributions||Open with a £500 balance and pay in £100 a month minimum.||Open with £100 and can pay in up to £4,000 a year until you’re 50.|
|Spending restrictions||No restrictions on what you spend it on.||Can only be spent on your first home (up to £450,000), retirement or if you’re terminally ill.|
|Transferable?||Can be transferred to a cash ISA or to a stocks and shares ISA with another provider at any time||You can transfer your lifetime ISA to another provider at any time.|
|Penalties||Transfers (without selling assets) to another stocks and shares ISA with another provider incur a £20 fee.||25% if you withdraw the ISA for something other than your first home or retirement.|
How do I apply for a Nutmeg ISA?
You can set up a Nutmeg ISA in just under 10 minutes on its website.
Firstly, you must have a UK bank account, be aged 18 or over and be a resident in one of Nutmeg’s specified countries. If you want to open a lifetime ISA, you cannot be older than 39.
You’ll be asked for some of your personal details and a series of questions about your savings goals to determine the best product for you.
With Nutmeg’s Stocks and Shares ISAs you have the option of a fully managed portfolio or a fixed allocation portfolio.
- The fully managed portfolio is regularly managed by Nutmeg’s investment team, who make adjustments to try and protect from losses and boost your returns.
- The fixed allocation portfolio is set up to perform with less intervention, with the Nutmeg team reviewing your assets once a year to see how they’re performing.
For a Nutmeg Lifetime ISA there is a 0.75% annual fee.
For Nutmeg’s Stocks and Shares ISA, the fees depend on your investment style:
- Fully managed portfolios – 0.75% up to £100,000, 0.35% over £100,000.
- Fixed allocation portfolios – 0.45% up to £100,000, 0.25% over £100,000.
Pros and cons
- Easy set-up. You can set up your ISA in just 10 minutes via the Nutmeg website.
- Access to your funds or investment 24/7 online or via the app.
- No trading, transaction, set-up or exit fees on the Nutmeg Stocks and Shares ISA.
- Customer service. Built-in secure Nutmail, live chat, customer support via phone or email.
- No cash or help to buy ISA products.
- Age restrictions. Nutmeg’s ISA products aren’t open to 16-17 years old, who would be eligible to open cash ISAs or help to buy ISAs with other providers.
- Lifetime ISA restrictions. Your savings can only be spent on your first home, your retirement or if you are terminally ill.
- Lifetime ISA first home must cost £450,000 or less to receive the money.
Is Nutmeg safe?
Nutmeg has over 60,000 customers in the UK and is regulated by the Financial Conduct Authority (FCA).
What is Nutmeg?
Nutmeg operates online through its website and an app, but also has real people on the phone available.
As well as stocks and shares ISAs or lifetime ISAs, it also offers pensions and general investing products.
Nutmeg aims to learn about you and find the right investments on your behalf, build your portfolio and make it easily accessible for you to check on your progress.
How does Nutmeg work?
Nutmeg’s founders were frustrated with the exclusivity and lack of transparency of mainstream investment products. They aimed to offer consumers a low-cost, high-quality investment platform that is easy to use.
Nutmeg offers stock and shares ISAs or lifetime ISAs, which have a different criteria and returns.
Once your account is set up, you can easily view your funds’ performance online or via the app.