How to combine your ISA and investment accounts to save £1,000

You could save thousands of dollars on platform fees by combining all of your investment accounts, including stock and share ISAs

The benefits and drawbacks of merging your small pension funds are a hot topic in the financial services sector, but what about combining your other investments, like your individual savings accounts (ISAs)?

If you have multiple accounts, you might be paying more than you need to because platform fees can reduce your investment returns.

You may be able to lower your management fee costs and make it simpler to track the performance of your investments by consolidating your finances. Additionally, depending on the wrapper you choose, there may be tax benefits.

For a do-it-yourself investor who wants to hide their income and capital gains from the taxman, an ISA or self-invested personal pension (SIPP) is usually the best wrapper. However, there are times when you may have also opened another account.

Certain investments, such as shares traded on exchanges that HMRC does not recognize (like the Shanghai Stock Exchange and Taiwan Stock Exchange), are not appropriate for an ISA.

ISAs and pensions are also subject to certain annual allowances, so after they have reached their annual limit, some people open another account to continue investing.

That already takes you to three accounts. You could have even more if you invest on multiple platforms.

We examine the argument for investment consolidation in light of this. What are the most important things to watch out for, and how much could you save?

How much in platform fees could you avoid?

Potentially lower fees are one of the main advantages of combining your investment accounts. Depending on how big your portfolio is, the savings could total hundreds or even thousands of pounds over several years.

An analysis of the potential savings from combining multiple ISA accounts has been conducted by the investment platform Interactive Investor. It discovered that by combining their ISA pots, an investor with a £100,000 portfolio, evenly distributed among three significant UK providers, could save 858 over a five-year period.

An investor with a portfolio worth £250,000 saw this number increase to 3,197, and an investor with a portfolio worth £500,000 saw it rise to 6,396.

Investors should conduct their own research to determine which investment platform would be most cost-effective for them, but the calculations assumed a 5% annual growth rate for investments and consolidated the accounts into Interactive Investor's ISA, which has a flat fee structure. Below, we provide more analysis.

"Many investors find it difficult to monitor their performance because ISAs are disorganized and dispersed among various providers, each with their own fees," stated Myron Jobson, senior personal finance analyst at Interactive Investor.

"More than just tidying up, consolidating multiple ISAs into one account can result in significant cost savings, increased efficiency, and better oversight of your investments," he continued.

The same can be said for other kinds of accounts, such as regular investment accounts and, occasionally, pensions.

It is worthwhile to look around for the most affordable investment platform before combining your accounts. Depending on your portfolio's size, this differs for each investor. A flat fee structure may be preferred by those with larger investment amounts, while those with smaller sums might be better off choosing a percentage fee structure.

We examine the effects of flat versus percentage fees on three major investment platforms, focusing on portfolios ranging from 1,000 to 500,000.

BFIA is the source. For purely illustrative purposes. Particularly, calculations are related to the providers' ISA accounts. Because different fee caps apply to stocks and shares purchased through an AJ Bell or Hargreaves Lansdown stocks and shares ISA, calculations are predicated on the assumption that assets held are funds.

What you should know about transferring investments.

There are a few crucial factors to keep in mind when combining your investment accounts.

Regulations governing ISA transfers: Exercise extra caution when moving money between ISAs because doing so incorrectly may cause you to lose your tax benefits on the amount transferred. You must fill out an ISA transfer form and get in touch with the provider you wish to switch to. "Bed and ISA" transfer: To lower your tax liability, you must transfer assets from a standard investment account to an ISA. Since this type of transaction typically has a deadline of a few days prior to the end of the tax year, make sure you allow ample time to complete it. Tracking down lost investments: If you are cleaning up your finances and believe you may have forgotten about some old accounts, contact the concerned provider to ask for assistance. You will require identification. Try entering your information into an online tool if you can't recall which provider you used. Various options are available based on whether you are looking for lost savings, shares, premium bonds, or a lost pension.