Are you looking to use your ISA allowance to invest in a FTSE 100 company? A good way to go about that is via a FTSE 100 Tracker Fund – and here’s how.
What is an ISA Tracker Fund?
A tracker fund is a collective investment scheme. It follows the movement of a market index (like the FTSE 100).
When the index rises, so too will the value of your fund – and vice versa. An index is made up of a number of stocks and shares, and changes in the shares are used to calculate the index.
Because this is an ISA, you can invest up to £20,000 this tax year as this is the ISA allowance for tax year 2019/2020 – which will remain the same for 2020/2021. The returns you gain from this investment will be protected from the tax man – so for budding or prospective investors, this is well worth taking advantage of.
Why invest in a FTSE 100 Tracker Using my ISA?
There are quite a few benefits to choosing one of these funds:
- Investing using your ISA allowance, which allows you to invest up to £20,000 each tax year with no tax on your returns
- Generally low costs and allows for diversification of investments
- No fee for active management of the funds
- Wide variety of choice – while it can be very hands off, you can also opt to ensure you choose your funds.
- Simple and straightforward
So, how do I invest?
You can invest directly in a FTSE 100 Tracker fund via a platform. There are many different platforms you can choose to invest through, including:
- Legal and General FTSE 100 Tracker Fund ISA
- Investec FTSE 100 Enhanced Income Plan
- Reyker FTSE 100 Defensive Supertracker Plan
Although you are more than able to invest directly into a fund, you also have the option of buying them through an investment platform. These are also known as a fund supermarket. We’ve done a more thorough blog on these, so make sure you’ve read that.
Fund supermarkets also enable you to invest in other forms of ISAs, including Stocks and Shares ISAs, Junior ISAs, Lifetime ISAs – all while keeping your money safe from the taxman.