NATWEST Stocks & Shares ISA - good investment?

ileven1225 · 12 March 2018 at 10:22PM

Hi All,

Hopefully my question was not too obvious to some of you.

I have received an email from Natwest promoting their investment product 'Tax-free returns - invest using a Stocks & Shares ISA'. Basically I could create an stocks and shares ISA account with Natwest. As i don't have any ISA in 2017/2018, i could put in up to £20k into the ISA account. The money could be invested using Natwest product (Invest fund). Currently predicted low risk with 3.8% return, medium risk with 8.3% and high risk with 13.6% return. Also I could get 1% cash back in July 2018.

It sounds good to me:
1. It is tax free
2. I already planned to invest up to £20k for something but haven't decided in which way. So what Natwest provides fits my needs.
3. The return rate looks OK and I understand that there is risk.

My question is that, do you agree with me above or you have anything else to recommend? I don't want a high risk high return way, I would like to have a reasonable risk with medium return.

Hopefully the above makes sensw and thanks for everyone's answers/comments in advance!

jimjames · 12 March 2018 at 10:57PM

An ISA is not a good investment one way or another, it's purely a wrapper that helps you avoid any tax on the contents. So Natwest are offering you some investments and a wrapper to hold them.

Banks tend not to be very good for investments - well not very good for you anyway - generally they're good for them as they make money from them.

I'd recommend reading up about investment on https://www.monevator.com so you understand a bit more but I'd suggest using platform for your S&S ISA rather than a bank as you'll have a much better selection of options.

ileven1225 wrote: »

It sounds good to me:
1. It is tax free
2. I already planned to invest up to £20k for something but haven't decided in which way. So what Natwest provides fits my needs.
3. The return rate looks OK and I understand that there is risk.
!

1) All ISAs are tax free so that's irrelevant.
2) Maybe true but so will many other options
3) The return is not guaranteed so any numbers they show won't really tell you anything about future performance

Alexland · 12 March 2018 at 11:08PM

The 1% offer is basically a refund of the 0.60% fund and 0.35% platform fee for the first year. These fees are nearly 3x higher than you could pay with Vanguard Investor who do the well regarded LifeStrategy fund series at 0.22% fund and 0.15% platform fee.

Given bond market conditions I would be cautious investing in a too cautious fund as we have seen months recently where cautious funds have seen losses where adventurous funds have seen gains. A balanced approach may be better but it depends on your volatility tolerance and investment timescales.

Investing should be for at least a 5 year outlook preferably 7 to 10 years. The longer you are invested the less likely you are to make a loss.

Alex

dunstonh · 13 March 2018 at 12:32AM

Natwest have set up a robo-advice service. Its a basic option with a handful of bank managed funds that launched in 2016.

They have a £10 initial charge on top of what they call a 0.35% platform charge (despite it not being a platform in the sense of what posters here and IFAs would consider a platform) and fnud charge of 0.6% p.a.

So, its quite expensive for basic, low feature, guided process that is using bank funds. And as many people know, bank funds tend to be at the bottom end.

ileven1225 · 13 March 2018 at 8:31AM

jimjames wrote: »

Banks tend not to be very good for investments - well not very good for you anyway - generally they're good for them as they make money from them.

1) All ISAs are tax free so that's irrelevant.
2) Maybe true but so will many other options
3) The return is not guaranteed so any numbers they show won't really tell you anything about future performance

Thanks a lot for your reply!

Why it’s not good for me? What type of investors those bank ISA is good for?

I guess any product would not guarantee return. It’s hard to choose which product is good for myself. Can you please provide any advice on selection of product?

Thanks!:D

ileven1225 · 13 March 2018 at 9:17AM

Alexland wrote: »

The 1% offer is basically a refund of the 0.60% fund and 0.35% platform fee for the first year. These fees are nearly 3x higher than you could pay with Vanguard Investor who do the well regarded LifeStrategy fund series at 0.22% fund and 0.15% platform fee.

Given bond market conditions I would be cautious investing in a too cautious fund as we have seen months recently where cautious funds have seen losses where adventurous funds have seen gains. A balanced approach may be better but it depends on your volatility tolerance and investment timescales.

Investing should be for at least a 5 year outlook preferably 7 to 10 years. The longer you are invested the less likely you are to make a loss.

Alex

Thanks Alex, it looks like Natwest overcharged their clients.

I will split the saving into 3 groups probably: £10k low risk, £5k medium and £5k high risk.

I actually planned 1 year to see if I would spend more time on this type of investment. perhaps as you said, it not enough to see the outcome.

Alexland · 13 March 2018 at 9:27AM

I wouldn't go as far as accusing them of overcharging as they are clear on their charges and I assume they apply them correctly. I would just observe they are on the expensive side of the market when compared to bigger players like Vanguard. I have some sympathy that it must cost lots to maintain a branch network.

Investing for only 1 year has a circa 25% chance of ending in a loss. Basically you might just randomly hit a period where the market is declining and then crystallise a loss on withdrawal. The best investing is long term investing.

Still if you are happy with the risk (and have nothing better to do with the money) and want to see the 3 funds go up and down then that's fine or you could stick it all in the medium risk fund. High street bank funds tend to be a bit more cautious anyway as they are aware their customers might not have much volatility tollerence which comes from confidence built from understanding the underlying assets.

Alex

dunstonh · 13 March 2018 at 9:58AM

Why it!!!8217;s not good for me? What type of investors those bank ISA is good for?

Like most bank products, they are aimed at people that wouldn't know good from bad and don't really care what they have.

aj23_2 · 13 March 2018 at 10:40AM

Banks are only there to serve their directors and big shareholders.

I got my AGM from Leeds BS yesterday, and 5 of the directors got £50k pay increases last year, one of them to £420k. They only care about making profit off their customers, whom without they wouldn't exist for anyway.

coyrls · 13 March 2018 at 12:54PM

Alexland wrote: »

Given bond market conditions I would be cautious investing in a too cautious fund as we have seen months recently where cautious funds have seen losses where adventurous funds have seen gains.

I’m a bit bemused by this statement, of course there will be months when there are losses in cautious funds and gains in adventurous funds, so that doesn’t help anybody make a decision on whether to invest in an adventurous or a cautious fund.

Alexland · 13 March 2018 at 1:46PM

We live in strange times and bonds are looking expensive so may not be as safe a choice as historically. I just advising caution if picking cautious funds that are heavy in bonds.

NATWEST Stocks & Shares ISA - good investment?

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