Advice - Stocks and Shares ISA

Pipz · 19 March 2017 at 12:49PM

Hi all,

Just after a little advice - I've overpaid my mortgage this year and have an established an emergency fund - I'm looking to contribute to an S&S ISA.

Ideally I'd like to invest to a fund that pays income monthly so that I have the flexibility to deploy received funds as need dictates.

In reality I'll end up reinvesting in the same fund.

I wondered if this strategy would have an adverse effect on my ISA allowance or incur unnecessary charges.

TIA.

Eco_Miser · 19 March 2017 at 1:05PM

So long as the money doesn't leave the ISA wrapper, it won't impact your ISA allowance, and if you choose a platform that doesn't charge for fund transactions you won't incur unnecessary charges (unless you could otherwise have had a cheaper fixed fee platform).

However, not many funds pay monthly income, and restricting yourself to those that do seems unnecessarily limiting, since those funds will be targeted at people who need a monthly income, which you don't.

Do you intend to contribute monthly, or just lumps sums as and when you have them available?

Pipz · 19 March 2017 at 1:15PM

The current plan is to pay in a fixed amount each month -with any additional disposable income for that month paid in after that.

AnotherJoe · 19 March 2017 at 1:16PM

Pipz wrote: »

Ideally I'd like to invest to a fund that pays income monthly so that I have the flexibility to deploy received funds as need dictates.

In reality I'll end up reinvesting in the same fund.

I wondered if this strategy would have an adverse effect on my ISA allowance or incur unnecessary charges.

TIA.

No, but a better plan especially if you plan to reinvest in the same fund would be to invest in an accumulation fund.

Should you wish to take any income out of the ISA or invest it elsewhere inside, just sell some units.

As said by EcoMiser, to make it worse, a monthly paying fund will be very restrictive since there arent many and most likely give you a poorly performing fund to boot.

[Deleted User] · 19 March 2017 at 5:39PM

Eco_Miser wrote: »

However, not many funds pay monthly income, and restricting yourself to those that do seems unnecessarily limiting, since those funds will be targeted at people who need a monthly income, which you don't.

I would suggest to anyone wanting monthly income from a fund could instead split their investment into three funds which pay quarterly income. Just make sure that the pay day for each of the three falls in a different month.

novice_1 · 19 March 2017 at 7:26PM

Instead of limiting yourself to those paying a monthly dividend, just invest in an accumulator and sell out as/when you need. Over the long term, talking averages, you should see a monthly increase in the capital value.

Pipz · 19 April 2017 at 6:07AM

Thanks for the advice.

My next question (and I appreciate this will vary between users) is which funds/platform is recommended for and individual with little experience in investing should go with?

I've made a start at researching with MSE's guide and trying to pick up info from this forum and currently Cavendish Online seems a good option as it gives access to Fidelity (which I think is a fund?).

Having browsed online - I can see that Cavendish makes up a mock portfolio with varying percentages attributed to different funds within a portfolio. Whilst I understand the importance of diversification does that apply to funds within a platform or is a better approach to subscribe to different platforms as well (one per Tax year ofc).

TIA.

AnotherJoe · 19 April 2017 at 7:51AM

Why would different platforms make any difference ? It's the investments that grow (or diminish), the platform is just a container. The only thing having several containers will do is make it more complex and almost certainly more expensive.

economic · 19 April 2017 at 8:29AM

AnotherJoe wrote: »

Why would different platforms make any difference ? It's the investments that grow (or diminish), the platform is just a container. The only thing having several containers will do is make it more complex and almost certainly more expensive.

isnt it a good idea to spread investments across a couple of platforms in case one goes bust? at least when the size becomes large enough to move to another platform.

AnotherJoe · 19 April 2017 at 8:36AM

Only if you are ultra paranoid because the funds aren't held in the platforms name so if they went bust someone else would take over the admin and tehnfunds would still be in the investors name not the platforms.
It would require a scam larger than Madoff to abscond with the money. . Maybe it's something the OP can worry about when their ISA gets to £50k.

AlanP_2 · 19 April 2017 at 8:45AM

Pipz wrote: »

I've made a start at researching with MSE's guide and trying to pick up info from this forum and currently Cavendish Online seems a good option as it gives access to Fidelity (which I think is a fund?).

Having browsed online - I can see that Cavendish makes up a mock portfolio with varying percentages attributed to different funds within a portfolio. Whilst I understand the importance of diversification does that apply to funds within a platform or is a better approach to subscribe to different platforms as well (one per Tax year ofc).

TIA.

Fidelity isn't a fund in this context, it is the platform. Cavendish act as your Execution Only Broker in effect and use the Fidelity platform for the transactions.

They have done a deal with Fidelity to market their product and have negotiated a deal that typically means it is cheaper to use them than go to Fidelity direct.

Fidelity also offer their own range of funds so it can be confusing when you first look. These are on offer via Cavendish/Fidelity as are
plenty of others.

Advice - Stocks and Shares ISA

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