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  • FIRST POST
    • lucyonline
    • By lucyonline 18th May 15, 11:03 AM
    • 23Posts
    • 3Thanks
    lucyonline
    Nutmeg, Vanguard Lifestrategy or Ready-Made Portfolio?
    • #1
    • 18th May 15, 11:03 AM
    Nutmeg, Vanguard Lifestrategy or Ready-Made Portfolio? 18th May 15 at 11:03 AM
    Hi all

    Complete newbie to investing here and was very much hoping for some of your expert advice.

    I have always been a bit nervous of the stock market but have always used my full Cash ISA allowance. I'm feeling a bit braver now and would like to put this year's ISA allowance of £15,240 into a Fund in a Stocks and Shares ISA. I already have the money in savings so am ready to transfer. Before I do, a few questions:

    1. I am clueless and don't have the time or understanding to research and choose between individual funds. I have been looking at Nutmeg who seem to do all the work for you (great for me) but on the forums people seem to say that you can do better than Nutmeg for a lower fee and better returns. One of the suggestions that comes up a lot is the Vanguard Lifestrategy range (I'd probably go 40 or 60), but that means buying an individual fund rather than a portfolio and I wasn't sure if it's better to diversify. Then there are the Ready-made fund portfolios offered by BestInvest or HL or whoever, which are more expensive than Vanguard but a little cheaper than Nutmeg but not actively managed which I think would mean that every so often I would need to sit down and assess and make decisions about whether or not to move my money which I'm not qualified to do!

    So the question is, for a complete clueless person who wants to pretty much just put the money somewhere and leave it and have it do better than it would in Savings/Cash ISA, what would be the best option?

    2. Once a decision has been made, is it better to then buy the thing in one big go (to maximise the use of the money that is currently sitting in savings) or drip feed to avoid buying when the market is high?

    Thank you so much for your time.
Page 5
    • C_Mababejive
    • By C_Mababejive 4th Dec 17, 8:27 PM
    • 10,355 Posts
    • 9,389 Thanks
    C_Mababejive
    Do most people go for VLC ACC or INC funds? I guess INC class gives more visibility ??
    Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
    • badger09
    • By badger09 5th Dec 17, 1:04 PM
    • 5,896 Posts
    • 5,231 Thanks
    badger09
    Do most people go for VLC ACC or INC funds? I guess INC class gives more visibility ??
    Originally posted by C_Mababejive
    No idea.

    Personally in my ISA I have Acc because I have no need to draw income. If I was holding it in an unwrapped account, I would hold Inc because I would find record keeping easier.
    • Linton
    • By Linton 5th Dec 17, 1:13 PM
    • 9,031 Posts
    • 9,117 Thanks
    Linton
    If you were using an ISA or a SIPP the only reason to have an INC fund is if you want the income. On the other hand if you are holding the funds in a non-tax protected account an INC fund is probably easier as although you will potentially pay income tax on both (even though you never see the ACC fund income), tax on INC funds is simpler to manage.
    • TBC15
    • By TBC15 5th Dec 17, 4:37 PM
    • 374 Posts
    • 173 Thanks
    TBC15
    If all else fails, use a food or sex analogy.

    Fortunately, the food one worked...

    Originally posted by ChesterDog
    OK now I’m interested. What’s the sex analogy, and do you have any links.
    This is a private computer not used for my paid day time work as an MP.
    • Coolbeans
    • By Coolbeans 5th Dec 17, 7:24 PM
    • 11 Posts
    • 2 Thanks
    Coolbeans
    HSBC GLOBAL AM UK GLOBAL STGY FUNDS are another alternative to VLS Funds
    • GMNN
    • By GMNN 31st Dec 17, 7:42 PM
    • 22 Posts
    • 4 Thanks
    GMNN
    I'm debating whether to invest in Nutmeg or VLS - I know they are different products and not directly comparable, but I wanted to understand the difference in charges between the two if I were to invest £500 / month for the foreseeable future.

    I currently use IWeb for my S&S ISA, no admin charges, flat £5 commission per trade. So if I invest £500 / month in VLS there, I'm effectively paying 1% fee each time, in addition to the Vanguard 0.22 % ongoing charge for the fund.

    On the other hand, if I put that money in Nutmeg's "Fixed allocation portfolio" I would have an ongoing charge of 0.45% but no commission charges (if I understood correctly) when I deposit the money each month.

    I realise that £60 / year for investing in VLS is not that much in the grand scheme of things, but I want to make sure I do a fair comparison of charges over a long period of time. Am I right in thinking that - purely for the purpose of comparing charges - I would be better off investing in Nutmeg as long as the annual £60 commission charges from IWeb are HIGHER than 0.23% (=0.45-0.22) of my total investment value? So the break point would happen in 4-5 years time, assuming I continue to invest £500 / month... Or am I missing something else?

    Of course I could invest in VLS on a quarterly basis and bring my trading commission down to £20 / year, but I would prefer the monthly investment option. Any ideas for bringing down costs for VLS investment? Suggestions for alternative platforms better suited for this purpose?

    Again, I know VLS and Nutmeg are two very different investment vehicles and are NOT equivalent to one another in terms of fund make up, exposure, balancing etc... This is just a question about comparing ongoing charges over the long term when choosing to invest in one over the other.

    Thanks!
    • ivormonee
    • By ivormonee 31st Dec 17, 8:17 PM
    • 108 Posts
    • 81 Thanks
    ivormonee
    But with Nutmeg you will also incur the charges of the underlying funds (or ETFs) in addition to their own platform/ management fees. And these charges will be on a par with Vanguard's 0.22%. So the comparison becomes iWeb's £5 commission charges in aggregate versus the 0.45% Nutmeg applied to the value of your assets.
    • Alexland
    • By Alexland 31st Dec 17, 8:25 PM
    • 1,618 Posts
    • 1,107 Thanks
    Alexland
    The performance difference between VLS and Nutmeg's fixed allocation ETF portfolios is negligible.

    Nutmeg would cost 0.63% (0.45% platform + 0.17% ETF cost) whereas investing in VLS with Vanguard Investor costs 0.37% (0.15% platform + 0.22% fund cost) so 0.25% cheaper and you are with a more secure provider.

    If you have an accumulated historic ISA balance on iWeb you could stick it in VLS this tax year and then start a new S&S ISA with Vanguard Investor next tax year for future contributions?

    Then every 3 years you could partially transfer some of your Vanguard Investor ISA to your iWeb ISA (to save the 0.15% platform cost which on £18k would otherwise be £27 per year) and pay for a single £5 trade to invest on iWeb?

    That way I doubt either company would make a profit from having you as a customer!

    Alex
    Last edited by Alexland; 31-12-2017 at 8:45 PM.
    • GMNN
    • By GMNN 31st Dec 17, 9:25 PM
    • 22 Posts
    • 4 Thanks
    GMNN
    But with Nutmeg you will also incur the charges of the underlying funds (or ETFs) in addition to their own platform/ management fees. And these charges will be on a par with Vanguard's 0.22%. So the comparison becomes iWeb's £5 commission charges in aggregate versus the 0.45% Nutmeg applied to the value of your assets.
    Originally posted by ivormonee
    The performance difference between VLS and Nutmeg's fixed allocation ETF portfolios is negligible.

    Nutmeg would cost 0.63% (0.45% platform + 0.17% ETF cost) whereas investing in VLS with Vanguard Investor costs 0.37% (0.15% platform + 0.22% fund cost) so 0.25% cheaper and you are with a more secure provider.

    If you have an accumulated historic ISA balance on iWeb you could stick it in VLS this tax year and then start a new S&S ISA with Vanguard Investor next tax year for future contributions?

    Then every 3 years you could partially transfer some of your Vanguard Investor ISA to your iWeb ISA (to save the 0.15% platform cost which on £18k would otherwise be £27 per year) and pay for a single £5 trade to invest on iWeb?

    That way I doubt either company would make a profit from having you as a customer!

    Alex
    Originally posted by Alexland
    Thank you to both for the advice. I didn't realise the ETF cost in Nutmeg would be additional, I thought it was already rolled into their 0.45 % ongoing charge. Definitely leaning towards VLS then..

    Indeed I have already invested in my iWeb S&S ISA this tax year so I will stick with it for now, then will consider other options in April.
    • Alexland
    • By Alexland 31st Dec 17, 9:31 PM
    • 1,618 Posts
    • 1,107 Thanks
    Alexland
    Thank you to both for the advice. I didn't realise the ETF cost in Nutmeg would be additional, I thought it was already rolled into their 0.45 % ongoing charge. Definitely leaning towards VLS then..

    Indeed I have already invested in my iWeb S&S ISA this tax year so I will stick with it for now, then will consider other options in April.
    Originally posted by GMNN
    Yup £500 per month in a Vanguard Investor ISA next tax year would cost you around 7/12ths of 0.15% X £6000 so around £5.25 total platform fee compared to £60 of trades on iWeb.

    Alex
    Last edited by Alexland; 31-12-2017 at 9:41 PM.
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