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  • FIRST POST
    • Not Me Officer
    • By Not Me Officer 28th May 17, 9:45 PM
    • 280Posts
    • 49Thanks
    Not Me Officer
    Investing newbie with questions...
    • #1
    • 28th May 17, 9:45 PM
    Investing newbie with questions... 28th May 17 at 9:45 PM
    On the back of recommendation here i bought the "DIY Simple Investing" book by John Edwards. So far so good and i'm finding it very helpful so big thanks for the recommendation.

    I've just got to the section where he discusses charges and the impact of charges and now i have questions. I will probably have questions later on as i work more through this book so you'll have to excuse me for bumping the thread from time to time.

    The book took me to http://monevator.com/compare-uk-cheapest-online-brokers/

    Before the read i had decided i was going to go with Hagreaves Lansdown. Their layout i thought was easy for a novice like me to understand. Well maybe not easy but easier. I felt more comfortable with that than the much mentioned Cavendish Online.

    So i go to that link and try to find a comparison for the two.

    I was surprised by the charges if i understood them right. I thought HL didn't charge to deal? Or was i just badly misinformed?



    My plan was to invest in a tracker of some description once i'd understood more and taken a closer look at what was available rather than a big list of funds. Just invest in a single simple tracker and then be done with. Maybe take a look in 1-2 years time. My contributions will be monthly.

    So firstly i see i'm going to be charged 0.45%. Looking around this seems on the higher side, correct, or not?
    I then notice the £11.95 charge. What is that exactly? £11.95 per purchase (so if i pay in £100 per month then it's really only £88.05? £11.95 per year? Is that even applicable to a tracker fund?)
    £1.50 for "regular investing". I'm guessing this is the one that is deducted from my monthly contributions, so that £100 is actually only £98.50?

    In comparison Cavendish Online are much much cheaper (if i've understood right), but is there any reason i should look at HL over Cavendish?

    Could someone please spare the time to go through the charges explanation with me?



    Don't worry, the charges is somewhere around halfway in the book, so i made it that far with only 1 question
Page 3
    • Linton
    • By Linton 11th Jun 17, 7:17 AM
    • 8,472 Posts
    • 8,407 Thanks
    Linton
    How do any of you base your decisions on where to place your money?
    Originally posted by Not Me Officer
    The primary factor is what the fund invests in, in terms of geography, company sizes and industry sectors, and the effect of buying the fund on my overall portfolio asset allocation.
    • Eco Miser
    • By Eco Miser 11th Jun 17, 7:51 AM
    • 3,158 Posts
    • 2,920 Thanks
    Eco Miser
    But the income/accumulation thing.

    I read recently from Dunstonh he goes for income where possible as they are 'cleaner' (what that means i don't know).

    When i googled a definition of the both then with my lack of understanding i don't know how an income fund could be better than an accumulation for someone who is trying to build their pot.
    I want my pot to get as big as it can as quick as it can and come retirement day that's when i'll access it, so i can't see any benefit of having an income fund until that day.
    Originally posted by Not Me Officer
    AnotherJoe was comparing income with growth, Dunstonh was comparing income units(INC) with accumulation (ACC) units. They are different concepts that happen to have the same name.
    The first refers to shares etc with a high dividend, but little overall growth in price, the second refers to funds which distribute their income to the fundholders, whereas an ACC unit retains the income in the fund. Income tax may be due on both Inc and Acc units, but keeping track of the income from Acc units is harder, which is why Dunstonh prefers inc units.

    I hope I've represented the position of AnotherJoe and Dunstonh correctly.
    Eco Miser
    Saving money for well over half a century
    • bigadaj
    • By bigadaj 11th Jun 17, 7:55 AM
    • 10,676 Posts
    • 6,975 Thanks
    bigadaj
    I've wondered this but haven't yet asked.

    I don't know your personal situation. I don't know what stage you're at in your retirement journey - whether you're early 20s or 60s or beyond.

    But the income/accumulation thing.

    I read recently from Dunstonh he goes for income where possible as they are 'cleaner' (what that means i don't know).

    When i googled a definition of the both then with my lack of understanding i don't know how an income fund could be better than an accumulation for someone who is trying to build their pot.
    I want my pot to get as big as it can as quick as it can and come retirement day that's when i'll access it, so i can't see any benefit of having an income fund until that day.

    But like i said i'm not an expert in this field so maybe there's a reason to have income rather than accumulation now?
    Originally posted by Not Me Officer
    You are conflating two issues. The first is whether to hold income or accumulation units within your chosen fund which is what dunstonh is referring to. This simply means units that pay out a dividend as cash rather than automatically adding it back into the fund. Within a pension or USA this doesn't make much difference, unwrapped then income is easie as you know the split of income and capital growth, which you need to know as the former is subject to income tax, whilst the latter falls into capital gains.

    The second part is whether the investments you hold are growth type or income type, the latter typically being companies that pay out higher dividends. This is an investment style issue, many people might say that investing for growth is better over the longer term whilst you are in the accumulation part of your life, and then switching to income when you retire and want to draw money out, however you can take an income by selling capital and units, so there is always an alternative.
    • AnotherJoe
    • By AnotherJoe 11th Jun 17, 10:08 AM
    • 7,566 Posts
    • 8,168 Thanks
    AnotherJoe
    I've wondered this but haven't yet asked.

    I don't know your personal situation. I don't know what stage you're at in your retirement journey - whether you're early 20s or 60s or beyond.

    But the income/accumulation thing.

    I read recently from Dunstonh he goes for income where possible as they are 'cleaner' (what that means i don't know).

    This is mostly only relevant if the funds are outside a tax wrapper, eg if they are not in an ISA or SIPP. If they are in a tax wrapper like those, then if you intend to hold them for the long term accumulation, IMO only ACC units make sense, (and for technical reasons, Acc units should provide more growrth than reinvesting the income into the Inc units)

    When i googled a definition of the both then with my lack of understanding i don't know how an income fund could be better than an accumulation for someone who is trying to build their pot.
    I want my pot to get as big as it can as quick as it can and come retirement day that's when i'll access it, so i can't see any benefit of having an income fund until that day.

    But like i said i'm not an expert in this field so maybe there's a reason to have income rather than accumulation now?
    Originally posted by Not Me Officer
    I am in my 60's and just about to start the "decumulation" phase. Hence me looking, partly also for diversification, to get some of my income "directly" as income, rather than by selling accumulation units.

    If you are 34, looking only to have your fund grow ratehr than derive any income from it, and looking for long term buy and hold, and within an ISA or SIPP, buy the Acc version.

    (There's another reason to do that as well, which is that funds that pay out a high level of income are arguably more likely to ignore whole geographies and areas of the market, which you wouldn't want to be out of if long term growrth was your aim.)
    • Not Me Officer
    • By Not Me Officer 11th Jun 17, 5:30 PM
    • 280 Posts
    • 49 Thanks
    Not Me Officer
    I tell you what - i'd be lost without you lot that's for sure.

    Here's a question (every time i think i'm coming to the end of them i have another ... apologies)

    as mentioned i was looking at the VLS80 fund. I think it fits well with my attitude to risk (the VLS100 is a bit too far), how i would like to manage the ISA/SIPP (likely SIPP) and my long term 30-35 year goal (hopefully not 40 year!!!). After speaking in detail with my wife she feels she's in the same position, same approach on risk (so VLS80 for her also).

    Now we're in 2 different types of workplace pension.

    I'm with NOW Pensions
    She's with NEST.

    Now bearing in mind the above (regards attitude to risk) the two seem to operate differently.

    NOW Pensions
    http://www.nowpensions.com/wp-content/uploads/2015/09/Investment-proposition.pdf
    https://www.nowpensions.com/wp-content/uploads/2017/04/NOW-Pensions-DGF-Factsheet-Q1-2017.pdf
    https://www.nowpensions.com/wp-content/uploads/2016/08/Statement-Investment-Principles.pdf

    I think the first link is probably the appropriate one?

    NEST
    https://www.nestpensions.org.uk/schemeweb/NestWeb/public/memberhelpcentre/contents/what-investment-funds-can-i-choose-from-and-how-can-i-change-my-fund.html
    https://www.nestpensions.org.uk/schemeweb/NestWeb/public/members/contents/how-my-money-is-managed.html

    When i log into my online portal it appears pretty rigid regards what i am investing in. Unless i've missed something then NOW decide where the money goes and that's the end of the story.
    So i would assume since they need to cater for a whole load of people then they will go somewhere in the middle, maybe on the cautious edge of the middle.

    However when my wife logs into her NEST portal she has options. It appears she's invested somewhere in the middle also but she also has a riskier option if she so desires which she can change herself.


    So again based on what i said regards our ISA/SIPP and VLS80 would it be best to go with the riskier fund or keep it fairly safe to balance things out?

    And have i missed something - can you change regards NOW like you can with NEST?

    Note: only minimums are contributed by both employer & employee.
    • dunstonh
    • By dunstonh 16th Jun 17, 5:50 PM
    • 89,532 Posts
    • 55,973 Thanks
    dunstonh
    Just saying it was income units I was referring to. I prefer them as it aids on rebalancing. You can use the natural income paid into the cash account to reinvest into different funds that are underweight to your desired allocations.

    Plus, as it was said above, with unwrapped investments, it makes it a lot easier to manage using the CGT allowance to avoid CGT.

    as mentioned i was looking at the VLS80 fund. I think it fits well with my attitude to risk (the VLS100 is a bit too far)
    To be honest, when you are already that high up the risk scale with VLS80, then going to VLS100 is not really going to make that much of a difference.

    When i log into my online portal it appears pretty rigid regards what i am investing in. Unless i've missed something then NOW decide where the money goes and that's the end of the story.
    NOW and NEST are very basic options. Aimed at the small employers who do not have the resources to operate a larger or better scheme. The investment selection with both is extremely limited.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • cynicaldoc
    • By cynicaldoc 16th Jun 17, 8:43 PM
    • 25 Posts
    • 10 Thanks
    cynicaldoc
    Difficult isn't it! The more I read the more I think I understand and then I read more and I'm not sure again...

    I've only started seven months ago and have £2600 in HL in a variety of funds and a single stock that's local to me:

    Blackrock UK Equity Tracker £529.29 +£20.93 + 4.12%
    CF Woodford Equity Income £439.85 +18.70 +£4.44%
    Jupiter India £335.07 +£22.96 +7.36%
    L+G International Index Trust £425.64 +£23.00 + 5.71%
    Scottish Mortgage Investment Trust £307.62 +£1.07 +0.35%
    (currently ex-div; pending div payment)
    SXX £116.59 +16.62 +16.62%
    Vanguard LS 80% Equity £441.37 Evens (bought yesterday)

    Stock value £2,586.99
    Total value £2,595.97 (+£94.16 +3.78%)

    I'm now wondering whether I just cash everything in and transfer it all to Vanguard platform and everything into VG LS60 or 80, thus only paying 0.22% and not the additional 0.45% to HL.

    Or transferring all my funds to HSBC FTSE World Index fund, or into the iShares All World ETF and just having that one fund or ETF on HL. I'm aiming for 25-30 years investment.
    Last edited by cynicaldoc; 16-06-2017 at 8:50 PM.
    • JohnRo
    • By JohnRo 16th Jun 17, 9:35 PM
    • 2,458 Posts
    • 2,213 Thanks
    JohnRo
    25-30 years is a long time and even if there is a major market correction or crash any time soon it would leave ample time to restore your investment.

    If you've got the stomach for volatility, which that selection implies you have in spades, then why not just look at holding something like VWRL and let the global equity market do it's thing for you.

    https://www.vanguard.co.uk/uk/portal/detail/etf/overview?portId=9505&assetCode=EQUITY##overview

    Hold it with iWeb (no custody fee) and then simply check in when the quarterly distributions land and either pay them away until you've built a decent sum or add them to a chunk of new money going in.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • Audaxer
    • By Audaxer 16th Jun 17, 10:19 PM
    • 563 Posts
    • 244 Thanks
    Audaxer
    I'm now wondering whether I just cash everything in and transfer it all to Vanguard platform and everything into VG LS60 or 80, thus only paying 0.22% and not the additional 0.45% to HL.
    Originally posted by cynicaldoc
    It sounds a good idea to put it all into one fund like a VLS, but on your balance 0.45% is only about £11.70 per annum, so not worth the hassle to transfer, and I think there is a £25 transfer fee. The Vanguard platform fee is less, but probably worth waiting until your balance is larger and then consider transferring to maybe something like Halifax Share Dealing (£12.50 platform fee) or IWeb, which I understand has no platform fee.
    • Not Me Officer
    • By Not Me Officer 17th Jun 17, 7:34 PM
    • 280 Posts
    • 49 Thanks
    Not Me Officer
    To be honest, when you are already that high up the risk scale with VLS80, then going to VLS100 is not really going to make that much of a difference.
    Originally posted by dunstonh
    Indeed. I feel i've done nothing but read for the past 2 weeks and since making that post i've found maybe i shouldn't have written VLS100 off actually.
    NOW and NEST are very basic options. Aimed at the small employers who do not have the resources to operate a larger or better scheme. The investment selection with both is extremely limited.
    It's nothing i can change since it's the employer/payroll who decide but out of interest of these 'basic' ones like NOW and NEST (and any others you may throw in with that) what would you consider best and why?

    And may be also worth asking just out of curiosity why would an employer pick NEST over NOW and vice versa? I don't imagine my company picked NOW because they're the best for the employee. Knowing how mine operate i would imagine they'd be the cheapest for the employer if that was a possibility. Other than that it'd be a stab in the dark.




    Getting back on track though, i was looking at something running alongside VLS80/100 as a secondary fund. Something that the VLS isn't too strong in.
    Now i'm going to test whether i've been able to read up accurately enough here. I was looking at something like:

    Vanguard Emerging Markets Stock Index: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-emerging-markets-stock-index-accumulation/fund-analysis
    or
    BlackRock Emerging Markets Equity Tracker: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-emerging-markets-equity-tracker-h-accumulation/fund-analysis

    If i've read it correctly then the VLS range doesn't really cover the emerging markets so well. I'm investing for the next 30-40yrs so i don't mind the risk as there's plenty of time to roll a few ups and downs.
    If i'm ok so far then the only thing i can't really tell is why you'd then opt for one over the other. I haven't learnt enough to do that.

    And beyond that i wouldn't know the ratio split to go on these. Maybe an 80/20 for VLS/Emerging but then i picked that ratio out of thin air. Advice?


    For the record it's unlikely i'll be using Hargreaves Lansdown. I just used their links as i find their site easy to navigate.
    • Not Me Officer
    • By Not Me Officer 18th Jun 17, 10:08 PM
    • 280 Posts
    • 49 Thanks
    Not Me Officer
    Ok so i have just opened a SIPP with Cavendish Online and i want to check something because i want to be 100% sure as if it goes wrong then it's not small change to me.

    Part of the application was me having to specify the lump sum i'm putting in there which i did.

    As it went on, one of the pages ("Payment") specified an account number and sort code, said it was Barclays Bank and said i should put my national insurance number in the reference as part of the Bank Transfer.

    Does that all sound right to anyone who's done this already?

    I assume i'll have to sit tight on my online account being available to log in. So should i transfer the money to that now or wait on the log in details?
    • cynicaldoc
    • By cynicaldoc 18th Jun 17, 10:14 PM
    • 25 Posts
    • 10 Thanks
    cynicaldoc
    25-30 years is a long time and even if there is a major market correction or crash any time soon it would leave ample time to restore your investment.

    If you've got the stomach for volatility, which that selection implies you have in spades, then why not just look at holding something like VWRL and let the global equity market do it's thing for you.

    Hold it with iWeb (no custody fee) and then simply check in when the quarterly distributions land and either pay them away until you've built a decent sum or add them to a chunk of new money going in.
    Originally posted by JohnRo
    Thanks... I did think of rather than holding an ETF, then buying a large % of my portfolio in RIT plc shares in one go (to only pay the dealing fee once) and hold it for a long time to ride out any volatility. It has consistently outperformed the All Shares World Index, albeit for a management charge of 1.14%, plus it's also trading +5.25% premium at present.
    • AlanP
    • By AlanP 19th Jun 17, 2:39 PM
    • 954 Posts
    • 671 Thanks
    AlanP
    Ok so i have just opened a SIPP with Cavendish Online and i want to check something because i want to be 100% sure as if it goes wrong then it's not small change to me.

    Part of the application was me having to specify the lump sum i'm putting in there which i did.

    As it went on, one of the pages ("Payment") specified an account number and sort code, said it was Barclays Bank and said i should put my national insurance number in the reference as part of the Bank Transfer.

    Does that all sound right to anyone who's done this already?

    I assume i'll have to sit tight on my online account being available to log in. So should i transfer the money to that now or wait on the log in details?
    Originally posted by Not Me Officer

    Sounds right to me, if I recall we sent our payment across at the same time as posting the form and they matched everything up at their end.

    The Cavendish Helpdesk via email were very helpful and answered any queries we had about the process quickly.
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