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  • FIRST POST
    • tony863
    • By tony863 7th Oct 17, 9:54 PM
    • 334Posts
    • 102Thanks
    tony863
    Novice investment fund
    • #1
    • 7th Oct 17, 9:54 PM
    Novice investment fund 7th Oct 17 at 9:54 PM
    Hi all,

    I'm 38, working full time, paying into a public sector pension and have 6 months insurance on my wages in the event of needing to take time off work.

    I have no debt and currently have approx £5k premium bonds and £6k just sat in a sub account in my standard Barclays account. I don't think it earns any interest whatsoever.

    I currently pay £150pm into my premium bonds account but don't miss it and wonder whether I should transfer a chunk of my money (£3k maybe?) into an investment fund and then use the £150pm to top it up.

    I've had a quick look at Nutmeg.com and I've seen that lots of people on here to for the vanguard LS 60 or 80. I'm looking at investing longer term (10 to 15years).

    I don't know much about these funds and I don't want to learn tbh. I'm willing to risk my money and understand I can lose more than I put in.

    All things considered, I'm thinking of the VLS60 but wondered if anyone else had any advice or comments to offer?
Page 2
    • Alexland
    • By Alexland 10th Oct 17, 10:21 PM
    • 449 Posts
    • 265 Thanks
    Alexland
    In your situation where you might want access to a proportion of the money before 60 then I would stick that money in an ISA and the rest (up to £4k per tax year) in a LISA.
    • tony863
    • By tony863 10th Oct 17, 11:01 PM
    • 334 Posts
    • 102 Thanks
    tony863
    In your situation where you might want access to a proportion of the money before 60 then I would stick that money in an ISA and the rest (up to £4k per tax year) in a LISA.
    Originally posted by Alexland
    Would you go Nutmeg or VLS?
    • Alexland
    • By Alexland 11th Oct 17, 6:10 AM
    • 449 Posts
    • 265 Thanks
    Alexland
    Its really your decision.
    • tony863
    • By tony863 11th Oct 17, 6:36 PM
    • 334 Posts
    • 102 Thanks
    tony863
    Its really your decision.
    Originally posted by Alexland
    I wasn't going to hold it against you in 22 years time if one made more money than the other I was simply asking your personal opinion because you know much more about the subject than I do.
    • Alexland
    • By Alexland 11th Oct 17, 7:18 PM
    • 449 Posts
    • 265 Thanks
    Alexland
    Ok personally I do use Vanguard for the ISA and Nutmeg for the LISA.

    However when our LISAs grow above £10k next tax year (2x£4ks and 2x£2k bonuses) then I will give serious consideration to moving them to AJ Bell who will be cheaper on larger balances and then using an HSBC or L&G multi asset fund as I already have too much VLS exposure across my ISA and SIPP.
    • tony863
    • By tony863 11th Oct 17, 8:25 PM
    • 334 Posts
    • 102 Thanks
    tony863
    Thanks Alex. Out of everyone, you've been through most helpful and I'm genuinely grateful for your advice.
    • tony863
    • By tony863 12th Oct 17, 7:03 PM
    • 334 Posts
    • 102 Thanks
    tony863
    Right, I've set up two accounts. One is with HL where I've deposited £2k and set up a DD for £100pm. The other is with Nutmeg under the same circumstances.

    Re HL - I think it's just holding it in a LISA at the moment. I think I need to call them tomorrow to get them to put it into the VLS60.

    Re Nutmeg - I deposited the £2k but I can't workout how to set up the DD! I also picked the fully managed account....but have no idea if that's the right choice over the other option. I know it costs more but can I have a little reassurance that people on here would make the same choice?

    Any other advice would be great
    • TheShape
    • By TheShape 12th Oct 17, 11:47 PM
    • 1,044 Posts
    • 803 Thanks
    TheShape
    Check how you're going to pay charges for the LISA with HL. If they have to sell investments to pay the charges, they will charge £1.50 to do so. You can setup a fund&share account to hold cash to pay charges.
    • tony863
    • By tony863 13th Oct 17, 4:49 PM
    • 334 Posts
    • 102 Thanks
    tony863
    Check how you're going to pay charges for the LISA with HL. If they have to sell investments to pay the charges, they will charge £1.50 to do so. You can setup a fund&share account to hold cash to pay charges.
    Originally posted by TheShape
    Thanks for bringing this to my attention. I've just been on the phone to HL and they were just going to let the charges accumulate over time and then bill me when they reached approx £50. I've now opened a fund&share account where I've deposited £30. I've also had to instruct them to set up an instruction to recover any fees from that account in the future as long as there is money in there.

    It's all a really steep learning curve tbh. I actually opened the two LISA's that I mentioned in my above post, only to find out that the law only permits 1 LISA per person! I've subsequently had to close my LISA with Nutmeg and open another S&S ISA in which they will transfer my original £2k. I've also diverted the £100pm into the same pot and Nutmeg will do the rest.

    I've opted for the managed account at 0.75 fee.... not sure if this is right so I'd appreciate any advice.

    With regards HL - I deposited the £2k but didn't know that it was just sat in a pot doing nothing. I then had to call them and ask them to invest in the VLS60. I also had to set up an instruction for them to invest the £100pm straight into the VLS60 as oppose to just leaving it in the pot.


    Does all of this sound right? I'm quite mindful of my inexperience in this area and want a little reassurance that I'm doing ok so far.

    One final question - Does the Nutmeg S&S ISA idea sound ok? I ask because I was originally opting for the LISA and I wonder whether people regard it as being a good option?

    As always, any extra advice is most welcome.

    Thanks in advance

    Tony
    • Alexland
    • By Alexland 13th Oct 17, 8:09 PM
    • 449 Posts
    • 265 Thanks
    Alexland
    Hi Tony,

    In none of the previous posts did you suggest you were going to open 2x LISAs or go with HL - what happened?

    The cheapest way to hold a low value VLS60 would have been with Vanguard in an ISA wrapper. Vanguard charge a 0.15% platform fee versus HL at 0.45%. The VLS fund cost would have been an extra 0.22% with either. In addition with Vanguard you could have been completely invested as they are happy to deduct fees from the units without needing a cash balance.

    With the LISA the platform fee for HL and Nutmeg Fixed Allocation would be the same at 0.45% but buying VLS would but 0.22% fund fee versus 0.17% for Nutmeg fund fees. Nutmeg would have been 0.05% cheaper and not required you to worry about a cash balance.

    Finally Nutmeg fully managed is more expensive at 0.75% platform plus 0.19% fund fees. They have not released any data to show a performance benefit of the active management. I am in the Fixed Allocation and it is performing well. It's fairly easy to switch over online.

    Alex.
    Last edited by Alexland; 14-10-2017 at 7:39 AM.
    • tony863
    • By tony863 14th Oct 17, 8:34 AM
    • 334 Posts
    • 102 Thanks
    tony863
    Hi Alex,

    I've obviously misinterpreted the information....I'm sorry about that. I thought I had no choice but to invest in a VLS60 is HL. I also thought the everything was centred around LISAs and not standard ISAs.

    Irrespective of the confusion, I'd like to rectify the situation asap. I will contact HL and see if I can cancel the investment without penalty. I'll also cancel the DD and empty the fund and share account. Once I've done that I'll start over again.

    With regards Nutmeg, I don't have anything committed to them in terms of which fund or product I'm involved in. I deposited £2k which is under the banner of an ISA pot. I also set up another DD but again, I can amend if needed.

    I'm really keen to take the advice that you've provided but I just need to clarify in simple terms (for me more than you) what that means.

    I'd appreciate it if you could link me directly to the product if that's possible?

    I'm grateful as always

    Tony
    • richyg
    • By richyg 14th Oct 17, 9:16 AM
    • 135 Posts
    • 146 Thanks
    richyg
    You might want to be careful about "starting over again".

    There are rules about opening ISAs with more than one provider in one year.

    I believe you can transfer between providers but you cant open more than one - so you need to research the rules.

    HL will charge a transfer fee or an account closure fee, depending on what you are trying to do.

    To be honest you might be best leaving things as they are for a bit , learn a little , and act to get to you a final situation that you are happy with next April tax year.

    You might be a few pounds out of pocket but that may be better than getting yourself messed up with HMRC . I was on hold for more than an hour trying to talk to them once.

    Act in haste , repent at leisure
    • Alexland
    • By Alexland 14th Oct 17, 11:23 AM
    • 449 Posts
    • 265 Thanks
    Alexland
    I agree the investments you have now made, having corrected the 2xLISA error, are not bad so no need to act in haste. Even though HL are a bit expensive they are the UKs biggest DIY shop so lots of others are in the same boat including a lot of very rich people!

    The LISA fee difference at 0.05% would not make it worth paying the £25+vat HL exit fee to transfer the LISA to Nutmeg so I would just stick with HL for a now. There is no LISA option with Vanguard Investor direct so you are paying about the right level of LISA fees. At least you have now had the learning experience of using a DIY platform.

    If your LISA grows above £20k then consider switching to AJ Bell YouInvest (the Manchester version of HL) as they would be 0.20% cheaper than HL but charge £1.50 per fund trade which over 12 months of regular contributions (assuming you invest the previous month's bonus at the same time) would be £18. This would normally break even if the balance was at least £10k (as you would be saving 0.2% but paying 0.18% in trades) but you would have to pay the £25+vat HL exit fee so your break even would be if the balance was £20k over 1.5 years (to recover £20 in year 1 and £10 in year 2). But reassess the market at the time incase there are even better offers.

    In terms of the ISA why not give Nutmeg a go for a while but it would cost nothing to switch from managed to fixed allocation for cheaper fees. You might need to wait a few days for the initial investment to settle down and after placing the switch order it will take a few days to occur as Nutmeg only trade twice a week.

    Also the ISA would be even cheaper with Vanguard Investor direct at Vanguard.co.uk and Nutmeg have no exit fees if you choose to transfer it and risk time out of the market. If you want to initiate a transfer create a new account with Vanguard and give them details of your Nutmeg account (but not the password). Don't just close the old account and withdraw the money.

    So for now just sit back and have fun watching your LISA money go up and down. On the ISA consider if you want to change to Nutmeg fixed or transfer to Vanguard. If you leave the ISA alone it might give you the chance to compare the active ISA Vs passive LISA investment approaches.

    Remember you don't make a loss unless you sell at less than you paid so don't worry if valuations move around - those are reflecting other peoples trades not yours!

    Also remember the max you can contribute to a LISA per tax year is £4k and the max on a S&S ISA is £20k minus any contributions to other ISAs (so £16k if you were to fill the £4k LISA) and had no other ISAa. The 25% bonus on a LISA doesn't count as a contribution. Your first bonus will be in April or May 2018 and then about a month after each contribution. As you are using HL the bonuses will appear as cash so you will need to login and tell them to invest it.

    Alex
    Last edited by Alexland; 14-10-2017 at 1:50 PM.
    • tony863
    • By tony863 14th Oct 17, 2:00 PM
    • 334 Posts
    • 102 Thanks
    tony863
    Thanks for both bits of advice. If anything, I'm glad you're giving me this help as I'd be lost otherwise. I can see that lots of other people have also been reading it so maybe it's also helping others to avoid the pitfalls!

    As you rightly say, I can't just start over and have to consider the impact of trying to close one and start up another. I think I'll try to confirm Nutmeg will close the LISA instead of just emptying it. Otherwise, it'll stay open as far as HMRC are concerned.

    So my plan is to firstly stay with HL (for the moment) and keep the LISA going with them. I'm going to top that up to £4k to get the most out of the Government bonus. I'm assuming that I won't get the full £1k bonus as I won't have had the account open for the full financial year?

    Another question regarding HL - taking your advice from the last post, I now intend to open an account with vanguard and transfer towards their ISA. I can then invest in the VLS60 as originally intended. With that in mind, do I need to pick a new fund for the HL LISA? I've currently got my HL LISA money going to the VLS60 fund and it seems that I should consider something else instead of keeping it all in one fund.

    Regarding Nutmeg, as above, I'll cancel the DD and get it all moved over to Vanguard. It makes sense as there are no fees, whereas the HL fund will include fees so it makes sense to leave it be for the time being.

    I've no doubt I'll have more questions as time passes simple as bare with me. Thanks as always.

    Tony
    • Eco Miser
    • By Eco Miser 14th Oct 17, 2:32 PM
    • 3,086 Posts
    • 2,849 Thanks
    Eco Miser
    I'm assuming that I won't get the full £1k bonus as I won't have had the account open for the full financial year?
    Originally posted by tony863
    You're assuming again. The bonus is a one-off (for each contribution) and covers the whole period from when you paid in to your 60th birthday (or you buy your first dwelling).
    If you pay in £4k next year, you'll get a £1k bonus on that too, but covering a period a year shorter.

    Generally, please slow down and check on all the requirements and possibilities BEFORE altering your financial arrangements again.
    Eco Miser
    Saving money for well over half a century
    • Sarastro
    • By Sarastro 14th Oct 17, 3:29 PM
    • 109 Posts
    • 63 Thanks
    Sarastro
    Why would you pay AVC's on a defined benefit scheme?
    • Alexland
    • By Alexland 14th Oct 17, 7:12 PM
    • 449 Posts
    • 265 Thanks
    Alexland
    Hi

    I have done some research into your 2xLISA problem and suggest you talk to both providers before taking any action.

    The LISA opening process does checks with HMRC and the Create Account API would return an error 409 Conflict which mean a LISA already exists. This may happen shortly after you do the online registration with the provider.

    As such you may only have one LISA after all and which one it is might depend on which provider reported it to HMRC first. As such you may not get a choice and the failed LISA provider may already or soon be aware that it was an invalid account opening.

    I wouldn't just close the one you don't want incase it's the one HMRC recognises to be open.

    In terms of having both investments in VLS (if your LISA is with HL and ISA is transferred to Vanguard) that's fine for now and the amount of money we are talking about but if you wanted to consider similar Blackrock, HSBC or L&G funds for the HL account that would also be fine.

    The main priority for now is sorting out the provider accounts not the funds.

    Ps HMRC don't care how long the contribution had been in the account as long as it occured during the tax year you get a 25% bonus on a LISA up to £4k contribution and £1k bonus per year.

    Alex
    Last edited by Alexland; 14-10-2017 at 7:16 PM.
    • bigadaj
    • By bigadaj 15th Oct 17, 3:15 AM
    • 10,327 Posts
    • 6,625 Thanks
    bigadaj
    Why would you pay AVC's on a defined benefit scheme?
    Originally posted by Sarastro
    Because you can't on a defined contornution scheme?
    • Dansmam
    • By Dansmam 15th Oct 17, 8:52 AM
    • 525 Posts
    • 1,793 Thanks
    Dansmam
    Why would you pay AVC's on a defined benefit scheme?
    Originally posted by Sarastro
    Reduces NI and you get tax relief at your marginal rate. Plus if you donít want to take a reduction on the DB pension, but still retire early, you can transfer the avc funds out and use them to bridge the gap. At least thatís how I understand it. Someone may be along in a moment to tell me Iím wrong but I do hope not as Iím rather counting on avcs to save me from coming late to the pension table.
    • tony863
    • By tony863 15th Oct 17, 3:29 PM
    • 334 Posts
    • 102 Thanks
    tony863
    Hi

    I have done some research into your 2xLISA problem and suggest you talk to both providers before taking any action.

    The LISA opening process does checks with HMRC and the Create Account API would return an error 409 Conflict which mean a LISA already exists. This may happen shortly after you do the online registration with the provider.

    As such you may only have one LISA after all and which one it is might depend on which provider reported it to HMRC first. As such you may not get a choice and the failed LISA provider may already or soon be aware that it was an invalid account opening.

    I wouldn't just close the one you don't want incase it's the one HMRC recognises to be open.

    In terms of having both investments in VLS (if your LISA is with HL and ISA is transferred to Vanguard) that's fine for now and the amount of money we are talking about but if you wanted to consider similar Blackrock, HSBC or L&G funds for the HL account that would also be fine.

    The main priority for now is sorting out the provider accounts not the funds.

    Ps HMRC don't care how long the contribution had been in the account as long as it occured during the tax year you get a 25% bonus on a LISA up to £4k contribution and £1k bonus per year.

    Alex
    Originally posted by Alexland
    Thanks Alex,

    I opened the LISA with HL before Nutmeg but you're right, I need to check. I'll be on to them tomorrow and see what happens from there. I'm not in a rush to get the accounts switched over until I know for sure where I stand.

    Cheers

    Tony
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