III.co.uk ISA and share investing...

tomclowes

Hello guys,

I applied for an account at share.com, and they requested (reasonably) that I send off some identification. I was looking at their website in a little more detail, and they have a £2.50 quarterly fee, and have a fee on their ISA account.

I am looking to invest in the stock market. Not often. Rather Im thinking maybe 5 buys a year.. and perhaps 2 sales a year, each of ~ £500 value.

I was going for Share.com because on the basis of that activity they seemed cheapest.

1% fee to buy min £2.50 would mean £25 a year buying.
1% fee to sell min £7.50 would mean £15 a year selling.
£10 a year subscription fee.
Then £20 a year for the ISA account.

Makes a total of ~ £70 a year. Please let me know if I am missing any other fees.

Now Ive been made aware of III.co.uk, which seems to be used by a lot more people, and seems to offer more things like sports betting etc which I might also want to look at in the future.

To buy and sell in real time costs a flat £10.
So 7 transactions is £70
The ISA account seems to be free.. The fees page is at: http://www.iii.co.uk/isas/?type=isa_charges

There is also the benefit that if may share buying timings match the four days a month that III trades in a batch, then I only have to pay £1.50 to buy...

Now III.co.uk details fees a lot better. Is the 1% fee on dividend reinvestment reasonable?

The statement "0.1% interest will be paid on any cash held in your ISA account, calculated daily and paid annually. Any tax payment due on this interest will be your responsibility." Is that irrelevant really as cash should not be kept in this kind of ISA?

And could someone elaborate on the 'Fund Dealing Charge' as I do not understand it.

Expanding on ISAs in general. The interest rate does not matter here does it? With shares the only point of the ISA is so you dont pay CGT on profits? Is that correct?

Based on the above, am I correct in thinking that III.co.uk looks like/is the better option of the two?

On ISAs in general. If I go for III.co.uk use their ISA and put £7200 in there before April 2009.. am I correct in thinking that is it, I cannot open an ISA elsewhere?
If I use III and have £3600 in shares, then i can open an ISA elsewhere and have £3600 in cash?

Thanks

Lansdowne

I don't use III but might be able to explain
-"fund dealing charge" = the cost of dealing in funds (rather than shares)
- interest on cash - in principle you are allowed to hold cash in a shares ISA, for example during the period when you had sold some stock and were waiting to buy another stock.

tomclowes

Right, but it would not be worth holding share profits in such an ISA based on the low interest rate? Rather either reinvest it in shares, or put it in a well paying ISA? cORRECT?

bitterSTAR

I have an ISA with iii.co.uk, and thought I'd let you know that I've had no issues with them whatsoever. The fee for dividend reinvestment is very reasonable, considering that if you wanted to manually invest the dividends it'd cost you atleast £1.50 which would be equal to the commission on £150 of dividends (which you're not going to get on an investment of £500). I have automatic reinvestment set up on mine, and I'd recommend the same option for you too! That way it would increase your dividend earnings in the future as the dividends get compounded.