Investment fund starter questions

GreyPilgrim

I was going to start a seperate thread for my question, but reading this thread, mine follows on (kind of).

Firstly, am I correct in thinking that my total ISA allowance is £7,200, and I can use this as either:
£7,200 in an S&S ISA, with nothing as cash,
up to £3,600 in a cash ISA, with the rest in an S&S ISA, as long as the sum of the two isn't more than £7,200?

How does the actual mechanics of an S&S ISA Work? I'm looking at investing £1,000 each in three seperate funds in a Vantage ISA with Hargreaves Lansdowne, and then setting up a direct debit to put £100 into each one each month for the rest of the year. So in total, that will be £6,600 of my allowance used.

What if I had set up a payment of £200? This would mean I would be putting £10,200 into the account / fund. How would this work? Would the first £7,200 be 'ringfenced' by the ISA wrapper, with the extra £3,000 falling outside of it, or would HL stop the direct debit once the £7,200 had been reached? (and then any subsequent investments would have to be made seperately outside of the Vantage setup)?

In terms of the first example, where the initial £7,200 is ringfenced, I can't see how's that possible...any interest or dividends would then have to be split - "this bit of the dividends came from investments within the ISA wrapper, this bit came from investments outside the ISA wrapper" - with each of the funds performing differently, this would impossible to administer, surely?

This probably seems like an extremely naive question, but it's my first foray into anything outside of the realm of cash ISA's.

I admit my ignorance, but I'm trying to learn rather than just ploughing in headfirst!

Lokolo

HL would stop any money being put in if you have already deposited £7,200 into the ISA. You would have to open a seperate account to hold the other S&S's that you wish to buy beyond your ISA. (this would stop the dividends problem you explained)

- http://www.h-l.co.uk/our-services/Fund-Account

^^ you would have to open one of those aside to your ISA one.

GreyPilgrim

Lokolo wrote: »

HL would stop any money being put in if you have already deposited £7,200 into the ISA. You would have to open a seperate account to hold the other S&S's that you wish to buy beyond your ISA. (this would stop the dividends problem you explained)

Thought so. Cheers Lok.

nrsql

If they didn't stop the direct debit then at some point in the future customs and excise would spot that you had invested more than the limit and certainly claim back the tax - may fine you (if you didn't report it before they spotted it) and.... you really don't want to come to their attention.

GreyPilgrim

nrsql wrote: »

If they didn't stop the direct debit then at some point in the future customs and excise would spot that you had invested more than the limit and certainly claim back the tax - may fine you (if you didn't report it before they spotted it) and.... you really don't want to come to their attention.

absolutely!

I was just wondering whether HL would do it, or the onus would be on me

dunstonh

I was just wondering whether HL would do it, or the onus would be on me

Legally, the onus is on you.

elwy

elwy wrote: »

I'm overwhelmed by all the jargon of different "sectors" and types of fund available...

To answer my own question, I eventually pinned down a page on Trustnet that gives a description of all the different types of sectors: http://www.trustnet.com/Investments/SectorPerf.aspx?univ=U
I've still got a load of jargon to get to grips with but this is a start!

elwy

Another question; does fund size matter? E.g. the highly popular Invesco Perp High Income fund seems to tick all the right boxes but it is huge (around £7 billion I believe). Is this a disadvantage in any way? If so, is there such a thing as an "optimal" fund size?