Already have B&B Cash ISA but how can I get an Equities ISA too?

icebergx

Hi all,
Thanks to you guys at MSE, I've sorted out my financial situation and am now investing/saving in a far more efficient and profitable way but i want more!!!
I've invested in a Bradford and Bingley Cash ISA (£3000) but am not thinking of using my £4000 ISA Share allowence but am not quite sure how to do this.

1) Do I purchase the Share ISA from another financial institiution or does it have to be B&B?

2) I'm thinking of either a FTSE tracker or maybe somthing more exotic (Chinese or Indian Stock Market). Are these available?

3) Is one FTSE100 tracker pretty much the same as another do some charge more than others. If so, which is the cheapest, and is cheapest best in this situation?

4) Are there any (impartial) comparison sites where I can see what is available.

5) What other factors should I consider before going for one, and which ones do other MSEs have and why did they choose them?

Thanks for any help you can give.

Money_Watch

Hi,

Here's a few answers:

1) You can get your share ISa from any one who provides them, not just B&B. Make sure it is a mini equity ISA though.

2) Yep, there is plenty of choice with equity ISAs.

3) In general, they are the same, but some will charge more than others, and this can obviously eat into the overall performance of your money.

4) You could try sites such as MorningStar (http://www.morningstar.co.uk) or TrustNet (http://www.trustnet.co.uk) which will show you the performance and charges for many funds.

5) Remember, ISAs (especially equity ISAs), should be seen as a long term investment (7 - 10 years), not for short term gain. You probably should ensure that other areas of your finances (such as building up an emergency fund, paying off debts etc) are sorted before worrying about investing in equities/funds.

Hope they help!

Regards,

Rob

dunstonh

5) What other factors should I consider before going for one, and which ones do other MSEs have and why did they choose them?

£4000 into one fund is the old fashioned way to invest. Had you done that in a FTSE100 tracker 5 years ago you would be in a loss situation now (or just about breaking even again). FTSE100 trackers are not the best way to invest. Fine when large cap is doing well but not when mid cap or small cap is the place to be.

icebergx

Thank guys I appreciate your answers.
Dunstonh, could you elaborate on your answer? What do you mean by Large cap, Mid cap and Small cap?
What would you recommend if this is 'the old fashioned way to invest. Any addional help would be greately appreciated.
Thanks.

dunstonh

Single fund investments have allowed for many endowments to fail or people losing their values at a higher rate than they would have done had they invested in a range of areas. It is the place where inexperienced advisors or investors get it totally wrong.

This can be seen by looking at large, mid and small cap. This means companies are split into areas depending on their market capitalization. Large cap would, for example, cover the FTSE100 companies.

In the 1990s FTSE100 trackers did well as large cap was doing well. In the last 5 years large cap has been the worse of the three so the FTSE100 tracker has done poorly.

For example, take a small cap tracker 5 years ago and you would have averaged 13-14% a year growth. Take a large cap tracker (such as your FTSE100) and you would have averaged 1-2% p.a. (indeed, some are still in loss).

So, had you picked a FTSE100 or FTSE All share tracker 5 years ago, you would be at break even.

Now, going forward, which is going to be the best place to be in? Nobody can answer that. So, you hedge your bets and put some in the various areas. Also dont rule out managed funds. Managed funds allow greater variety than trackers. If you look at the last 5 years, out of 384 funds available 5 years ago, the FTSE100 trackers are around 300th place. There are areas that trackers are not available and including them in your spread of funds to supplement your trackers is a good idea.

Lastly, you have to look at not just investing in the UK. The UK is historically the best stockmarket once every 5-7 years. Likely to be even less in the future. So, stick all your money in UK funds and you will be in the best place twice, maybe three times over 15 years.

You have £4k to invest, look at a minimum of 4 funds. With the right provider you could get more but do no less than 4.