Stocks and Shares v Self Trade ISA - Natwest

smallfry27

I bought Tim Hale's book 'Smarter Investing' after several people recommended it on this forum. His take is that most small investors are better off in trackers or ETFs. These have low charges, and will perform at least as well as the market it tracks. A recent Money Box programme also stated that on average managed funds do no better than trackers.

Psychological_2

yes ETFs seem to be the widespread opinon, although I have no idea how I go about buying into them. Do I need to find a broker/ifa?

dunstonh

Modern OEIC trackers can be more cost efficient than ETFs. Especially on regular contributions.

A recent Money Box programme also stated that on average managed funds do no better than trackers.

Although its not always as simple as that though. Take the UK All companies sector. The FTSE all share tracker will consistently be around mid table. So, around half the funds above and below. The funds below could range from poor performers consistently or higher risk funds than the tracker in a negative period (and better performing in good because of the extra risk being taken). Funds in a sector will often have different remits and different risk levels. So, you cant compare like for like a lot of the time because they will perform at different levels at different times. i.e. a fund heavy in mid caps will perform differently to a FTSE 100 tracker that is heavy in large caps. Even a FTSE tracker fund will be heavy in large caps and will lag behind a mid caps fund when mid caps are the place to be.

smallfry27

I can see your argument and should be taken into account with a large portfolio. However for a small investor, I think a tracker is a good core product to start with.

Psychological_2

Thanks for all your input on this guys but I am confused with what to do from hereon in:

Being an ISA, I should never close it down but transfer it correct? In this case I want to transfer it to something where I can call the shots a little bit more - I'm keen on ETFs and iii.co.uk looks interesting if there is no annual fee and can be monitored online.

More than anything I'm keen to get away from Natwest, do I need to approach iii and ask them to take on my ISA allowance?

I'm just about in the 40% tax bracket so I guess having it in an ISA for me will be beneficial as any interest I earned over that will be taxable at 40% right?

debbie42

I've transferred from Selftrade to II, both to avoid the annual charge, but also to get better service, and have been happy with that decision. I use this for shares and ETFs. If you wished to transfer an ISA to III then you need to let them initiate it for you. There was an incentive of 0.5% of the transfer value (to a max of £100) recently, so check for that.

Psychological_2

Thanks Debbie - and for anyone else looking to move to iii.co.uk the incentive code is TRANS2010 to receive 0.5% back on the amount you transfer over to them from another ISA

Psychological_2

Have successfully moved £1200 over to iii.co.uk from Natwest with regular contributions of £250 and feeling good about it - next step is to work out what to invest in. Any help would be greatly appreciated seeing as this is my first foray into the world of investments that isn't managed by someone else...

I was thinking a gold ETF fund, Tullow Oil (apparently Ghana set to produce oil this year), and Apple Inc (more new products on the way and I have a great deal of interest in gadgets)

I'm prepared to take a certain level of risk but would be great if some of the more experienced investors on this site could tell me if I'm being foolish here, seems to make sense to me.

dunstonh

this is my first foray into the world of investments that isn't managed by someone else...

note that for reference.....

I was thinking a gold ETF fund, Tullow Oil (apparently Ghana set to produce oil this year)

Straight in at the deep end then with regards to very high risk then.

I'm prepared to take a certain level of risk

What is "a certain level of risk"?

Psychological_2

Thanks dunstonh - I was hoping you'd come back to me.

I would say the level of risk I am prepared to take is medium/medium-high but fairly balanced. So of the initial £1200 I was considering putting 600 into Gold ETF 300 into oil and 300 into apple.