Hargeaves Lansdown v Interactive Investor v ??

djbfp

I am wanting to start investing some money (start off with about £5000) and learn how to do it and have been told by friends that investing in funds is the way to go.
I have done some research and read some of the forums but am a bit confused as to how to go about it - is it best to go with an online broker like Hargreaves Lansdown? But I've also seen that you can have an Interactive Investor account - are they quite similar to each other and which do you think is best to go with for a beginner - cheaper fees, easier to follow and learning how to invest etc?
Any other advice/ideas for a beginner if you don't think they are good choices?

Thanks

deadpeasant

First, make sure you want to invest (which is for the long term, as your investment will go up and down in the shorter term) rather than save.

Second, if you do want to invest, do so within an ISA wrapper if possible.

Third, HL is a good way to invest in funds. (a) Their platform is widely considered the most helpful, informative and easiest to use. (b) For a large number of funds there is no annual fee, either inside or outside an ISA wrapper. (c) Most or all of the funds' initial charges are waived. (d) HL don't charge for buying or selling or switching between funds. (They DO charge with other kinds of investments - shares, ETFs, investment trusts.) (e) HL will also rebate some of the funds' annual management charges in the form of "loyalty bonuses".

I don't know as much about Interactive Investor, but here's what I have learned; you can phone them to ask for more detail: (a) Platform good but not as friendly as HL. (b) I believe no annual fee outside ISA, not sure within ISA. (c) II waive some or all of initial charges on funds. (d) II do charge for investments, so not as good as HL for funds, but cheaper than HL for other investments. (e) II do NOT rebate any of funds' AMC.

So, on balance, HL beats II for funds.

But you should also consider Alliance Trust. (a) platform and customer service felt to be nowhere near as good as HL. (b) no annual fee outside ISA; small annual fee inside ISA, I think £25+vat. (c) I think waive some initial charges on funds, but check. (d) £12.50 dealing charge for all investments including funds. (e) AT's unique selling point is that they rebate ALL "renewal commission". For those who build up large investments, this will easily outweight AT's dealing charges and less friendly platform.

For £5k invested in funds, I believe HL is the clear winner. But I've provided what I know in case it's of interest or helpful.

deadpeasant

Should also have said - HL and II and AT all basically do the trick. Choice between them is secondary to what fund(s) you choose.

HL have a £1k lump sum minimum per fund. So you could invest £5k in up to 5 funds.

Popular tracker funds include HSBC's range, which have low annual charges.

For managed funds, you can look at HL's Wealth 150, but bear in mind that this is advertising as much as "public service" info. You can get more info on how funds have performed on sites such as Trustnet and Morningstar.

masonic

It is possible to shave a bit more off the costs elsewhere, but in terms of ease of use of the site and customer service, HL takes a lot of beating.

Also, there is no need to keep to a minimum of £1000 per fund. You can use their regular saving option to gradually invest (from £50 per month) up to whatever value you want. You can also switch part of one fund into another fund to split your money into smaller chunks.

Tycho_2

And one to avoid at all costs; Torquil Clark. I am just in the process of trying to run my own investments and avoid using an IFA like in the past. Are Trustnet and Morning Star sites I should regard as valuable? HL alway seem very efficient, but there are funds in the Wealth 150 list that I find surprisingly poor performers, e.g. Neptune Global Equity ???

Reaper

Tycho wrote: »

HL alway seem very efficient, but there are funds in the Wealth 150 list that I find surprisingly poor performers, e.g. Neptune Global Equity ???

It doesn't look that bad:
http://www.trustnet.com/Tools/Charting.aspx?typeCode=FCGORBA,XO:GLBLGRTH

djbfp

Great - thanks for all the info and advice. By the sounds of things, and from what I've read, HL does sound the best option and will look into the ISA wrapper (I've never heard of it!). I will check with them re minimum amount etc and then look at some of the sites for tips and advice on which funds to get.

Thanks again for your help.

-- Sorry, just realised I got confused re the ISA - I hadn't heard it called that before! But I didn't know that it could be cash and shares as I just thought it was cash only, so will look into doing that too.

DrSyn

1. Suggest you take the time to have a look at the sites below for information.

www.candidmoney.com

www.morningstar.co.uk

www.trustnet.com


2. Do not beleive those who tell you "charges are not important". Over the longterm the higher the charges, the less money you get back. You can control the charges you choose to pay, you have no control over how the fund you choose will perform!