S&S ISA Novice Questions

bongoali

Hi,

I am saving for my young son long term - so have around 18 years left.

For the 1st year I've put away £100 in savings.

Thinking of changing this to investment and wondering the best way to go about opening a S&S ISA (in my name).

Is it as simple as walking into a bank and advising them of my appetite for risk ?

I have no idea about shares so wouldn't want to manage anything myself.

Hope I'm asking the right sort of question.

Any help appreciated? Links I can read?

Many thanks

dunstonh

Is it as simple as walking into a bank and advising them of my appetite for risk ?

If you want a low quality option yes.

Whilst an IFA is a much better option, there are not going to be many IFAs willing to handle just £100pm. So, your choice is a basic and typically poor quality option at the bank or do a little research and DIY

bongoali

dunstonh wrote: »

If you want a low quality option yes.

Whilst an IFA is a much better option, there are not going to be many IFAs willing to handle just £100pm. So, your choice is a basic and typically poor quality option at the bank or do a little research and DIY

Thanks dunstonh.. I could put away more than £100 per month.. what would be the minimum monthly amount that most IFS would be willing to handle please?

dunstonh

The problem is that if an IFA does it on commission, it will about 10 years for the IFA to cover their costs. So, most will say its not cost effective. Not all. I know a couple of IFAs locally that do anything and everything. There are some like that in every town. If they do it on fee basis (which will be mandatory from 2013) then it will be around £500. That makes it expensive.

To be honest, take a look at Hargreaves Lansdown and decide if you can DIY. I cant tell you funds as I have a legal liability that prevents me (and it wouldnt be right for me to do so). However, other posters here who are not authorised in real life may offer some suggestions.

bongoali

dunstonh wrote: »

The problem is that if an IFA does it on commission, it will about 10 years for the IFA to cover their costs. So, most will say its not cost effective. Not all. I know a couple of IFAs locally that do anything and everything. There are some like that in every town. If they do it on fee basis (which will be mandatory from 2013) then it will be around £500. That makes it expensive.

To be honest, take a look at Hargreaves Lansdown and decide if you can DIY. I cant tell you funds as I have a legal liability that prevents me (and it wouldnt be right for me to do so). However, other posters here who are not authorised in real life may offer some suggestions.

Thank you again for taking the time to reply.
I will take a look.

bongoali

:money:Me again!

Going to plump for £50 a month S&S ISA with H&L to begin with.
This is going to be an 18 year journey for my son.
I think I will put £50 a month in savings for him too.

With regards to the S&S ISA - as a beginner I'm wondering whether to go for Funds, Gilts/Bonds, ETFs, Shares, Covered warrants or Investment trusts ?

I assume I can only choose one. Would Funds be the best place to start.

Are there any threads you know of which have some good suggestions of what to go for ?

Thanks :money:

Lokolo

Gilts and Bonds are a form of borrowing (like a loan).
Equities are shares.



A very basic risk graph!

In more detail you have Home and International (for Bonds and Equities). Obviously international carrise more risk as you also have currency risk.

---

Collective Investments (Funds, ETFs and ITs) will usually have numerous different types of investments (Cash, Bonds, Property, Equities) inside of them to give diversity.

ETFs are trackers, they follow something. This could be the FTSE, or Gold or whatever.

Funds can have a broad range of investments from lower risk Bond funds, to High Risk emerging market equties.

ITs have the same idea as Funds but they have different rules and regs.

http://tools.morningstar.co.uk/uk/fundscreener/default.aspx?Site=uk&LanguageId=en-GB

Here's a little tool you can use to find some funds to invest in. A couple of pointers;

- Distribution Status - Acc means any income that a fund could give out, goes back into the pot, rising the fund value. Inc means any income that a fund could give out, does give out.

- Fund of Funds - basically a fund made up of other funds.

- Style Box - 2 boxes, you can pick whether you want Large Cap (larger companies) or Small Cap (smaller companies) or both or leave it blank for the Equity Box. Fixed Income Credit Quality means how likely the company is to pay back the bond loan.

Have a play around with it

bongoali

Loko - thanks .. feel I'm learning lots already.. will take a look

gadgetmind

bongoali wrote: »

With regards to the S&S ISA - as a beginner I'm wondering whether to go for Funds, Gilts/Bonds, ETFs, Shares, Covered warrants or Investment trusts ?

Now, aren't those some fancy words for a beginner! Someone's been doing some reading.

The dealing costs on ETFs, shares and Investment Trusts make it hard to drip-feed money in.

I'm sure many here can recommend some funds, but while I hold a few myself, I haven't exactly gone for a balanced portfolio, so there isn't much point in me sharing my holdings.

The other option is trackers, and HL now provide a few of these, but there are monthly fees for holding them, and this is per tracker. However, they also have Vanguard Lifestrategy trackers, which are like a portfolio in one tracker. Sadly, the catch is that the HL charge will be 4% of your year one cost (assuming £100pcm), 2% after year two, and so on, which kind of misses the point of trackers, which is low low fees.

Your best bet might be to start with some carefully chosen funds and then consider a switch to trackers when your pot is larger. By "carefully chosen" I mean that you have a good geographic and sector spread, and are avoiding some of the more trendy and unproven types of funds.

Mikeyorks

bongoali wrote: »

Would Funds be the best place to start.

Almost certainly.

Is there any reason you're using your own ISA instead of a Junior ISA? Other than the very sensible one of being able to maintain jurisdiction over the money - after the age of 18? (and withdraw before 18 - if necessary) If not - the HL Junior ISA gives you all the scope you need :

http://www.hl.co.uk/news/expert-comment/the-first-ever-junior-isa

bongoali

Mikeyorks wrote: »

Almost certainly.

Is there any reason you're using your own ISA instead of a Junior ISA? Other than the very sensible one of being able to maintain jurisdiction over the money - after the age of 18? (and withdraw before 18 - if necessary) If not - the HL Junior ISA gives you all the scope you need :

http://www.hl.co.uk/news/expert-comment/the-first-ever-junior-isa

thanks for the suggestion mike but my son was born before the date when child trust funds moves to junior isas so can't use junior isa.