Cost of setting up maxi ISA

Kayjo

I'm completely new to this whole investing milarkey and would really appreciate any help.

I've recently inherited £15k and went off to the Abbey National to get a maxi ISA for the allowed £7k before end of tax year. However, it's going to cost something in the region of £260 just as a fee to set the whole thing up. This sounds quite a lot to me and I would appreciate anyone's advice about whether I'm doing the right thing or should do something else with the money or go somewhere else with it. What should I expect to be paying in fees?

cheerfulcat

Hi, Kayjo,

If you go to a discount IFA, you will not pay any initial commission, and if you invest in a fund which pays trail commission, there's frequently no annual fee either. I use Hargreaves Lansdown and am very happy ( no association, just a customer ).

http://www.hargreaveslansdown.co.uk/

You don't have to rush to use this year's allowance; you may put the money into the ISA wrapper without choosing an investment - that means you can take your time to choose.

I don't like managed funds, myself, as I think that they are very expensive but if you'd prefer not to handle the investment yourself, they're better than nothing. Take your time and do a little research first; trustnet has a lot of good information -

http://www.trustnet.co.uk/

HTH

Cheerfulcat

dunstonh

You have learnt the first rule of regulated financial products. Never buy from a bank or building society tied or multi-tied agent. Products are more expensive and generally under perform. Plus they have a limited range which they try and shoe horn you into.

blinko

im with Hargreaves lansdown to they are pretty good, but most of all they are cheap which especially suits the small time investor eg me, but i think you woudl be hard pushed to find an ISA provider that doesnt charge an annual fee around £20 appears to be the standard for there services where as with Hargreaves lansdown if you fund receives renewal commision then you dont have to pay any annual fees

carnet

If I could just clarify a couple of points re. commission/charges.

If you use a discount broker for an ISA consisting of Unit Trusts or OEICs, the broker is unlikely to charge you any initial or annual commission for their services.

There will, however, be initial and annual charges payable on the actual investment fund(s) themselves.

With a discount broker most of the UT/OEIC Management Company's initial charge will be discounted. Typically you only pay about 0.5% instead of the average 5%.

Additionally, if you use Hargreaves Lansdown's Vantage Service a small proportion of the UT's annual charge will also be rebated. This is typically about 0.25% rebated from an average 1.5%.

So, in most cases, you will still have to pay a little bit of the UT/OEIC initial charge plus most of the annual charge.

Kayjo

Thank you so much for all your replies.

Sorry to appear a bit thick (I am blonde afterall!!!) Cheefulcat mentioned

"You don't have to rush to use this year's allowance; you may put the money into the ISA wrapper without choosing an investment - that means you can take your time to choose."

but how do I do that without going through a high street bank?

As April 6th is looming dangerously close I think I should do that and then worry about what to invest it in afterwards.

cheerfulcat

Kayjo wrote:

Thank you so much for all your replies.

Sorry to appear a bit thick (I am blonde afterall!!!) Cheefulcat mentioned

"You don't have to rush to use this year's allowance; you may put the money into the ISA wrapper without choosing an investment - that means you can take your time to choose."

but how do I do that without going through a high street bank?

As April 6th is looming dangerously close I think I should do that and then worry about what to invest it in afterwards.

Hi, Kayjo,

You can go to any online broker or a discount broker like Hargreaves Lansdown and open a self select ISA - it's just an account into which you put however much you wish to contribute for this tax year. They are very easy to open. Then, when you have decided what you want to buy, you tell the broker, who makes the purchase. Hargreaves Lansdown's telephone help service is slightly better than comdirect, but I use both quite happily.

HTH

Cheerfulcat

Kayjo

Many, many thanks Cheerfulcat - I've just rang lansdowne hargreaves and they were helpful - I'm going to post them a cheque.

Then i need to work out afterwards how to invest it. But it'll be a load of my mind to know I've at least got the money into a wrapper.

Kayjo

Sorry to restart this thread but after all your help I successfully managed to wrap £7k up in an ISA wrapper with lansdowne hargreaves - but I haven't done anything with it since and haven't got a clue about how to start. I've seen good reports of Rensburg but I don't know how to transfer the money to them.

Any suggestions would be great. Anyone one know how I can educate myself with all this finance stuff - it just seems like a minefield to me!

carnet

Kayjo wrote:

I successfully managed to wrap £7k up in an ISA wrapper with lansdowne hargreaves - but I haven't done anything with it since and haven't got a clue about how to start. I've seen good reports of Rensburg but I don't know how to transfer the money to them.

Any suggestions would be great. Anyone one know how I can educate myself with all this finance stuff - it just seems like a minefield to me!

I assume you mean that you've opened a Maxi ISA with HL and currently have it sitting as cash ?

If you know which fund(s) you wish to invest into its simply a matter of instructing HL by letter, telephone or even doing it yourself online, if you've signed up for their online Vantage Service and have a password etc.

However, if you don't know which fund(s) to invest into I'm afraid no-one on these boards can advise you as (a) we don't know your personal circumstances, aspirations, time horizon, attitude to risk etc etc and (b) are prevented from doing so by the FSA in any case.

You can gain some ideas from Financial magazines such as "What Investment", "Money Management" etc., which also publish UT/OEIC and IT Performance Tables, and also from the HL website or from their quarterly "Investment Times" publication where they give their recommendations in each sector.

If you absolutely don't know what you're doing there's really no substitute to an IFA - I've been doing this for twenty years and still have lots to learn - what little I now know has been gained through bitter experience and plenty of losses along with the gains.

Kayjo

Thank you for your reply Carnet.

I understand that no-one can advise me and it wouldn't be fair to ask but if, for example, I wanted to put it all with fund managers Rensburg would I contact them first? Is it not normally considered wise to put it all with one company such as that or should I spread it around a bit, especially considering I've got this tax year's ISAs as well to decide what to do with too.