S&S ISA - best place for small investor?

stardust09

Hi, I want to start a Vanguard Lifestrategy S&S ISA but will only have 2-3K to invest to begin with. I've looked at the various platforms and lots of people suggest using HL if you only have one fund but I can't work out if the monthly fee outweighs the possible investment. I've spent a week or so researching this but am just ending up being confused by all the different platforms and how their fees would impact on someone who only has a small investment.

Does anyone have any advice for me?

Thanks.

saintalan

Hi, I am in a similar position, in looking to invest in Vanguard and have been looking at the costs.

Basically HL charge £2/month for each fund so for one fund £24/year most other lower cost companies charge a total % of funds around .31% so it really depends on how much you have or think you will have in the future.

In your case your, say, £3k will cost £24 / year at .31% that would be £9.30.

It really depends how much you will invest over time and whether you might add a fund or not.

Of course HL & others could change their pricing structure.

Cheers

Alan

wriggly

saintalan wrote: »

Basically HL charge £2/month for each fund so for one fund £24/year most other lower cost companies charge a total % of funds around .31% so it really depends on how much you have or think you will have in the future.

0.31% happens to be the TER for the LifeStrategy 60% fund. I think you may be conflating this with the platform fee.

For the Vanguard LifeStrategy funds, there is a TER ranging from 0.29% to 0.33%. You are not charged this directly, it is taken out of the fund, so everyone pays the same, no matter which platform they use.

Added to this, there will be an explicit platform charge, which you will pay directly. For HL, this is £24/year.

For Alliance Trust, it would be £48/year + £12.50 up-front. So, clearly HL is a better deal for OP. (AT may be better if you want to own multiple Vanguard funds)

Most other platforms will have some charge, and you need to consider those charges for your situation, including your best guess at how often you intend to add to your investment, how much you intend to have in 5 years time, etc.

For the purposes of comparison for investing in the same fund, you can ignore the TER. Just be sure you don't accept that as the only cost, without checking for additional fees.

saintalan

Thanks wriggly. I was aware of the TER its just that some of the other sites I looked at from memory Charles Stanley, TD? were about the .31-.35%.

It does get a bit confusing. The OP may want to look at this.

Cheers

Alan

BLB53

For small pots of less than 10K, Charles Stanley are probably the best as they have a fixed 0.25% platform charge. For a 3K fund this would be £7.50 p.a. - compared to HL's £24.

stardust09

Thanks for the advice so far.

I want to intially start with a small sum then hope to built it up to more than 10K over the next five years. I don't really want the hassle and cost of changing platforms later on, if I can help it, although I'm aware charges might change in time anyway.

It's so confusing!

grey_gym_sock

well, CS charge £10 per holding to transfer out. so if they're cheaper for you by about £16.50 per year (i.e. £24 - £7.50), you wouldn't have to stay with them for long to save more than it would cost to leave.

currently, HL are cheapest for 1 vanguard fund worth over £10k. though this (and everything else) could change.

moving platforms can be very slow, but that doesn't matter too much if you're staying in the same fund, and not in a hurry to start switching funds on the new platform.