How to use Alliance Trust Savings?

elle27

Sorry for a silly question, but I'm struggling to Navigate the Alliance trust savings account.

I am new to ISA's and investing and have just opened an Alliance Trust Savings stocks and shares ISA in the hope of learning more.

I placed a few hundred pound in the account just to have a play around. With half the money I seem to have successfully purchased some shares which are showing in my account.

I then placed the other half into an investment fund (as part of the same ISA). Now this doesn't really show up in my account.

Say I have £400, On my account page it states:
Stock Value: £200
Cash Balance £200

When I click on this, it states the cash balance is in 'online dealing account' and there is no further information? i.e. it doesn't say whether this has been invested, whether this has gone up or down in value.

If I click on 'trading centre' tab, then on 'fund supermarket' option, followed my 'my fund orders' it shows I have invested this cash in a fund, but it just states 'accepted' and shows no further information.

So my question is, have I sucessfully invested this in a fund and what happens now? Do I get an update on whether the value of the fund has increased/decreased? Or do investment funds not work like that? My brief reading suggests an investment manager has a portfolio of stocks/shares which can go up and down?

I really want to understand more about this and how to invest before I stick my full ISA allowance in

Many thanks.

Also any suggestions on what to do with an extra cash above the £11,520 ISA allowance would be appreciated

ChesterDog

Funds aren't dealt on the market right there and then. Your order sounds like it will be actioned in the next day or so.
ETFs and shares can be dealt instantly (when their market is open, obviously), but funds like OEICs need to adjust their own holdings to accommodate inflows (your money in this case) and outflows, so a bit of jiggery-pokery has to happen en route.

elle27

OK, that makes sense. thank you

ChesterDog

And no question is ever silly, in my book. The silly thing would be not to ask if you don't know about something important.

ChesterDog

As for your other question... Have you got a good, cheap index-tracking fund of some sort? Most people consider that a sensible foundation to build on.

Like a Vanguard FT tracker, or the HSBC one for example.

Just a suggestion, obviously.

elle27

Hi, thanks for the suggestion. This looks like a good idea. Are these long-term. i.e. stick a lump sum in for 5+ years etc? Is there a need to split the money across a few of these, for instance but half the money in an HSBC one and half in a Vanguard one for instance.
Thanks

ChesterDog

Yes, they are not a quickie.

There woukd really be no point duplicating the same index in two different funds, but appropriate diversification is generally a good thing. So, yes, you could be in one fund tracking say the FT-All Share and another for global equities for example.

I am not familiar with Alliance Trust's charging structure though. Be careful of putting too little into any one fund and therefore having charges bite out a disproportionately big chunk.

And be mindful that these are just my suggestions. No one (heaven knows least of all me of many people on here) can give you anything resembling proper advice without a full understanding of your circumstances.

ChesterDog

On the cheap tracker funds - people will often tell you that these will often beat actively managed, higher-cost funds, which shows fund managers in general aren't too hot. This isn't really fair, I always think, because most active funds have a very specific remit to follow. If their particular sectors don't do too well in a given period, there is nothing the manager can do to work a miracle. But, over time, I think, most people woukd agree that tracking a decent index will do a pretty good job for you.

ChesterDog

Crikey - I look like I am really liking the sound of my own voice now!

Just a pointer: if you don't already know it, the Monevator blog is a veritable goldmine of excellent, thought-provoking investment knowledge.

Perelandra

As Chesterdog says, be careful with charges on ATS.

They charge a flat fee of £12.95 (less in monthly regular saving) for trades. This is on the high side, and also applies to funds, which can often be bought/sold for free with other platforms/brokers/supermarkets.

They also charge a quarterly fee of £10 + VAT for your ISA.

... and make sure you sign up for paperless statements etc, or you'll get another charge of, I think, £5 plus VAT p.a.

ATS can be decent for larger portfolios, but for smaller ones their charges will eat into your investments.

elle27

Thanks for all the help.
I don't think the ATS website is very helpful and the videos are pretty useless so I have 2 more questions:

1. I've read that ATS fees reduce to £1.50 per trade if you use direct debit. If you set-up the direct debit, of say £100, and you allocated this equally between 2 funds (£50 each), would this mean that every month you would be charged £3 for every £100 spent? Or is the £1.50 a one off fee for setting up the trade?

I really like the idea of the idex-tracking fund suggested. As I understand it, you could buy into one of these either through an ISA or outside of an ISA. What would be the difference? Is it just that with the non-ISA method you would be taxed on any gains/profit? But they would both increase at the same rate?

Sorry to be so naive.