Stocks & Shares ISAs

baublebag

I've been maxing my S&S ISA into income funds hoping it will give me an additional retirement income that as I understood it will be tax-free. I won't have to declare it on my return or worry about any complicated paperwork, which seems a major benefit to me! I've set all my funds to re-invest dividends, which with Cavendish Online is free. Looking at some of the other providers it seems they have quite alarming trading fees, if you had to pay £2 or £5 each time a dividend was re-invested it would massively impact your return, especially since on my average size and quite diversified ISA many of the individual divvies are just £15-20 a time.
I don't understand why the relative costs of dividend re-investment are not covered in the comparison of platforms as surely this is pretty important?

Brand

Cuidadosa wrote: »

Hi All,
-Key question: Looking for the best (convenience and cost) platform to drip feed in and out of a tracker fund (monthly?) £200/month.

Cuida A tracker can be bought in a fund (e.g see Hwindsor on L&G above page 2 ), either standalone or within a fund supermarket, but compare theETFs bought through stockbrokers just like shares are, but without the CGT. London listed and Ultra cheap broad ETFs are Vanguard’s “VUKE” to track the FTSE100 and “VUSA” to track a USA equivalent.For a little bit more charge you have “VWRL” for the FTSE “All World”, if you want “global”, as someone suggested.

http://www.etfstrategy.co.uk/vanguard-uk-undercuts-rivals-with-low-cost-london-listed-etf-range-lse-58963/

Halifax still offers £2 per trade for regular investors, but that’s nearer £3 with the annual ISA fee. Flat fee per sale http://www.halifax.co.uk/sharedealing/charges/

If you dripout your exit, then you probably won’t exceed your annual £9k CGT allowance, so, as a basic rate taxpayer, there is less need for you to use an ISA anyway. (See debate pa 4 above) Oustide an ISA may be cheaper; e.g. Halifax has a £12.50 pa ISA charge but apparently no chargefor a standard share dealing account (and unlike its sister iWeb, has no £25 setup charge).
Share Centre charges much less for a normal account but £5 per month for an ISA account. It’s only £1 to buy but has a % fee per sale. https://www.share.com/accounts/

On the question of dripping out, though, as I’ve said above about its free “advice” feature, this is where Share Centre could come into its own, as you then could have someone to chat to on timing your selling(even though the charge for selling will be more than Halifax’s £12.50 flat fee. (on Share Centre is see mikebeaches above, page 3) If you can make a confident decision on exit e.g. all at once or half now half later, then you may decide to skip dripping out. (Perhaps you will just exit when you need the cash !

Cuidadosa

Thanks, Brand

I've used Snowman's spreadsheet to compare platforms but it doesn't look as if it's all that useful for monthly contributions. However, I found that Close Bros works out quite cheap if I'm willing to give up Vanguard funds and go for another. A quick look around the forum took me to the HSBC FTSE All Share index (C) and it works out very cheap (I think). Am I misguided?

The other thing I found was the City of London investment trust (recommended also in this forum) but Close Bros would charge me £9/transaction for that one, so not an option for monthly investment with them. So I was thinking about what you say of maybe not needing an ISA and invest in this one somewhere else. From what you say, looks like I could do it for £1/month? Or would that not apply to closed funds? But then, that'd be a 1% charge (since I'd split my investment between ISA and this) doesn't that sound like too much?

innovate

I asked this morning on this thread whether somebody could explain what "dripping out", "drip out" means. For some unfathomable reason, this post has been removed.

So I ask again, because it keeps being mentioned and I don't know what it means. I also gather that I am not the only person who doesn't know.

Cuidadosa

Hi innovate,

From what I've gathered (but honestly, I'm no expert), it means to regularly take out some part of your investment. I.e. spread your sales over a period of time because that will smooth out the chances of selling at a low point. More or less the same as with drip in, but instead of the price you buy for, the price you sell for. Both of them are a gamble!

I guess this makes sense if the sell fee is a %, because overall you'll get charged the same.

innovate

Hmh, might be that is what is meant. Though this would only be relevant if somebody wants to draw a regular income from their investment, would it?

innovate

Brand wrote: »

Cuida A tracker can be bought in a fund (e.g see Hwindsor on L&G above page 2 ), either standalone or within a fund supermarket, but compare theETFs bought through stockbrokers just like shares are, but without the CGT.

Do you mean "without stamp duty"? CGT would only come into play at the time of selling, and applies to funds and shares all the same, surely (unless investment is in an ISA wrapper)?

Cuidadosa

innovate wrote: »

Hmh, might be that is what is meant. Though this would only be relevant if somebody wants to draw a regular income from their investment, would it?

I guess, but it would also apply to those who want to start moving their investments into a lower risk category (eg like its recommended for pension funds), instead of moving everything all at once, drip feed out and into the new lower-risk investment/savings account

innovate

We are in an S&S ISA thread here, so it's difficult to understand why anyone would want to take money out of their ISA, unless it is for the purposes of spending the proceeds.

Re-balancing the investment doesn't need to involve the removal of funds from the ISA. I also can't see a seasoned investor to swap any of their investment for a savings account in the foreseeable future.

Still can't really understand what "drip-out" means, I am afraid.

jimjames

innovate wrote: »

Still can't really understand what "drip-out" means, I am afraid.

No, nor do I.

I've never heard it mentioned before other than in this thread where it had been used by an investment seller. It may just be their jargon that means nothing.