Stocks & Shares ISAs

dunstonh

I was thinking of taking up the Moneyfarm S&S ISA offer for a year then moving elsewhere, probably somewhere with no management fees as hopefully I'd have a bit more of a clue what I'm doing by then and more time to devote to it.

You wont save charges doing that. Moneyfarm is also not a conventional investment option. It is a robo-advice pre built solution.

My question is whether I'd have to change the funds or can I just change the platform?

Moneyfarm is not a platform.

I.e. everyone says invest for 5yrs+ but doing it this way, would I be investing for just 1 year and then need to change all the shares thereby losing that benefit of riding out the bumps by investing for longer?

Moving your investments but remaining invested is still being invested.

katieks

Thanks for replies. If Moneyfarm not a platform, do I need to pay separately for a platform too? The summary MSE article doesn't include this in their fees for them. I appreciate they're 'robo-advice' whatever but even using their algorithms is likely to perform better than me with very little idea of the moment and will give me an opportunity to get into the stock market and be able to see how it works without having to know too much myself and all this for free management fees. If you have a better suggestion Dunsonh as I'd be very grateful as I just want to make my savings work harder than the paltry savings rates on offer with a cash ISA. I've already got Regular Savers and Santander account, etc. But for the hassle of opening new accounts, credit checks, etc to be able to save 3k at slightly more - I just don't have time for that.

I got some advice off a financial adviser and for them to manage the fund cost a lot. 4.5% initial investment fee then ongoing 1.5% per annum. Apparently your money does very well investing with them, but it just seemed too much for me. Maybe they were an expensive one. Also spoke to another financial advisor who said he doesn't really do investments <50k. I don't want to invest that much just yet. Was thinking of 20k max at present.

Thanks in advance.

katieks

And also, I have no idea what I can expect in terms of returns from a general low-med level risk investment in a mixed UK and Europe fund. 0.35% fees is a lot if the increase is only 1% but not if it's 3% - I Googled FTSE 100 rate increase and I can't make sense of it. The other thing is I have a 1.94% mortgage. At the moment I'm hoping investing in stock market will outweigh this i.e. I can earn a higher return than paying off mortgage. Am I mistaken in this? It's unfortunately not a mortgage where I can get back to the money easily if I make overpayments.

masonic

katieks wrote: »

Thanks for replies. If Moneyfarm not a platform, do I need to pay separately for a platform too? The summary MSE article doesn't include this in their fees for them.

It is a self-contained solution, so there is no platform in this case. I wouldn't use MSE guides when it comes to investments. It really isn't where their strengths lie. They probably have a correct summary of the charges, but it does not necessarily include the best options.

I appreciate they're 'robo-advice' whatever but even using their algorithms is likely to perform better than me with very little idea of the moment and will give me an opportunity to get into the stock market and be able to see how it works without having to know too much myself and all this for free management fees.

There really isn't any evidence that these robo-advice strategies perform any better than a fixed allocation strategy. Taking Nutmeg as an example, it seemed to under-perform in its managed portfolios and later released cheaper fixed allocation portfolios. You also have options like Vanguard Lifestrategy and L&G multi index that can be held in a platform, possibly for even lower costs (less than 0.5% overall).

katieks wrote: »

And also, I have no idea what I can expect in terms of returns from a general low-med level risk investment in a mixed UK and Europe fund. 0.35% fees is a lot if the increase is only 1% but not if it's 3% - I Googled FTSE 100 rate increase and I can't make sense of it. The other thing is I have a 1.94% mortgage. At the moment I'm hoping investing in stock market will outweigh this i.e. I can earn a higher return than paying off mortgage. Am I mistaken in this? It's unfortunately not a mortgage where I can get back to the money easily if I make overpayments.

Investing will tend to deliver high returns with high variability. Over a sufficiently long period, it will tend to work out a lot better than 1.94% - typically 5%+inflation is used as a guideline for equities.

Investing in the UK and Europe only is not very sensible. You should be looking at something more global, possibly including bonds and maybe even property.

Smarter Investing by Tim Hale makes very good reading if you want to understand these things.

dunstonh

The summary MSE article doesn't include this in their fees for them.

MSE has always been poor on the investment side of things. The articles are not a good source of info. This section is far better. Even when posters disagree on things (and investing is often about opinion) you still get decent discussion on the whole and get to see all sides.

I appreciate they're 'robo-advice' whatever but even using their algorithms is likely to perform better than me with very little idea of the moment and will give me an opportunity to get into the stock market and be able to see how it works without having to know too much myself and all this for free management fees.

Are you sure? We have a robo offering for those that want it. It uses the L&G multi-index fund range (class C). That same fund is available direct from L&G or on platforms. So, why not buy a multi-asset fund on platform (not suggesting L&G - just used that to point out that robo solutions are similar to active passives multi-asset funds)

I got some advice off a financial adviser and for them to manage the fund cost a lot. 4.5% initial investment fee then ongoing 1.5% per annum. Apparently your money does very well investing with them, but it just seemed too much for me. Maybe they were an expensive one. Also spoke to another financial advisor who said he doesn't really do investments <50k. I don't want to invest that much just yet. Was thinking of 20k max at present.

IFA portfolios often beat these solutions. However, IFAs are not generally interested in small investors. These robo solutions are aimed at filling the gap between those that dont want to DIY and those that cant get advice cost effectively.

And also, I have no idea what I can expect in terms of returns from a general low-med level risk investment in a mixed UK and Europe fund. 0.35% fees is a lot if the increase is only 1% but not if it's 3% - I Googled FTSE 100 rate increase and I can't make sense of it.

If you used a typical 1-10 scale, the FTSE100 would be up around 9. So, a low/medium is not a sensible fit with a 9 risk area. You should use like for like in terms of risk when making comparisons.

Brand

katieks wrote: »

And also, I have no idea what I can expect in terms of returns from a general low-med level risk investment in a mixed UK and Europe fund. 0.35% fees is a lot if the increase is only 1% but not if it's 3% - I Googled FTSE 100 rate increase and I can't make sense of it. The other thing is I have a 1.94% mortgage. At the moment I'm hoping investing in stock market will outweigh this i.e. I can earn a higher return than paying off mortgage. Am I mistaken in this? It's unfortunately not a mortgage where I can get back to the money easily if I make overpayments.

Katieks
1. you are "hoping" for 3%+, so what happens to mortgage payments if it doesn't return 3%+ in any one year or even loses money? stockmarket returns are fickle.
2. I can see your view, but sometimes these clever approaches in finance come a cropper.
3. Moneyfarm is like buying a fund directly from an asset manager.
If you want to transfer, then you simply transfer out to another ISA provider, like any other ISA transfer, so yes you might be uninvested for a few days.
4. Instead of buying shares, it buys a selection of ETFs, so is like a fund of funds, and thus is spread over a very large number of companies.
5. The diversification is even larger as it includes global ETFs. It chooses and holds the ETFs on your behalf and tweaks them according to its view of the economy.
6. For a new investor or someone who does not want to follow it too closely, it should be a comfort to have someone doing this, so I think it is a reasonably good choice of first investment for a hands-off investor.
7. Given that it is a new fund, I would guess it will give a lot of attention to the fund to try to make it do well.
8. I think with charges you have to think what they need to do the job properly and what would it cost me to do it independently.
It chooses the ETFs according to the level of risk you say you are, and also the smaller the amount of money you put in, the less risk it will give you.
9. For all but the most adventurous category, it reduces risk by increasing the amount of bond and fixed interest ETFs.
10. That is really a key point as you have to be sure in your mind that you agree with the moneyfarm fund manager (and the industry consensus on what a low/medium risk stockmarket investment is) that you need a substantial proportion invested in bonds and fixed interest, especially at a time of very low interest rates.
You either need to have a view on this assumption yourself, or else trust the view of the moneyfarm manager.
(To me, a person either wants the risk of the gyrations of the shares and the stockmarket or does not, and, if so, should not get involved with bonds etc. so in moneyfarm terrms, I would have to mark myself as rather high risk rather than medium risk. )

atruefaker

Hello All

I am new to this even though I have a stocks and shares ISA with Santander for a while. I didn't really know what I was doing when I was sent to see the advisor. I believe it has a fund manager overseeing,etc. I haven't paid into it for a while and I am not sure if I have actually had any return.

I am trying to sort this out and look at how best to improve this pitfall. I have noticed from a few posts there is mention of some good advisors on here. Would anyone be able to point me in the right direction?

Thanks in advance.

temartin123

Why do you not mention trading fees on Shares? Many investors won't have the capital that is often required as a minimum initial investment for a lot of funds, so will want to invest in ETFs.

masonic

temartin123 wrote: »

Why do you not mention trading fees on Shares? Many investors won't have the capital that is often required as a minimum initial investment for a lot of funds, so will want to invest in ETFs.

For funds, you can go as low as £100 at some platforms, and for a regular investing plan £25 per month is possible. If someone doesn't have either a £100 lump sum to invest in each fund, or £25 per month per fund, then maybe they they are better off saving in cash until they do.

But, comparing these minimums, funds (OEICs/UTs) would tend to be preferred over ETFs. ETFs become increasingly beneficial for larger investments.

Lump sum of £100 (First year cost - 45p for a fund, £6 for an ETF)
OEIC/UT
Trading cost = £0
Annual platform cost = £0.45 (0.45% platform charge - HL)

ETF
Trading cost = £6 (broker with no holding charges - XO)
Annual platform cost = £0

Monthly investment of £25 (First year cost - 80p for a fund, ~£19 for an ETF)
OEIC/UT
Trading cost = £0
Annual platform cost = ~£0.80

ETF
Trading cost = £18 (platform with cheap regular monthly investing option at £1.50)
Annual platform cost = ~£0.80

dunstonh

temartin123 wrote: »

Why do you not mention trading fees on Shares? Many investors won't have the capital that is often required as a minimum initial investment for a lot of funds, so will want to invest in ETFs.

Surely smaller investors are better off investing in UT/OEICs rather than ETFs as a means to reduce their costs. Plus, smaller investors tend to be more inexperienced and not aware of the extra risks that ETFs can have.