Stocks & Shares ISAs

bowlhead99

ValiantSon wrote: »

It depends on which platform you use as to whether you will be charged trading fees. Personally, as you are someone with a small amount invested/to invest, then I would avoid any platform that wants to charge you a trading fee (hang your head in shame AJ Bell). Go for a percentage fee platform.

You're right, for small amounts it does make sense to pick a platform that just bills you on a percentage basis, because that will be cheap if you don't have a lot of assets. With charges of 0.15-0.25% available, the platform service will only cost you a trivial amount of money, well below what it costs the platform to set up and administer your account in the early years, as you'll be subsidised by the larger investors.

For example if you start off with a few hundred pounds and add a few hundred more over the course of the year, your average account balance might be around £500, making the first year's fee about a quid. They're hardly going to be buying yachts at your expense with the profit margin on that; if they so much as take a moment to answer a call or email query from you they've probably given up a year or two's profit

For that reason, I don't really agree that AJB should hang its head in shame They only charge you £1.50 for booking a fund subscription or redemption, and it's not their fault if the OP isn't going to invest very much money. Charging a token amount of money for the work involved in placing and reconciling a trade and issuing contract notes etc is something that stops the bigger investors subsidising the smaller ones who generate just as much workload and systems overhead for their £50 trade as a large investor whose trade or account balance has a few more zeros at the end of it.

So paying a fee per trade doesn't make sense for someone like Super Whiskey but it's hardly shameful of AJB to stricture its pricing like that.

Super_Whiskey wrote: »

I'll do a bit more research and I think I will end up going with the Vanguard Lifestrategy 60% fund.

I have seen a few offers for Nutmeg which mean you don't have to pay any management fees for X number of months however given that Vanguard is so much cheaper I doubt it would be worth the hassle to use the offer and then switch the fund over once it has ended.

Yes, a free intro to a service isn't much of a giveaway, if you are not investing very much money (i.e. so that the absolute amount of pounds they're giving up with a promotional deal is not very high). Might as well pick something that's more 'future proof', that you can live with over the longer term and save the costs or hassle of moving later.

Note that the Lifestrategy fund has a different approach than either Nutmeg or the alternative index-based mixed asset finds at HSBC or Blackrock or L&G to which ValiantSon referred earlier. The Vanguard Lifestrategy fund aims for a fixed declared ratio of equities to bonds, while the other three fund series do not, and neither does Nutmeg; also their ratio of UK to overseas assets will differ from the others.

These differences have the potential to produce a bigger difference in total return in any particular year than the fee differentials, though will not necessarily be better or worse over the long haul.

ValiantSon wrote: »

It could easily be the case that when the no-fee period end the fund will be down and you would then have the choice of selling at a loss to move to a different platform, or paying the higher fees until your investments return to profit. The no-fee offer is there for those taking a short term view, which is a terrible way to approach investment; investing needs a long term approach due to market volatility.

As above, it's probably better to set yourself up all for the long term rather than chase short lived deals from providers who might be banking on your apathy to make more from you once your balances increase over the coming years.

Still, the point about 'selling at a loss to move to another platform' is perhaps a red herring. Markets will go up and they'll also go down from time to time. If you find that they happen to have gone down at the point when you'd like to change providers into a comparable product with a lower fee, there's no real issue with "selling at a loss' to do so, as the comparable product into which you're moving at another provider will also likely have gone down too, and you'll be buying it on the cheap compared to having bought into that product today.

People can sometimes get hung up on not wanting to make a loss or needing to wait around for a recovery to 'get their money back' before they're willing to take the sensible approach of moving on. Best not to be driven by emotion. Anyway, the Nutmeg product might just as likely have made a gain instead of a loss before you get around to moving from it, and in the time that you're temporarily out of the market while moving between providers you might either gain or lose or break even depending how fortunate it is to be in cash at that time.

So I wouldn't say the prospect of Nutmeg value being low at the time you want to move would be a good example of why you would need to keep with it., but it might have a psychological impact. If you've already identified that after the intro period is up you'll probably leave them for greener pastures, there's no major reason not to use those other pastures from the start. The MSE forums are full of people pointing out and grabbing 'introductory offers' with all kinds of banks and financial firms. But if the amount being saved is only just a small (or fractional) percentage of a few hundred quid, and they don't have a totally compelling product in all other respects, maybe best to just skip it.

Super_Whiskey

Thanks for your response. I've read a few of your other posts in this sub-section and they've been quite informative.


Aside from fees, risk appetite and platform, is there anything else I should be considering? I know we're not talking about large sums however the more information the better!

Alexland

Super_Whiskey wrote: »

Aside from fees, risk appetite and platform, is there anything else I should be considering? I know we're not talking about large sums however the more information the better!

Different platforms have different minimums for setting up regular investment plans. For example HL will do £25 per month, Cavendish will do £50 per month but Vanguard Investor require at least £100 per month.

Alex

ValiantSon

bowlhead99 wrote: »

For that reason, I don't really agree that AJB should hang its head in shame They only charge you £1.50 for booking a fund subscription or redemption, and it's not their fault if the OP isn't going to invest very much money. Charging a token amount of money for the work involved in placing and reconciling a trade and issuing contract notes etc is something that stops the bigger investors subsidising the smaller ones who generate just as much workload and systems overhead for their £50 trade as a large investor whose trade or account balance has a few more zeros at the end of it.

So paying a fee per trade doesn't make sense for someone like Super Whiskey but it's hardly shameful of AJB to stricture its pricing like that.

We'll have to agree to disagree on that. AJ Bell charge the same percentage fee as both Cavendish and Charles Stanley, but also charge £1.50 per trade. I believe that is poor, and you don't: c'est la vie.

bowlhead99 wrote: »

Still, the point about 'selling at a loss to move to another platform' is perhaps a red herring. Markets will go up and they'll also go down from time to time. If you find that they happen to have gone down at the point when you'd like to change providers into a comparable product with a lower fee, there's no real issue with "selling at a loss' to do so, as the comparable product into which you're moving at another provider will also likely have gone down too, and you'll be buying it on the cheap compared to having bought into that product today.

It isn't really a red herring, because you are buying into a proprietary mix with Nutmeg, which cannot be transferred in specie, so you do have to sell if you wish to move your investments. If, however, you buy one of the multi-asset funds mentioned, then that can be transferred in specie to a number of different platforms, meaning that you don't have to sell. When we are talking about the possibility of dealing with robo-advisers then it is a perfectly valid consideration.

bowlhead99 wrote: »

So I wouldn't say the prospect of Nutmeg value being low at the time you want to move would be a good example of why you would need to keep with it., but it might have a psychological impact. If you've already identified that after the intro period is up you'll probably leave them for greener pastures, there's no major reason not to use those other pastures from the start. The MSE forums are full of people pointing out and grabbing 'introductory offers' with all kinds of banks and financial firms. But if the amount being saved is only just a small (or fractional) percentage of a few hundred quid, and they don't have a totally compelling product in all other respects, maybe best to just skip it.

On that we can agree.

ValiantSon

Alexland wrote: »

Different platforms have different minimums for setting up regular investment plans. For example HL will do £25 per month, Cavendish will do £50 per month but Vanguard Investor require at least £100 per month.

Alex

Although you need to keep in mind that those regular investment sums can be gotten round with a decent initial investment, e.g. with Vanguard Investor, an initial investment of £500 allows you to avoid their £100 p/m commitment.

You can also decide, to skip months and invest a larger sum every couple of months, or every quarter.

Alexland

ValiantSon wrote: »

e.g. with Vanguard Investor, an initial investment of £500 allows you to avoid their £100 p/m commitment.

So if you have already invested £500 would they let you setup a regular investment plan at say £25 per month?

Alex.

ValiantSon

Alexland wrote: »

So if you have already invested £500 would they let you setup a regular investment plan at say £25 per month?

Alex.

No, but there is no need to. You could just manually, each month, invest £25.

debtfreehorizon

I'm 32 and want to start investing into S&S ISA. Where is the cheapest place to start investing into Scottish mortgage? I'm hoping to start with around 100 per monthly.

Cavendish through Fidelity charges £1.50 per trade, and then 0.25% admin costs on top of the fund costs

Charles Stanley don't allow you to invest regularly into SMT - saying it's a share rather than a fund

Direct through Baillie Gifford costs £32.50 + VAT per year.

Any other cheap options that people use to invest regularly?

bowlhead99

debtfreehorizon wrote: »

Cavendish through Fidelity charges £1.50 per trade, and then 0.25% admin costs on top of the fund costs

Direct through Baillie Gifford costs £32.50 + VAT per year.

Any other cheap options that people use to invest regularly?

I use AJ Bell Youinvest which would be similar to the Cavendish/Fidelity one you mention for regular monthly purchases: £1.50 per purchase plus 0 25% platform fee per year. Note you don't have to actually buy every month, you can set the purchase amount to be more than your actual monthly contributions meaning the purchase won't fire every month, e.g. only when there's £x in the account to be able to afford the trade.

That technique might help out smaller investors in only triggering a purchase (and fee) every two or three months and incurring fewer charges, but it does mean you have some periods with idle cash not working for you which isn't efficient if you have large amounts being paid in.

Also the annual percentage-based fee is capped at £7.50 a quarter (on ISA or unwrapped trading account) so once you have £12k invested it doesn't go up any more beyond the £30/yr level.

But if you don't mind paying £30/yr it's not much more expensive than that to go direct to Baillie Gifford at £40/yr and then never need to worry about the purchase fees. The downside of doing that is that as your portfolio grows and you want to branch out into buying some non-BG product you might come to realise that it's handy to have a broader set of fund or share choices available - especially for example if you were using an ISA and are not allowed to contribute to multiple S&S ISAs in the same financial year.

Alexland

debtfreehorizon wrote: »

I'm 32 and want to start investing into S&S ISA. Where is the cheapest place to start investing into Scottish mortgage? I'm hoping to start with around 100 per week.

There really is no need to invest weekly as monthly is the norm.

You can invest directly with BG without an ISA wrapper and they only ever charge a £22+vat withdrawal fee so consider if the capital gains and dividends are really likely to use up your annual allowance?

Alterntively SMT is available on Haifax Share Dealing regular investements and for ISAs they charge £12.50 per year and £2 per regular investement so £36.50 inc VAT.

Alex.