Stocks & Shares ISAs

masonic

Jeepers44 wrote: »

Does anyone have any views on the fairly recently introduced Investec Click and Invest platform for s&s ISA?

Frankly this offering looks laughable. I took their "What type of investor are you?" questionnaire, which had nothing to do with investing and the outcome was...

"You prefer a safer outcome
Your friends know you are the cautious type. You’re the one in the group trusted with booking the holiday flights, because you don’t like leaving things to chance. If you feel like this about risk in general, it’s likely your attitude is probably going to be the same if you chose to make a financial investment."

:rotfl:

In any proper risk tolerance questionnaire I score a 9/10 or 10/10. But because I don't like dancing in the mosh pit at a concert and would rather have a mouthful of wine than a mouthful of river water, apparently I can't possibly tolerate the gyrations of the stockmarket.

Plus, as above, it's a bit of a rip-off.

Jeepers44

Thanks for the comments - I thought as much really but wanted to float it with those who know more than me just in case anyone thought the higher fees might be outweighed by a potential overall better offering with the investment but useful to hear. Thanks!

Trinity1011

Please excuse my naivety on this subject. In one of the above posts Alexland says " On a 60% shares and 40% bonds mix you should expect average annual returns around 3.5%". Is this the same as saying you would be getting a 3.5% interest rate?

dunstonh

Trinity1011 wrote: »

Please excuse my naivety on this subject. In one of the above posts Alexland says " On a 60% shares and 40% bonds mix you should expect average annual returns around 3.5%". Is this the same as saying you would be getting a 3.5% interest rate?

No. I suspect that is a real return of 3.5% (i.e. on top of inflation). Cash savings typically do not keep or just about keep up with inflation if you shop around.

Alexland

My expectation for 60/40 given market valuations was a medium term 3.5% nominal return (around inflation) rather than real return. This roughly matches the Vanguard forecast below. I have low expectations and if they are exceeded that would be great. Maybe following the recent circa 10% equities price correction you could add another 0.6% pa as 60/40 in 2018 has been a waste of time so far and assets compound better at lower valuations.

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/why-investors-prepare-for-lower-returns

It's hard to be too precise as it depends on how your contribution pattern plays into the volatility and the reasonableness of valuations at withdrawal.

Alex

eskbanker

Trinity1011 wrote: »

Please excuse my naivety on this subject. In one of the above posts Alexland says " On a 60% shares and 40% bonds mix you should expect average annual returns around 3.5%". Is this the same as saying you would be getting a 3.5% interest rate?

Just to add to the above posts, one of the most important words in Alex's post is 'average', in that investments may deliver a long-term average of 3.5% annually but in practice that'll look like, say, +5%, +30%, -15%, +2%, -20%, +8%, etc, whereas interest on savings is linear and predictable....

Trinity1011

Thank you everybody for your replies. To clarify, to my simple mind, would i be correct to think then that if i invested a lump sum of £10000 and i achieved the 3.5% return then after one year i would have £10350?

dunstonh

Trinity1011 wrote: »

Thank you everybody for your replies. To clarify, to my simple mind, would i be correct to think then that if i invested a lump sum of £10000 and i achieved the 3.5% return then after one year i would have £10350?

If the return in that year was 3.5% then yes. Personally, I would consider 3.5% low for that asset mix. However, for forward planning, it is sensible to under project and over achieve.

And because returns will never be 3.5% annually, it is probably better to work to a lower rate in the early years.

Trinity1011

I have an old PEP, now stocks and shares ISA, which I have had since 2004 and to be honest I have never really looked into its performance or tried to compare it to other products, until now that is as I have a ~£6k cash ISA maturing.
Looking at the annual growth from 2005 of the ISA shows an average increase 8.4% and the fund has doubled in value.
So a few questions - this to me looks like good performance – is it?
Would it be naïve to simply put more money into this without looking around?
Finally I don’t seem to be paying any charges for this ISA whereas I notice management and platform fees seem to be a large area of discussion.

Linton

Trinity1011 wrote: »

I have an old PEP, now stocks and shares ISA, which I have had since 2004 and to be honest I have never really looked into its performance or tried to compare it to other products, until now that is as I have a ~£6k cash ISA maturing.
Looking at the annual growth from 2005 of the ISA shows an average increase 8.4% and the fund has doubled in value.

So a few questions - this to me looks like good performance – is it?

Doubling in value over 13 years is 5.5% annual, not 8.4%. 8.4% annual is equivalent to trebling over 13 years which would be about average for a 100% share fund broadly invested acrosss the world. But we dont know what you fund is - perhaps it is not 100% equity and perhaps it is not invested broadly across the world.

Would it be naïve to simply put more money into this without looking around?

Really you should have been investing in it every year since 2005. You would have accumulated a large amount of money by now. Whether to put more money into the fund rather depends on what it is.

Finally I don’t seem to be paying any charges for this ISA whereas I notice management and platform fees seem to be a large area of discussion.

The chances that you bought the origimal PEP directly from the fund manager. If so, the costs would be bundled in with the fund fees and included in the published fund price. These days people tend to use "platforms" run by 3rd parties with which you can buy funds from a very wide range of managers. The costs are explicit but the fees taken by the fund manager are lower.