Stocks & Shares ISAs

Alexland

Nellie43 wrote: »

Thanks Alex - it's £15000 - I will remove it and put it in a fixed savings account although slightly tempted by the S&S Isa but I daren't risk it ...

Well you could easily rewrap £15k back into a Cash ISA within one £20k tax year allowance so unless you are expecting to find another big pot of money then it should be fine to withdraw it and put it in a taxable account which might overall generate better return for you.

S&S investments have had a very good run in recent years (although pretty flat in the past 12 months) and it may not continue. Only invest money that you will not need to access for 5 or preferably 7 to 10 years to reduce the risk of selling at a loss.

https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/

Alex

bluepowell

dunstonh wrote: »

An economic cycle is typically around 10 years. So, if you invest for less than that period, you dont know if you are going to get the good years, bad years or nothing years.

As for changes, it depends on how you invest. A risk targetted multi-asset fund with underlying passives would rarely need changing. However, a bespoke portfolio of single sector funds would need changing annually (rebalancing, risk adjustments, weightings reflecting economic cycle and actuarial data etc).



Below average in what respect? You need to be wary of basic ratings. Especially if they are just comparing funds in the same sector. A sector may have funds covering risks 3 to 8 on a 1-10 scale. You would expect the higher risk funds to perform better in growth periods and worse in negative periods. So, a low-risk fund in that sector may be below average but that is bey design. It doesn't make it unsuitable. The investor may not want the higher levels of volatility that goes with the higher risk fund that has done better looking backwards. Indeed, where we are at the moment, buying funds that have done the best over the last 5 years may see them being the worst in the years ahead.


It is a viable option but HSBC is better value. This is one of those examples where a change occurs. 5 years ago, VLS was the lowest cost option. That is no longer the case. Plus, their asset allocation is not to everyone's liking. You won't be unhappy with it but it is no longer what can be considered top of the pile.



If the pension meets the objective better then use that. If ISA is better then use that. Investments are the same in both as are the charges (in most cases). So, its really only the maturity process and accessibility along with tax that differs.

Hi.

Thanks for the reply and info/comments and sorry for not thanking you earlier.

So.

After my initial post I thought it would be best to properly look at what I’ve got, and also provide some further info.

So of the 3 things I inherited only one is a S&S ISA and I didn’t really inherit it as it was already in my name! My dad opened it many years ago and was paying in £50/month. These payments stopped about 10 years ago I think. I don’t remember him opening it (I must have signed something!) I don’t rely on these for any income etc, so an happy to leave them to mature until i retire in approx. 25 years. Talking of retiring etc. I am self employed, but haven’t been paying into a pension since I was made redundant about 4 years ago. After struggling to find work and finally deciding to go self employeed and the having to work through the mess my dad left me when he died about 2 years ago, pensions etc have only really come back to the fore of my mind. I also have his house that I now rent out. No mortgage owing on it. For futher info I am also a higher rate tax payer.

Anyway. The 3 investments are detailed below.

15k in the S&S ISA called “JPM UK Higher Income A Net Acc”. http://www.morningstar.co.uk/uk/funds/snapshot/report.aspx?id=F0GBR04NSS#/overview

The other to inherited investments are

2k in “Threadneedle UK Monthly Inc Rtl Inc”. http://www.morningstar.co.uk/uk/funds/snapshot/report.aspx?id=F0GBR04RT0#/overview

20k in “Fidelity European W Acc”. http://www.morningstar.co.uk/uk/funds/snapshot/report.aspx?id=F00000QS9O#/overview

These last 2 aren’t S&S ISA’s .

These 2 seem to have pay a dividend and that is re-invested. I guess I’m paying some kind of tax on that via my self-assessment I now have to fill in. I don’t understand if divs are paid in the case within the S&S ISA.

In terms of the “ratings” I originally mentioned I now understand that they are compared to similar investments, but looking at the JP Morgan one and thread needle one neither are rated that great compared to other similar ones and the stocks they are made up of are very also similar. Also the fees seem quite high compare to the rates quoted in the main article. Also as an aside I inherited some shares off my dad in mostly UK companies that are part of these 2 investments. Divs are being re-invested via DRIP.

To view how much they are worth etc I log onto the associated website. i.e. fidelity for the fidelity investment etc. JPfr JP one. So I’m assuming that that s the “platform”.

So firstly. The fidelity one seems like a good investment in terms of it’s past performance and rating. But can I “convert/wrap it up into” an S&S isa? And should I move it Cavendish online to lower the fees that I’m paying? (not that I can figure out the fees! Maybe I’m being thick, but it seems very confusing!)

Secondly – The other 2 don’t seem to be that good and are very similar. Also seem to have much higher fees. Should I ditch them both and invest in something else (HSBC one, vanguard one?) That would give me a euro based investmen (fid), UK shares and worldwide investment (diversity is the key?)

Lastly – I plan to start making making contributions (half the rent collected from the property. Should I start adding to these investments, or start a completely new one? Or would it be better to pay into a private pension?

Again.

Thanks in advance for the any advice.

Alexland

Firstly if you are a higher rate taxpayer can you pay enough into your pension to get your income down to basic rate?

Those investments are big enough that a fixed price ISA wrapper such as iWeb should work out cheaper than Vanguard Investor or Cavendish percentage charges.

I would consider a single mixed asset fund such as Vanguard LifeStrategy, HSBC Global Strategy or Blackrock Consensus.

The existing S&S ISA can be ISA transferred and you could contribute up to £20k per tax year to wrap the others and your ongoing rental income.

Alex

Fonque

I currently have an S&S Isa. The well known high street bank has proposed that they would like install a new Fund Manager, in order to provide a more efficient and lower charges, along with some changes regarding where the Fund can operate and how.
The changes to the scheme need to be approved by shareholders within the scheme to pass.

I have read through the Voting document I have been sent but there are a number of questions I have but that aren't your run of the mill questions regarding ISA'a since it involves Fund mergers, statement value and share price.

I don't have much financial experience, so I want to sit down with someone and go through the paperwork legalese and what it means for me and what my options are.

I really am lost as I don't feel I can sort it out if i can't get the answers I need. I would like some help but I'm not sure where to get it.

eskbanker

If you post more detail, including name of bank, product, fund, etc, then chances are someone may have heard about the proposed change and be able to clarify some or all of your questions.

Is this something you chose for yourself and if so, are the reasons for choosing it still valid?

If not, and you invested based on advice then you can obviously ask the adviser.

If I was a betting man I'd suspect that there will be better investment options for you than the type of product sold by high street banks, not renowned for investments that are value for money....

Fonque

eskbanker wrote: »

If you post more detail, including name of bank, product, fund, etc, then chances are someone may have heard about the proposed change and be able to clarify some or all of your questions.

The Bank is Natwest, the product is Cautious Growth Fund.
RBS Investment Options ICVC are proposing changes that are supposed to, in the main, lower the costs of running the scheme, increased efficiency and safeguarding the viability of investments for the long term.
Adjustments also will allow the scheme to trade freely across the EU, with respect to certain restrictions on borrowing etc).

I opened it with the intention of using it for a house deposit (subsequently used half of it for that purpose) The remainder on my Statement Value currently 10,434.394 shares at 149.50p or £15,599.92) is now really an account that I don't have specific goals for save for retirement.

My concern is over whether the price of the shares will be protected upon transfer (should the new scheme be approved) as these two points in the paperwork seem to contradict one another, leaving me very confused as to whether it is or upon transfer a third of the value will be arbitrarily lopped off (rather than subject to the ups and downs of the Stock Market).

From the summary document:
[...If the mergers are approved, you will automatically become a shareholder in the New Fund(s) on the effective date of the merger, and the Exisitng Fund(s) in which you were previously invested will close. You'll recieve shares equal in value to your current shareholding as at 17th May 2019....]

But in the Voting Document:
[Basis for the issue of New Shares.
Shareholders will receive New Shares in place of the Shares they currently hold.
Cautious Growth Fund Class 1 net Accumulation will change to Managed Defensive Fund Class 1 Net Accumulation.
The price of New Shares to be issued to each Shareholder under the scheme shall be £1
Each Shareholder holding Shreas in a relevant Existing Fund immediately before the Effective Date shall be issued with New Shares in the relevant New Fund in accordance with the following formula:
A x B = C
where:
A = The part of the Value of the relevant Existing Fund which is attributable to a Share of the relevant type;
B = The number of Shares of the relevant type which were held by that Shareholder immediately before the effective Date; and
C=The number of New Shares to be issued to that Shareholder by RBSCIFL in respect of RBS Investment Funds ICVC which number will (if necessary) be rounded upwards to the nearest smaller denomination New Share. RBSCIFL will pay into the relevant New Fund an amount equal to the value of any additional New Shares issued as a result of this rounding.

C equates to both the number of New Shares and the Value of those New Shares, by virtue of the price of New Shares being £1.]

If anyone could help demystify this because I think I am clearly misunderstanding it that would be extremely helpful.

masonic

Fonque wrote: »

The Bank is Natwest, the product is Cautious Growth Fund.

http://www.rbs.co.uk/Downloads/personal/investments/KIID-CautiousGrowthFund.pdf

It's an expensive fund of funds (ongoing charges of 1.9% per year), over 3 years it is in the bottom 25% by performance of funds in its sector. It is unsuitable for holding money you intend to use (for example to buy a house) within the next 5 years.

You'd be crazy to keep this fund, sell up, move to a low cost platform and buy a better quality fund. Keep the money you need for your house purchase in cash.

Take this opportunity to sell up and run away from RBS as fast as you can. The changes proposed above are highly unlikely to bring this cash cow fund in line with the quality or low cost of alternatives, such as the L&G multi index series.

Edit: Here are the details of the new fund: https://personal.natwest.com/content/dam/rbs_co_uk/investments/downloads/Investment-changes/Managed-Defensive-Fund-KIID-Class-1.pdf
Still quite expensive (ongoing charges of 1.5% per year), still a fund of funds - all it holds is low cost index trackers, so charges really should not exceed 0.5%.

Alexland

Fonque you are being moved from one poor fund into another. Time to wake up and either move to cash if you intend to withdraw in the next few years or invest in something better (eg Vanguard LifeStrategy) if you are serious about getting the likely benefits of long term investment.

Alex

Fonque

Thanks very much for your replies.
I'm arranging to see an IFA soon to help sort out my financial position and put myself in a better position for the future.

Alexland

Fonque wrote: »

I'm arranging to see an IFA soon to help sort out my financial position and put myself in a better position for the future.

Is there anything about your situation that makes it particularly worth paying for advice or could you just go low cost DIY by investing in a professionally constructed LifeStrategy fund in an ISA on the low cost Vanguard Investor platform? Also have you considered additional pension or S&S Lifetime ISA (if under 40) contributions?

Alex