Stocks & Shares ISAs

masonic

Brand wrote: »

There are various charges and constraints involved, mostly involving the inability to switch freely in and out of interest-bearing cash accounts, the distortion on your flexibility and quality of your decision about how much to hold in cash, how much in shares, and how much in other assets.

What about CGT? Outside of a tax free wrapper, you would not have the freedom to switch freely in and out of shares without tax liabilities. You may not get a decent rate of interest when you do so inside of a S&S ISA, but at least you don't risk sacrificing a chunk of your liquidated gains to the tax man if you want to radically change where you are invested.

Brand

BobQ wrote: »

I do not have an approach.

MSE is stating a fact: To buy an ISA yiu need to have a platform first and buy funds using it.

You are saying this is wrong because it is unwise to choose the platform first when the costs of the funds you buy may be cheaper on another platform. Also true, but MSE makes that point three paragraphs later.

I am in no position to accuse anyone of being pedantic, but I think you could cut them a little slack!

I agree with Bob. Why has MSE written a guide to Stocks and Shares ISAs a week ago? Not because it's readers have all suddenly woken up and want to be share investors, but because of the Budget changes.
this is a bargain hunting website and its readers must be asking: I know precious little about shares, but I like cash ISAs, and I've heard the budget, so Should I know a bit more about this S&S ISA lark. is there something in this for me at all and what is the general organisation and cost of this. Yes strictly they should be asking first Should I invest in shares at all, then look at the ISAs etc, but bargain hunters are not always so rational! They study the bargain first, then consider only second if they really want it! To answer this, MSE has written a very handy first step guide.
No it might not satisfy the pedants nor the very knowledgeable investors already, but to do so the bargain-hunting audience would just ignore it. Yes you can buy a fund direct, such as from fundsmith, as innovate has said, and mike has helpfully also pointed out L&G. but the usual method in PEPs and ISAs has always been to join a scheme then add the investments and for most people that will be the case. We can all be picky and such detail can be explored down to page 32 of the forum thread,, but new students of stocks and shares will not want to plough through piles and piles of detail, and instead just want a fairly simple anwere to Is there anything in this for me? and How roughly do I go about it.

innovate

As you would expect, I totally disagree. I also do not like to get misquoted, so please do check before you claim I said something that I did not say.

Your reasoning is not logical since plenty of other websites, amongst them diverse ones such as monevator.com, the Daily Mail, the Telegraph, prove that it is possible to have concise S&S ISA guidance for novices. None of them proposes that you would start with a platform and then select your investments - mainly because it is totally non-sensical to do so.

Brand

masonic wrote: »

What about CGT? Outside of a tax free wrapper, you would not have the freedom to switch freely in and out of shares without tax liabilities. You may not get a decent rate of interest when you do so inside of a S&S ISA, but at least you don't risk sacrificing a chunk of your liquidated gains to the tax man if you want to radically change where you are invested.

You have a £11,000 CGT allowance outside of your CGT-free vehicles, so are you'd have to be a very hot investor to exceed that on a £5,940 investment between April and July? Why not keep that £5,940 outside of a Stocks and Shares ISA until the offerings are clearer - and possibly more flexible and attractive - in July?

innovate

The discussion was a general one, not an April to July 2014 one.

Not sure why people think there will be much change in July - ok, may be some of the S&S providers might offer better rates for cash holdings though I doubt they will because interest rates remain in the doldrums.

IMO, there will be zilch changes of any significance to S&S ISAs in July (apart from the higher limit and transfer to cash option) since the investment world will be totally unaffected by the fact that people can put a few K more into a tax shelter.

What more flexible and attractive offerings did you have in mind?

NB. You do realise that the current S&S ISA allowance is £11,880, not just £5,940?

masonic

Brand wrote: »

You have a £11,000 CGT allowance outside of your CGT-free vehicles, so are you'd have to be a very hot investor to exceed that on a £5,940 investment between April and July? Why not keep that £5,940 outside of a Stocks and Shares ISA until the offerings are clearer - and possibly more flexible and attractive - in July?

Investing in a non-ISA account with a view to bed & ISA in the future is a useful strategy and one that I've made use of at times. For people whose decision whether or not to invest that extra money in S&S is contingent on getting favourable terms on cash when the NISAs come into effect, that is a wise strategy.

However, coming back to your comments that investing in S&S in an ISA restricts ones ability to freely move between asset classes, I disagree that CGT is irrelevant to those people. They might be holding for 10 or more years and over those timescales £30k worth of holdings growing at just the rate of inflation would be enough to tip them over into CGT territory. With the oft-quoted annual 7% growth rate, they'd only need an initial investment of just over £11k. Even without NISAs, it is certainly not "never no more expensive" to use a CGT-free vehicle. The changes might make it a no brainer for everyone to put what S&S they can within an ISA, but in many cases it already is.

masonic

innovate wrote: »

IMO, there will be zilch changes of any significance to S&S ISAs in July (apart from the higher limit and transfer to cash option) since the investment world will be totally unaffected by the fact that people can put a few K more into a tax shelter.

One factor, which might be of interest to a few, is if a provider decides it is not willing to accept partial transfer out requests, which could make it difficult for those wishing to pile money into S&S with a view to later converting some of it back to cash and chasing the best cash ISA rates with it.

trevjl

jimjames wrote: »

It's hard for a simple site like MSE to be able to cover all the options and variations but they certainly don't make things easy for new investors with some of the misleading info provided.

HL are one of the more expensive providers but as you have spotted it really depends on the amount you have invested. At £10k the difference is small and like you say the good service and friendly website is worth paying for.

However once you get to having a portfolio of £100k or £200k and the difference is £450 vs £250 or £900 vs £500 then saving £200 or £400 per year starts to become far more significant and maybe not worth paying for.

You are quite correct of course, but as it's a %, then if, a big if, I get to having 200K in there then the difference will still be a % and the difference will still be of the same significance. It is just the way I am, happy to pay a bit more for something if I find it suits me personally, quick to move if things don't please me. For example, wouldn't be seen dead in a Wetherspoons just because I can get a pint of ale £1 cheaper

trevjl

mikebeaches wrote: »

Not sure if you've seen the rather long thread - currently running to 47 pages - about folk trying to leave Hargreaves Lansdown?

https://forums.moneysavingexpert.com/discussion/4870018

No I haven't but will take a look thanks, 47 pages, blimey

masonic

trevjl wrote: »

You are quite correct of course, but as it's a %, then if, a big if, I get to having 200K in there then the difference will still be a % and the difference will still be of the same significance.

You are overlooking the flat-rate options, where you pay, for example £80, regardless of the size of your holdings. Compared to these platforms, the difference does become more significant.