Reinvest into my investments? (Newbie)

Cuidadosa

Hi,

I'm going ahead and opening a Close Brothers S&S ISA (looked OK in Snowman's table and in the ISA table he linked to for my situation). I've selected the following to deposit £150 monthly:
City of London Investment Trust (50%)
HSBC FTSE All Share (C) (50%)

In setting up the account, it asks about what would I like to happen to the income from my investments. My initial reaction was to select 'reinvest' but then the following text appears:
Note: from April 2014, income generated for bundled funds (commission-paying) cannot be re-invested and will be paid into your product cash account. Please choose clean funds (commission – free) if you would like all income to be re-invested. Dividends or other distributions from exchange traded investments (e.g. shares) will only be re-invested if they amount to £100 or more. This is to avoid you incurring unnecessary dealing charges. Any amount that is not re-invested will be held as cash within this product account.

And to be honest, I don't know if a) it applies to my situation and b) maybe I sould select one of the other options, namely:
Pay to my product cash account (I don't know what this is!)
Pay to my Close cash account (not applicable)
Pay away to my nominated bank account Any guidance appreciated, thanks!

bigadaj

You'll probably want income to be reinvested so choose this option, my understanding is that all new purchases will be unbundled and commission free. In which case you will probably get a separate charge on the account which you'll have to pay by keeping a small amount of cash or paying as the fee becomes due.

Unbundled should be cheaper than bundled but some commission rebates are sufficiently high that the opposite may be true,though I understand close bros and the co funds platform they use are just doing unbundled for all new transactions.

Cuidadosa

Hi, thanks
What is the difference between bundled/unbundled? It it closed/open?

Also, I realise that Close Bros will charge me £9 per month I invest on the City of London one, so I'm going to change my plans I think...

Being a basic tax payer, how much of a hassle will be to invest in that one outside of an ISA? I'm thinking opening this ISA with only the FTSE tracker (Close Bros seems one of the cheapest ones for this purpose) and find the cheapest place to put the money on the CoL one with monthly contributions (which I'm hoping will work out much cheaper than £9/month! :shocked:)

bigadaj

Bundled means all the charges are included in ine fee, unbundled they are split. So a bundled fund might charge 1.5% and thiguha. Discount broker platform you might get 0.5% rebated. Unbundled these charges might be 0.75% to the fund manager and 0.25% to the platform! sometimes the total charges are less bundled, some unbundled and there are different deals with different platforms and brokers.

The sums your talking about aren't huge so I'd be against splitting into two platforms, why have you chosen the city of london investment trust?

In some ways what you've done is correct in terms if choosing investments and then the best place to keep them, but if it really is that costly for the IT which is presumably because they treat each month as an additional share purchase then I'd look at another fund to achieve my aims. Presumably you are after income and growth from uk shares, in which case maybe look at those sectors on rustnet and Morningstar and select a suitable oeic or unit trust.

If you really want to invest in the IT then many do their own monthly plans with low fees, so it's one of the few cases where it can be cheapest to go direct.