Interactive Investor the only reasonable platform for monthly investment?

Jevvers

I am edging closer to getting out of my "analysis paralysis" and actually buying the diversified index tracker & bonds portfolio in an ISA wrapper that I have been researching (!)

So I have been looking at the platform options and I have looked at Snowman's spreadsheet and at the Monevator table of charges.

BUT I want to dripfeed the money monthly as a) it is more affordable for me and b) to benefit from pound-cost averaging.

Am I right in thinking that Interactive Investor is the only reasonable option for doing this as they are £20 per quarter and £1.50 per trade (which the £20 goes towards). So if I invested in 5 funds per month that would be £7.50 per month. And over at iWeb that would be £30 per month??

Some other numbers:
Initial investment £6,000 and £500pm thereafter
I also have a decent sum in L&G FTSE All Share ISA which I could transfer if it would be worth it (current TER 0.54... although I havent checked whether RDR has changed that)

Long post - thanks for reading!

grey_gym_sock

if it's down to interactive investor vs iweb, that sounds right. but is it?

are you buying funds (not ETFs)? because some platforms do that for no dealing fee.

e.g. cavendish online, or charles stanley direct, no dealing fee, but 0.25% on-going charge on current value of funds - which would be less than £90 a year (the dealing charges with interactive investor) until the current value reaches £36k.

you can find cheaper all-share trackers now, with L&G or another provider.

sabretoothtigger

£20 per quarter and £1.50 per trade

my broker is 32 a quarter plus 2.50 a trade but I can deal any time I want buy or sell

Halifax is the other one but I guess they are not as cheap. I have heard of a couple others but not used them.
Funds I use HL and I forget the charge now but its like 0.25% fixed pa?

PenguinJim

Jevvers wrote: »

Am I right in thinking that Interactive Investor is the only reasonable option for doing this as they are £20 per quarter and £1.50 per trade (which the £20 goes towards). So if I invested in 5 funds per month that would be £7.50 per month. And over at iWeb that would be £30 per month??

It might be worth doodling your numbers on a spreadsheet with some formulas, just to make sure you're getting your figures right.

For example, at iWeb it's £5 per trade, so 5 trades a month is £25 per month.

But if you've got a quarterly charge, you'll need to divide that charge by three (for monthly) or move to quarterly accounting. So, if I understand what you've written, for five trades a month, II would charge (£1.50x5)x3 for a quarter, plus a £20 charge, totalling £42.50 per quarter for five monthly trades. iWeb would charge (5x5)x3, totalling £75 per quarter for five monthly trades. II would be £10.83 cheaper every month.

If you don't already have an iWeb account, there's the £25 opening fee to consider, too.

Do II have any inactivity charges? % charges on dividend reinvestment (or even offer reinvestment?)?

Note that if, for example, you don't do any trades in 2018 due to other financial priorities, II will cost you £80 that year, and iWeb will cost you £0.

amandajc

I love your "analysis paralysis" reference. I was struck down with the very same thing a few months ago but I have now made a move and am happily managing my S&S ISA at II and SIPP at Fidelity.

After much research and deliberation I went ahead and chose II for the ISA because the whole fee structure suited me. I also have 5 regular monthly trades so my total annual charge including platform fees will be £90 (when my free trades from the transfer offer run out - If you do transfer in the offer is worth a fair amount). Fidelity is better for my SIPP because it is unlikely to get so big that the 0.35% charge will be more than a fixed rate platform fee.

PenguinJim is right, you probably also need to consider how you will want to manage your ISA going forward, how much trading you are likely to want to do, what kind of things you will be buying, how big it is likely to get etc.

But don't deliberate too long, fill in the forms with whoever you choose and start the ball rolling.

(btw II will reinvest dividends for a charge of 1% of the value of the dividend paid (capped at £10).

PenguinJim

amandajc wrote: »

(btw II will reinvest dividends for a charge of 1% of the value of the dividend paid (capped at £10).

Just to be awkward, iWeb do 2% capped at £5. They don't like giving us straightforward comparisons, do they?

Jevvers

PenguinJim wrote: »

It might be worth doodling your numbers on a spreadsheet with some formulas, just to make sure you're getting your figures right.

For example, at iWeb it's £5 per trade, so 5 trades a month is £25 per month.

But if you've got a quarterly charge, you'll need to divide that charge by three (for monthly) or move to quarterly accounting. So, if I understand what you've written, for five trades a month, II would charge (£1.50x5)x3 for a quarter, plus a £20 charge, totalling £42.50 per quarter for five monthly trades. iWeb would charge (5x5)x3, totalling £75 per quarter for five monthly trades. II would be £10.83 cheaper every month.

From what I understand, II charge £20 per quarter but then you get trades for up to that amount "free" and only start paying again when you go over the £20. So in my example (if I've understood it correctly!) I would pay the £20 and then have to pay an extra £2.50 per quarter (£7.50*3 = £22.50 - the £20 already paid).

If I wanted six funds/bonds in my portfolio and paid into each monthly it would be £20 + £7 extra.

Part of my problem with choosing a % fee instead of flat is that I would quite like to consolidate everything which would mean moving in £66k from the L&G ISA so my portfolio could start small and then become medium in one fell swoop.

All this time while I am prevaricating in analysis paralysis I am out of the market, it's already been a year! AARGH!!!

Jevvers

amandajc wrote: »

After much research and deliberation I went ahead and chose II for the ISA because the whole fee structure suited me. I also have 5 regular monthly trades so my total annual charge including platform fees will be £90 (when my free trades from the transfer offer run out - If you do transfer in the offer is worth a fair amount). Fidelity is better for my SIPP because it is unlikely to get so big that the 0.35% charge will be more than a fixed rate platform fee.

Thanks yes I had spotted the transfer offer, I do need to take that into consideration.

amandajc wrote: »

But don't deliberate too long, fill in the forms with whoever you choose and start the ball rolling.

I know! It's driving me crazy and each time I think I've got it right I spot some problem.

amandajc wrote: »

btw II will reinvest dividends for a charge of 1% of the value of the dividend paid (capped at £10).

Does that apply to Acc funds too or do those automatically include the div?

Thanks!

Jevvers

PenguinJim wrote: »

Note that if, for example, you don't do any trades in 2018 due to other financial priorities, II will cost you £80 that year, and iWeb will cost you £0.

Good point

amandajc

I'm pretty sure acc funds do the reinvesting as an internal operation so it isn't an issue but, if I'm wrong, I hope someone will let me know.

I would have thought your transfer in would mean you would definitely be better with a flat rate platform like II? - and yes, you're right, the £20 counts towards trades so you only pay anything above that you spend in the relevant quarter.

Good luck!! It's very easy to research yourself into inertia but I finally managed to persuade myself that there probably wasn't an "ideal" solution and action was what was needed (And if you are going to transfer in be prepared for a wait - mine hasn't come through yet after several weeks although they have credited me with the free dealing commission).

le_loup

amandajc wrote: »

I'm pretty sure acc funds do the reinvesting as an internal operation so it isn't an issue but, if I'm wrong, I hope someone will let me know.

That's correct.