Interactive Investor the only reasonable platform for monthly investment?

grey_gym_sock

Jevvers wrote: »

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.

given that extra info, interactive investor does sound like a good option.

transfer the L&G tracker in, and switch it to a cheaper all-share tracker (e.g. vanguard have 1 with 0.15% on-going charges). there are 1-off costs to switch, but then no additional costs to hold that tracker, apart from the £90 per year which you're paying anyway for regular investments.

cloud_dog

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??

Have you looked at Halifax?

It really depends on usage and transactions but I opened an account with them purely for the regular investment option (iWeb had withdrawn theirs).

But... Purely for a regular investment option their ISA charges £12.50 per annum and their monthly RI charge is £2 (+ stamp duty).

Obviously, their standard dealing charge isn't very competitive (£12.50) but it depends if you are primarily focusing on RI.

guitarman001

How much do you have to pay to regularly buy a fund through iii (e.g. Vanguard each month)? I assume the £20 does not go toward this, ONLY to actual share trades? If so then it wouldn't be of much use to me (at the moment, unless I piled in tonnes of money to HL in which case their %age fee would start becoming ridiculous).
EDIT - £1.50 for regular investment, so the £20 doesn't cover this.

gmgmgm

I'm very happy with iii, though I only use them for vanilla/ISA shares or ETFs.

An easy way to think about the charges are: £1.50 per buy trade. So long as you do at least £20-worth every quarter, that's the only charge. Otherwise iii will top up the charge to £20.

grey_gym_sock

the quarterly £20 with iii can count as advance payment for dealing in both funds and shares, and for both 1-off deals (at £10 each) and regular monthly deals (at £1.50 each).

that means you can do 4 regular deals per month, and only pay £20 per quarter (since the regular deals are £1.50 * 4 * 3 = £18 per quarter, which is less than £20).

Eco_Miser

You could just buy one fund a month, changing each month. This would mean you would be up to £400 over/under your ideal allocation, balancing out over a period of five months, but would only pay £5/month at iWeb.

PenguinJim

Jevvers wrote: »

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.

That would seem to make II much cheaper. Even if you don't do any trades for a year, "losing" that £80 should already have been covered.

II will cost you a minimum of £80 a year, £800 over ten years. With iWeb, 14 trades/year (12 dripfeeds + 1 new fund + one sold fund, covering bases) and iWeb will cost £725 over ten years. A bit cheaper, but I'd still rate that £75 difference as "peanuts" in the grand scheme of things, and you'd have more trades per month with II (although doing more than 20 trades a year sounds like a lot to me!). But you could also stop trading on iWeb for extended periods without loss.

If you're doing all Acc funds (which you probably should at the start of your portfolio, if you can afford it), you can ignore the dividend reinvestment charge.

I'm really not helping, am I? Which website do you prefer?

Edit: of course, you could dripfeed £1,000 every two months with iWeb, which would cost £30/year!

bowlhead99

PenguinJim wrote: »

Edit: of course, you could dripfeed £1,000 every two months with iWeb, which would cost £30/year!

Given a 10 year investment timescale and the desire to drip feed, doing 6 bimonthly chunks a year seems just as reasonable as 12 monthlies.

However, that does mean that half the money is going in a month later than it could, and if the cash is just sitting around in an account earning less than inflation, would seem less than ideal. Out of the 60k invested in the 10 years, 30k of it is going in 'a month late'.

If you assume long term returns of say 6%pa to make the maths easy, that's 0.5% a month, so by making the payments later you are missing out on half a percent of 30k which is £150. Of course there would be compound returns on that over the period so maybe more like £200.

It is still small beans compared to the overall 60k (plus growth) pot. But it's worth considering this sort of thing if trying to minimise fees. If you are investing £500 for a £5 charge, you are paying a 1% in 'set up costs' on everything you invest. If you can invest £1000 for the same £5 charge, you basically lower your set up cost on everything invested, by half. So if you halve your setup costs on everything, and you only miss out on a month's return on part of it, you have to consider whether that's a good deal or not.

At 'normal' levels of return you're not losing as much as a percent of investment return by waiting a month, so even if you're generating your £500 spare cash from a monthly salary, there seems no need at the start of a month to incur extra fees by getting the cash in "right now", other than building the discipline of having an ingrained investment habit and not being tempted to spend it on toys. Obviously if you wait an entire year to get around to it you have lost an entire year's return which in a good year is expensive.

As a general rule if the amounts of pounds being invested are larger, the fees become more inconsequential. If iii were charging you a fixed fee and you had some spare trades, you might as well use them. If iweb were charging a fee linked directly to trade volume, you might as well try to economise.

It is of course more of a hassle to rotate what you are investing in each month to minimise costs rather than 'set and forget', so personally I end up paying higher fees than the bare minimm I could get away with, in pursuit of an easy life.

Jevvers

Thanks everyone, those were v helpful answers. I have decided I will go for iii and see how I get on. They offer no exit fee for the first year anyway and I prefer their interface over iWeb.
Have a nice weekend.

PenguinJim

Jevvers wrote: »

I prefer their interface over iWeb.

I think that's often overlooked but quite important. Good choice!

Best of luck with your investments. :beer: