best, simple, lowcost, share isa platform

Mistermeaner

Hi

Hijacked someone else's thread with thus subject so thought best to start another.

I have approximately 300-500 quid per month I want to invest in a stock s and shares isa (I already have a cash isa and other pension arrangements)

After some very limited research I went for virgin on basis of simplicity and what I thought was low charge of 1%. I split my monthly dd 50:50 into their ftse tracker and bonds fund.

A number of people on here have criticized virgin for high charges and pointed me at others; eg h&l , l&g etc which charge less - I might be a bit thick but I can't see the benefit with these guys: as far as this humour can tell the charges work out roughly similar.

E.g. h&l charge 0.45% themselves and then each of the 1000's of funds you can then invest in have their own separate charges, some high some low (and imo difficult to search easily) but of the few similar to the virgin ftse tracker I looked at the charges bring the total up to roughly 1% (or as near as makes little difference). Again similar story with l+g

I get that from the likes of h+l you can access far more investments and do more complex activities like share trading etc but as I am after just a simple isa set up with minimal faff is there r really any advantage for me in moving to anywhere else?

Am I missing something / looking at the wrong fund s within these platforms (I do find the level of choice overwhelming)

Also as I have paid into virgin this tax year I think I'm stuck with them now anyway until next tax year

Thanks

Ps sorry for poor typing, kindle is infuriating.

ChopperST

If you only want to invest in funds then 1% is way too much as a management charge.

If you are sub £20k then Charles Stanley at 0.25% would be your best bet.

Over £20k it becomes more savy to use a fixed fee broker.

Compare here - http://monevator.com/compare-uk-cheapest-online-brokers/

If you want to hold individual stocks and funds it becomes a little more complex but as a fund only investor then the table makes it easy to work out where to go.

You can transfer your investments across to another platform but you do suffer some time out the market.

colsten

Did you follow the advice given in response to your post in the other thread:

Rollinghome wrote: »

More info for you at http://monevator.com and performance figures at www.trustnet.co.uk.

mgarl10024

ChopperST wrote: »

Compare here - http://monevator.com/compare-uk-cheapest-online-brokers/

Excellent link - just what I wanted. Thanks.

Mistermeaner

HI Thanks for responses and input and yes I did look at the monevator link...

Apologies if I am being a bit thick (and I have no doubt I am) but when I look at Charles Stanley for example, after a bit of digging (its not obvious) I find their quoted fee as 0.25% as you said, but then I would need to invest through them in some sort of fund (in my case I would look for something similar to the virgin FTSE tracker), this is where I start to struggle:

i) there are literally 1000's of funds to choose from - good for someone who knows what they are doing and/or has time, but I want simple. Quick look and I cant see anything that immediately jumps out as equivalant to a FTSE tracker...lots that might be similar though.

ii) I am confused by the info from Charles Stanley in respect of further charges, they make grand claims about there being no further charges etc. but when I look at some of the funds available all seem to have an AMC (annual management charge), in their glossary they explain that I won't see this direct as its handled within the unit prices of the fund but this is my point regarding the total costs as regardless of where it is applied it is still applied. Some cost less than others but to a layman like me if this AMC is 0.75% does this not make the total 'cost' of this fund 1% and therefore equivalent to the 1% I pay virgin?

I am not disagreeing with the advice I am getting and please believe me it is greatly appreciated; I am just struggling to understand the difference between all the options.

Might be the wrong attitude as well but as we are dealing in fractions of %'s I don't see 0.1, 0.2, 0.3 % as significant in the scheme of things; each 0.1% is £1 for every £1000 invested so until I am in the realms of £100K's (which won't be for some time yet!) is it really worth worrying about?

Thanks

bowlhead99

ggb1979 wrote: »

E.g. h&l charge 0.45% themselves and then each of the 1000's of funds you can then invest in have their own separate charges, some high some low (and imo difficult to search easily) but of the few similar to the virgin ftse tracker I looked at the charges bring the total up to roughly 1% (or as near as makes little difference). Again similar story with l+g

I get that from the likes of h+l you can access far more investments and do more complex activities like share trading etc but as I am after just a simple isa set up with minimal faff is there r really any advantage for me in moving to anywhere else?

Am I missing something / looking at the wrong fund s within these platforms (I do find the level of choice overwhelming)

HL were just an example of a fund platform - their fee is relatively high at 0.45%. Fidelity is 0.35%. TD Direct is 0.3%. Charles Stanley is 0.25%.

You are right, once you have paid the platform fee you will still be paying a fee to the manager of the underlying funds that you select. As you've likely seen from having a nose around, these fees can range from 0.1% to 1% or more. The ones with the highest levels of fees are specialist actively managed funds, often in niche sectors, while the ones with lower fees are passive trackers where the manager does not have to think too much.

The reason people are telling you that Virgin is expensive is that the type of fund they are offering is a basic tracker that just follows an index up and down. This costs the 'fund manager' virtually nothing because they are not actively managing anything - they just buy shares in every company in the index and hold them. So the fees and expenses charged for such funds should be at the bottom end of the scale - 0.1% or 0.2% to the fund manager on top of your platform fee.

An example of a fund that should perform just the same as the Virgin FTSE tracker is the Fidelity Index UK. It charges just 0.09% per year (see link at HL here: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fidelity-index-uk-class-w-accumulation)

So, if you held that at HL with their relatively expensive platform fee of 0.45%, total charge including the 0.09% for the fund itself is 0.54%. If you were able to find and hold it somewhere with a lower platform fee like Charles Stanley Direct as ChopperST mentions, you'd be on 0.25% + the 0.09% for a total of 0.34%

So, imagine you have £10,000 invested in a super basic no frills UK index tracker. You can pay 1% (£100 every year) to Virgin, or you can pay 0.34% (£34 every year) to buy the Fidelity fund at CSD.

You're right, places like HL and CSD offer a lot of fund choices which can be a bit overwhelming. But by doing this they are giving you a lot more choices than Virgin for generally a lot less cost than Virgin so for most of us, that's a good thing.

For example, most people should not have their entire equity(company shares) allocation stuck in a UK tracker so that most of the money is in the biggest UK listed companies with a little bit of money in smaller UK listed companies. That is quite a specialist fund. Aside from the somewhat skewed allocation between sectors (lots of money in oil and gas, financials and pharmaceuticals), the UK stockmarket is only a tenth of the size of the world stockmarket. Most companies are *not* listed here.

So, very few investment advisers would recommend someone to hold a single UK tracker on its own. It is better to hold other funds from around the world to balance out the allocation, or more simply to have one fund (which would be a bit more expensive but still cheaper than the Virgin product) which spreads its money out more globally. Therefore the wide choice offered by an investment platform is very useful, even if you are just going to buy and hold one or two funds.

Also as I have paid into virgin this tax year I think I'm stuck with them now anyway until next tax year

You can simply go to a new provider and fill out a form and have Virgin cash up and transfer the money to the new provider where it arrives as cash ready to invest in the funds of your choice without losing ISA status. You might be 'out of the market' for a little bit of time during this process but not much in the grand scheme of things.

Mistermeaner

very helpful; thank you

jimjames

ggb1979 wrote: »

Might be the wrong attitude as well but as we are dealing in fractions of %'s I don't see 0.1, 0.2, 0.3 % as significant in the scheme of things; each 0.1% is £1 for every £1000 invested so until I am in the realms of £100K's (which won't be for some time yet!) is it really worth worrying about?

Thanks

It's very easy (and what Virgin hope you will do) to ignore small percentages thinking they are insignificant.

The example above Virgin are charging you 3x the cheapest option. Would you go to a supermarket that charged you 3x the price of a competitor?

Remember the fees are taken year after year so as your investment grows the fees will increase. By taking the fees out you are also not having them able to compound over time so the difference will mount up over the years.

Virgin make it easy by having 1 fund. That simplicity should mean a lower price not 3x the cost of a competitor. When managed funds were charging 1.5% then their 1% looked more reasonable. Charges elsewhere have come down, unfortunately Virgin seem stuck in high charging mode.

Mistermeaner

Thanks to helpful advice received here I have ditched virgin and am in process of transferring to charles stanley

Next question is how do people find and choose funds? CS website is a bit pants for easily comparing fund performance, I spoke to someone there who agreed and pointed me towards trustnet, which seems very friendly to use but I am still bamboozled by the amount of choice - what would be a typical strategy to invest by? Not aiming for anything in particular just want to get my spare cash working better for me t Han crappy savings accounts do.

With my work pension (pot size 60k) I split into 10% chunks and went with a mix of historically well performing, sector and geographically diverse funds. Got lucky as all are doing well so continuing with that with the pension.

Is this approach as good as anything?

mgarl10024

I think we're on similar paths. That monevator link ChopperST posted really helped me out, and having just signed up for a Charles Stanley ISA, I'm now in the process of choosing funds.

I await the advice you get with interest!

Mistermeaner

NO replies... i Guess I was being quite optimistic expecting financial advise for free

Any who - incase anyone takes pity on me and is willing to chuck a little advice my way....... I have been reading on here lots and scanning trustnet looking at funds.

I am currently thinking something along the lines of this as my fund portfolio:

25% Vanguard 60 (or maybe 80/100 havent decided)
25% FTSE tracker - dont know which one
25% US tracker - again dont know which one
25% some sort of bond / gilt fund, again don't know which one

While I've been trawling loads of funds and found some potentially interesting ones I am not sure how to search for the types of funds I am looking for as they dont seem to be 'classified' in any way that I think about them, so I am struggling to shortlist in order to draw comparisons - can anyone steer me in the right direction?

Also I know its my decision etc. but is the above a semi-coherent investment strategy in terms of spreading risks / returns a little bit? Am I missing any major sectors or excluding anything that people typically hold?

Any advice greatly appreciated.

Cheers