Shares ISA or managed service?

Amarone

I have £5k in a 3% cash ISA but am considering putting the rest of my allowance into a shares ISA as I am a higher rate tax payer. I have researched to a point but the actually simplicity of opening a stocks and shares ISA baffles me.

Should I open a share dealing account via a platform ( I have no experience of trading) or should I open a managed stocks and shares fund service. I would ideally like to save £300 a month but also have £2k to put away as a lump sum.

My last question is would the managed service be a "tax wrapper" i.e isa? I looked at opening a shares account with my bank First Direct as I have a Royal Mail share certificate but stalled due to the fact that I was considering a managed monthly share service.

Advice would be very much appreciated.

ChopperST

You seriously need to do some research before [STRIKE]saving[/STRIKE] investing.

Investing is for the long term (5 years minimum) and your capital is at risk unlike cash.

The usual advice would be to look at the monevator https://www.monevator.com website and read books such as Smarter Investing by Tim Hale and the Coffeehouse Investor - https://www.coffeehouseinvestor.com (American but same principles apply). The Boggleheads website is also a very useful resource.

You either invest in individual shares or buy funds of which there are literally thousands to choose from.

Spend this time researching and buy a few books and make it your bedtime reading and it will be money well spent rather than trying to DIY and potentially making a huge and costly mistake.

jimjames

Personally I would look to funds not individual shares. I've been investing for nearly 20 years and have no shares (well other than one held for perks), all my investments are in funds. For a newbie investor funds are so much easier and less hassle/risk.

Amarone

Thanks to both.

I've been looking at a managed fund service and attempting to avoid the initial charge and then the annual management charge. I could use a platform but then face the risk of not having an experienced fund manager - dilemma!

I've had a look at the top performing managed funds but can anyone recommend their chosen managed fund service?

ChopperST

Your post above illustrates your complete lack of understanding.

PLEASE PLEASE PLEASE take time to read up.

A platform is a provider that allows you to buy / sell shares and funds.
http://monevator.com/compare-uk-cheapest-online-brokers/
Some also have their own funds e.g. Fidelity.

Platform charges vary from provider to provider with some charging a set fee and some a % of your holdings.

Individual fund charges are referred to as the ongoing charges figure (OCF) which used to be called the TER or total expense ratio. This is made up of the annual management charge of a fund plus any other fees such as an initial dealing charge.

Top performing funds today are unlikely to be the top performing funds tomorrow.

"past performance is no guarantee of future returns"

Please do some research or see an IFA from unbiased.co.uk if you can't work it out for yourself.

Amarone

Thanks ChopperST - I know it appears I haven't done much research but I have - many months and my wife is becoming seriously disillusioned! My problem is I keep skipping from one thing to another.

My current thought process is to open a low cost tracker fund with Fidelity. Which one I choose is the next area for research - UK , European , Japanese , Global etc. It's a minefield!!

Or might just stick it in a 2.85% Cash ISA!!!

ChopperST

We were all once like you.

For an inexperienced investor a tracker fund would be ideal as you just put your money there and do nothing.

Only investing in a FTSE tracker would miss out the vast majority of world markets and leave you seriously undiversified in your portfolio.

Many on here are advocates of the Vanguard lifestrategy funds (I personally prefer to pick and choose my allocation) which for your amount would be cheapest held with Charles Stanley at 0.25% per year. You simply need to decide your equity to bond allocation and open an account.

How many years till you need the money?

gkerr4

do some more reading about trading and investing and have a go - when you say you need an experienced fund manager, you almost certainly don't.

if you have time to have carried out research over the past few months, then you have time for the ongoing homework needed to manage your own portfolio.

I never hold a share as long as 5 years! the longest in my current portfolio is 2 years (citibank, 2012, currently +88%) and I've held IPO's for less than a day.

if you have the inclination, and it sound like you might - then get reading and enjoy it.

edit - if you do have the inclination, a good starter book is "the naked trader" by robbie burns. He explains everything in simplistic terms starting with from a very basic "i've never bought a share before" position.

wooder

Amarone wrote: »

I've been looking at a managed fund service and attempting to avoid the initial charge and then the annual management charge. I could use a platform but then face the risk of not having an experienced fund manager - dilemma!

I've had a look at the top performing managed funds but can anyone recommend their chosen managed fund service?

Try this....

https://www.fundsmith.co.uk/Home.aspx

Amarone

ChopperST wrote: »

We were all once like you.

For an inexperienced investor a tracker fund would be ideal as you just put your money there and do nothing.

Only investing in a FTSE tracker would miss out the vast majority of world markets and leave you seriously undiversified in your portfolio.

Many on here are advocates of the Vanguard lifestrategy funds (I personally prefer to pick and choose my allocation) which for your amount would be cheapest held with Charles Stanley at 0.25% per year. You simply need to decide your equity to bond allocation and open an account.

How many years till you need the money?

10 years - I'm in it for the long haul.

ChopperST

For a ten year timescale I'd consider a 60/40 split between equities and bonds. If you don't want to go it yourself then look at the Vanguard Lifestrategy 60 fund.

Picking stocks is a trickier affair and challenge anyone who suggests you will CONSISTENTLY make a profit picking individual shares to show you their evidence. It's a very hard game to play long term and win. There are some very bright people who do it but the vast majority don't and will consistently underperform. Which approach you take fundamentally bills down to your risk tollerance and how much you can afford to lose.

Good luck whatever you decide.