Joint account investments

Andrew2010

I've found Virgin unit trusts a good investment in the past. However, are there any similar investments for joint accounts (spouses) that anybody has found?

barak

Andrew2010 wrote: »

I've found Virgin unit trusts a good investment in the past. However, are there any similar investments for joint accounts (spouses) that anybody has found?

Your reference to "joint accounts" is not really relevant - as any Unit Trust/OEIC, or shareholding can normally be held in up to four joint names.

jimjames

Andrew2010 wrote: »

I've found Virgin unit trusts a good investment in the past. However, are there any similar investments for joint accounts (spouses) that anybody has found?

How are virgin investments good? 10x the cost of the best provider doesn't sound very good to me.

Even HL.co.uk is cheaper than virgin and they are considered one of the higher cost options.

Maybe you need to split out the investment from the way it's held. For best tax efficiency an ISA would generally be worthwhile and they cannot be held jointly.

Andrew2010

10x what cost? He management fee. That's 1% for Virgin.
There are management fees for S&S ISAs.

bowlhead99

The virgin fund is the simplest and easiest fund type that a fund manager can run. It just tracks the index using a computer, only changing its holdings when the index does each quarter. Other fund managers would charge 0.1% a year for that, not 1.0%.

Doing the maths very simply, you might think that after a decade, Virgin has eaten 10% instead of 1% of your fund value, and maybe you are happy with that because Richard Branson's brand is a nice friendly one. However, it's worse than that.

Imagine the index fund in which you're invested- the underlying market- generates capital growth and dividends which together add up to 7% a year. Some years a lot more, others could be losses, but that's a reasonable long term average for indexes of large companies.

So a fund with zero management fee would go up in value from, say, £10,000 invested to 10000 x 1.07 by end of year 1, or 10000 x 1.07 x 1.07 by end of year 2 etc, and eventually has 10000 x1.07^10 by end of year ten. That's basically a value of £19672 after a decade.

If you had to pay 0.1% management fee every year, your net profit would not be 7% a year, it would be only 6.9% a year. So the calculation would be £10000 x 1.069 x 1.069 x 1.069 etc etc, which after a decade only gets up to £19488.

However, you chose to invest in a fund that has the exact same underlying assets but charged 1.0% for management, leaving you with a compounding annual return of not 7%, not 6.9%, but 6.0%. Run the calculation for that one by doing 10000 x 1.06 x 1.06 x 1.06 and so on for 10 years. End result is not £19672 or £19488, but only £18078!

So, with a fund that's a bit less than a percent more expensive - you've destroyed 15% of your profits over the decade.You're about £1410 worse off, for every £10000 you started with. Ouch!

You are right that all ISAs have some sort of cost. However as an example you could pay about 0.2% as a "platform fee" and 0.1% to the fund manager for a basic fund and that's 0.3% total instead of your current 1.0%.

Examples of cheap platforms include Charles Stanley Direct at 0.25% a year or Youinvest at 0.2% (plus £1.50 a month if you make ongoing contributions) or IWeb with a large account setup fee but then only £5 every time you add money to it and nothing if you don't.

dunstonh

I've found Virgin unit trusts a good investment in the past.

Virgin investments are pretty poor. Expensive and limited in options.

However, are there any similar investments for joint accounts (spouses) that anybody has found?

Is that because you have fully utilised your ISA allowances each?

Andrew2010

So presumably a stocks and shares ISA might be better provided it has a low management fee.

dunstonh

So presumably a stocks and shares ISA might be better provided it has a low management fee.

You would struggle to find a comparative fund (either direct or via platform) that is more expensive than Virgin.