ETFs vs Trackers

wyrleyite

I currently pay monthly into a Unit Trust Index tracker ISA but due to increased overtime at work I now have some surplus cash each month. As this varies month to month I can't just increase my payments and have just being bunging in the money when I can.Recently I have been considering Selftrades iPlan. As far as I am aware they just charge £25 pa and £12.50 for selling. If this is correct could I just buy ETFs each month with whatever cash I've got over a greater choice of investments and I can choose when to buy.Any advice would be appreciated, particulary regarding costs. My Unit Trust charges 0.5% pa and as these will be ISAs I can't do both.

gt94sss2

Yes, Selftrade charge £25/year for their ISA/PEP account but purchases of ETFs (both from iShares and Lyxor) are commission free within the account - they call it the 'iPlan' but its a standard feature of all their ISA/PEP accounts.

As you say, sales do cost £12.50.

You can choose how much to invest in your Selftrade ISA each month (subject to the annual ISA allowance) and transfer the funds in via a debit card - and then choose what ETFs to buy.

In addition, Selftrade also have a referral scheme where you could get up to £80 (my details are in post 242 in that thread if interested) for joining them - which would pay for over 3 years worth of ISA fees.

If you already have an shares ISA for this tax year, you will have to transfer it to Selftrade, as per the ISA rules. If your existing provider charges you for transferring to Selftrade, then Selftrade will refund any fees (up to £400/£100 per account) - this is in addition to the referral offer above.

Regards
Sunil

Reaper

Although only small if you are totalling up the costs don't forget the ETF itself imposes a management charge in addition to whatever the broker charges you for the purchase.

A typical one may be 0.4% pa, though it can be higher or lower.