Investment Platform & SIPP Query

crazychamps

Hi All,

I have been reading up quite extensively on investing over the past year and have since decided to take the leap and open an ISA account to make an investment.

The main fund that I want to start putting my money into is the Vanguard Lifestrategy 80 Accumulation fund. Looking at the different platforms that this site suggests and the funds that each platform offers, I have narrowed it down to two options:

1. Cavendish Online
2. Charles Stanley

Now I was wondering if some of you who use either one of these sites could give me your opinions on the advantages/disadvantages of each to help me with my decision (e.g. in terms of use, in terms of customer service, etc...).

Background
In terms of my investment usage, I am willing to put up to £1000 when opening the account, and aim to transfer in £100-£250 each calendar month.

As abit of background, I know what investing is and what I am getting myself into. I have a good amount of savings for my age (24) that is situated in different current accounts gaining interest and as such I am keen to get into investments, then peer loans (in the next 6 months or so), then SIPP (next year or so).

Second Query
Looking at the Vanguard lifestrategy 80 history, the same percentage for performance is shown across both the income and accumulation funds. I am aware that they are in essence the same fund, and that the income option simply gives you the dividends at the end of the year whilst the accumulation option re-invests it to give you more units of the fund. However, is there a site/person who has compared the performance of both (i.e. someone who has taken into account the effect of compiling the dividends back into the fund and who has come up with a percentage for 1 year, 3 years etc...)?

SIPP Question
Onto my final question in relation to SIPP. I am familiar with how these work however have a somewhat tricky question.
Assuming I am currently sitting within the 20% income tax bracket, and I decide to transfer £800 into my SIPP, I should in effect be investing £1000 (i.e. I would get 20% (£200 top-up) from the government). On the other hand, if I am in the 40% bracket and transfer £600, then I would get £1000 (i.e. a £400 top-up).
However, if I am currently in the 20% bracket and next year I will be in the 40% bracket, is it possible for me to set aside the money I want to put into an SIPP and wait till I am in the 40% bracket next year in order to get the extra 20% on my SIPP transferred amount?

To simplify things let us try an example. If today I transfer £1600
into an SIPP, I should get £400 from the government. However, if I wait a year and then transfer the same amount, I should get £800 in my SIPP for the same exact amount that I am setting aside. Therefore, is it not best to wait until next year before opening this SIPP to effectively gain an extra 20%?

I hope some of you can help me with some of my questions and want to thank you in advance for the help.

CC

JohnRo

I ditched Cavendish in favour of CSD, no regrets. Really good customer service, very efficient and always friendly in my experience. No doubt Cavendish clients will say the same.

However CSD do have a vastly superior website / account portal with retrievable account detail by the bucket full in pdf or far more useful excel formats. It depends what you want from the account portal though, as to how important that aspect is, for me it was a major factor.

dunstonh

Platforms are a value added service. Every platform will have pros and cons. Some will be basic. Some will be full featured. You need to look at the features you may use and those you wont and then look at the costs.

jimjames

crazychamps wrote: »

To simplify things let us try an example. If today I transfer £1600
into an SIPP, I should get £400 from the government. However, if I wait a year and then transfer the same amount, I should get £800 in my SIPP for the same exact amount that I am setting aside. Therefore, is it not best to wait until next year before opening this SIPP to effectively gain an extra 20%?

I hope some of you can help me with some of my questions and want to thank you in advance for the help.

CC

Yes, tax relief is given based on your rate at the time you put the money into the SIPP. They have no idea when that money became cash in your pocket. Guess it really depends how confident you are that you'll enter 40% band.

ColdIron

crazychamps wrote: »

I am aware that they are in essence the same fund, and that the income option simply gives you the dividends at the end of the year whilst the accumulation option re-invests it to give you more units of the fund.

You don't get more units than you purchased, the Acc price per unit is simply higher than the Inc price

crazychamps wrote: »

However, is there a site/person who has compared the performance of both (i.e. someone who has taken into account the effect of compiling the dividends back into the fund and who has come up with a percentage for 1 year, 3 years etc...)?

Any site will show you the performance of each fund. You can use Trustnet to compare the two, with and without income reinvestment, but there are no surprises regarding the total return

I haven't used Cavendish but CSD will be fine for your VLS ISA

AlanP_2

I'm with Cavendish for a SIPP and am more than happy with them, no experience of CSD.

Have found their customer services helpful and responsive via email when needed.

Dird

It depends how much you plan to deposit vs your salary.

If you will make £45k and plan to invest £100/month you're no better off by waiting. If you will make £50k and invest £350/month you're not better off.

It's only if you invest enough to break into the 20% bracket that you're better off.

If I was you then I guess I'd just do the monthly £100/month now or whatever then plow in the £1,000 after reaching the 40% threshold (assuming it's soon) while continuing the monthly payments

Cavendish - I am happy with them & will remain with them until my ISA is big enough that a fee-based platform is cheaper
Positives
1) Enough funds for me
2) Fast email response.
Negatives
1) Monthly Saver is % based rather than £. I have £570 SIPP and £430 ISA, the % method gives me random rounding like £100.02 and £49.98 for funds instead of £100 or £50. Fidelity say they can fix it via phone call & may add the option to the site.
2) There is no overall transaction history, only transaction history for individual funds...I'd like to just see them all on 1 page

I tend to use Fidelity's own performance graph for comparing funds rather than Cavendish itself.

Dird

ColdIron wrote: »

You don't get more units than you purchased, the Acc price per unit is simply higher than the Inc price

This is the thing about ACC I find so strange/corrupt. The idea is you are re-investing so you should have a new share, not an inflated value of your existing shares.

When the ACC price increases but your units do not do you still get more dividend ££ as you would by re-investing INC dividends to buy more units?

jimjames

Dird wrote: »

This is the thing about ACC I find so strange/corrupt. The idea is you are re-investing so you should have a new share, not an inflated value of your existing shares.

When the ACC price increases but your units do not do you still get more dividend ££ as you would by re-investing INC dividends to buy more units?

Yes. Dividend is a percentage so will be based on larger base price. It's no different to a savings account where the income is paid out compared to one where the income is compounded.

bigadaj

Dird wrote: »

This is the thing about ACC I find so strange/corrupt. The idea is you are re-investing so you should have a new share, not an inflated value of your existing shares.

When the ACC price increases but your units do not do you still get more dividend ££ as you would by re-investing INC dividends to buy more units?

Of al the potential issues that are corrupt in financial services then the use of accumulation units is an odd choice and comes pretty far down the list.

Dird

jimjames wrote: »

It's no different to a savings account where the income is paid out compared to one where the income is compounded.

OK nice example