Query about Halifax Share Dealing platform's trading costs

bowlhead99

BLB53 wrote: »

The auto-rebalance bonus is worth ~0.5% each year and saves you all the hassle plus the platform costs will be cheaper.

Observation - I can't think of a source that proves that automatically balancing at vanguard's preferred frequency is somehow worth 0.5% more a year versus rebalancing manually unless you are talking about savings of fees from your chosen platform during the rebalance process. Whereas you are saying auto vs manual is worth 0.5% plus the platform costs will be cheaper.

I'd agree it saves the hassle, and it saves fees from the platform for buying and selling, but I'd dispute the 0.5% unless you have a source.

Audaxer

Thanks very much for your very informative post bowlhead99. The reason that I had originally picked the 5 funds was after reading the investment book, 'The Long and the Short of It' and the Monevator site that sort of allocation gave a good level of diversification. However in view of what you have said I think I will definitely go with the VLS60 now.

ColdIron, you are right in that I previously said that I was looking for mainly a steady income with a bit of capital growth. I was going to go for the Ready Made portfolios from HL, but I was advised on here that the level of fees at ongoing 1.34% and 0.45% platform charge were very high. I therefore decided it might be best to go down the passive route, but haven't yet come across any Vanguard or other index diverse funds that concentrate on income. So I am still looking for income but was hoping if I go for the VLS60 I can withdraw a small percentage annually from the part of the growth. I appreciate there may be lean years when there is no growth, but I can cope with that as being a very conservative saver up until now I have enough of a cash buffer.

If I go ahead with a VLS60 and plan to draw down some growth as income, am I better going for the Accumulation version of the fund and forgetting about the Income version and the yield?

ColdIron

I wouldn't use something that doesn't really do what I want. Your HL MM funds had high fees because they are expensive unit trusts (1.34%) held with an expensive unit trust platform (0.45%) but that is no reason to abandon all actively managed investments. In an earlier thread I recall you were looking at Investment Trusts which are a well recognised way of generating income. I don't want to send you in circles buy why did that end up in a cul de sac for you? 3% - 4% or more is easily achievable and is paid monthly, quarterly etc. You shouldn't let the fee tail wag the suitability dog but you could get this for about 0.75 pa with HL, your VLS would be 0.67%

Eco_Miser

Audaxer wrote: »

ColdIron, you are right in that I previously said that I was looking for mainly a steady income with a bit of capital growth.

Audaxer wrote: »

I am considering investing a lump sum in an ISA for this year's allocation creating a portfolio of 5 index trackers, and from April investing next year's allocation monthly

Going for a steady income AND investing monthly would mean each month some money going in, and attracting fees and using up your ISA allowance (if in ISA) AND money coming out. Better to only have money going one way.

If the money going in is greater, better to use accumulation units, don't take an income, and maybe just invest once a year, saving fees.

If the money coming out is greater, maybe a mix of INC and ACC to get the net income you want, and no new investments?

Audaxer wrote: »

Does that mean for I would pay a charge of £62.50 for the initial lump and then be charged £62.50 for each subsequent monthly instalment split between the 5 funds?

If you didn't take the Regular Investment option, yes.
I know you've decided to go with a single fund of funds now, but if you really wanted your original plan you could do it cheaper by only investing in one or two funds each month, cycling through your portfolio to keep the percentages close to those you chose.

Audaxer

ColdIron wrote: »

I wouldn't use something that doesn't really do what I want. Your HL MM funds had high fees because they are expensive unit trusts (1.34%) held with an expensive unit trust platform (0.45%) but that is no reason to abandon all actively managed investments. In an earlier thread I recall you were looking at Investment Trusts which are a well recognised way of generating income. I don't want to send you in circles buy why did that end up in a cul de sac for you? 3% - 4% or more is easily achievable and is paid monthly, quarterly etc. You shouldn't let the fee tail wag the suitability dog but you could get this for about 0.75 pa with HL, your VLS would be 0.67%

Yes, I know what you mean, but I wouldn't really know which Investment Trusts to pick. The passive route, either with the funds I was thinking of, or the VLS60 which I would now opt for, seemed to be the safest less complex option. Is there a portfolio of Investment Trusts that has the same sort of diversification as the VLS60, or should ITs be part of a wider portfolio of funds? What sort of growth levels are there in ITs, and how volatile are they?

Going back to the HL Ready Made ISAs, although the ongoing charges are high at around 1.34%, am I right in thinking the estimated yield of 3.3% for the Balanced Income portfolio is after the charges have been deducted? If that is the case and the yield was met, the income would be 3.3% less 0.45% platform charge, so you would receive 2.85%? If so, not great, but not that bad if there was some growth as well.

I've quite a large sum I could invest as I have a fair amount of savings in other ISAs not earning that much, that I want to transfer into the VLS60 or whatever I decide on.

I'm not quite sure what to do now for best, but I'm put off contacting an IFA in view of the likely costs, and I thought the passive route was the way to go, at least to start with. Any further thoughts you have about how to go down the Investment Trust route would be appreciated.

ColdIron

I wonder if now would be a good time to step back and review your circumstances and what you are trying to achieve. You are looking at several solutions that solve different problems

Are you still working and receiving a salary or other income? Are you investing for your retirement, would a pension be worth considering? Are you working but looking for shorter term access to your funds than 55? This might be a good reason to use your VLS60. In all of these cases you should be focussing on total return and not income. Are you at, or close to, retirement and require your investments to pay steady income to pay the bills?

Once you are clear on your objectives a solution should present itself

BLB53

I'd dispute the 0.5% unless you have a source.

This article seems to suggest a bonus is very likely
http://www.efficientfrontier.com/ef/996/rebal.htm

sebthered

I'm about to use the Halifax platform for my fund, which is a simple invest and leave alone - however, does this platform regularly update the value of the fund or is it periodic?

Audaxer

ColdIron wrote: »

I wonder if now would be a good time to step back and review your circumstances and what you are trying to achieve. You are looking at several solutions that solve different problems

Are you still working and receiving a salary or other income? Are you investing for your retirement, would a pension be worth considering? Are you working but looking for shorter term access to your funds than 55? This might be a good reason to use your VLS60. In all of these cases you should be focussing on total return and not income. Are you at, or close to, retirement and require your investments to pay steady income to pay the bills?

Once you are clear on your objectives a solution should present itself

I'm in my late 50s, took early retirement last year and in receipt of private pension. I don't need the investment income to pay bills, but would just use it to increase retirement income as I'm not making the best of my savings as regards growth or income. I have a decent amount saved in Cash ISAs, Santander 123 accounts, and a Virgin S&S ISA (now in the bonds and gilts fund). I now know the costs of the Virgin fund at 1% are too high for that type of fund and I should have transferred it somewhere cheaper before now, but you live and learn. I was thinking I might even transfer the Virgin fund into a VLS40 to have some exposure to equity, but a bit lower that the VLS60. Then again maybe I should be brave and put it into the VLS60 as well as this year's allowance!

So my requirements in my view are quite straightforward - to get a simple diversified portfolio, with medium risk level, to achieve increased income (from my current low level) with some growth over the long term to guard against inflation. From what I had read, the passive route was a good way to start at least, as there doesn't seem to be any guarantee of better returns with managed funds.

ColdIron

sebthered wrote: »

I'm about to use the Halifax platform for my fund, which is a simple invest and leave alone - however, does this platform regularly update the value of the fund or is it periodic?

Regularly periodic I would venture. If your fund is a unit trust/OEIC these have a daily valuation by the fund manager so it's not going to get much better than that regardless of your platform