Stocks and Share ISA - £25,000

itc262626

Hi,

Looking for some general advice.

I have £25000 to invest over about 10-13 years and am looking at Stocks and Shares ISAs. I don't want to be involved in trading or moving funds and am happy to leave well alone long term. I don't have any experience in stocks and shares.

There is a mind boggling number of options and I'm not sure where to start. I'm happy with the risks and obviously want it to grow (where I know there are no guarantees). I've looked at Moneyfarm, Cavendish, Fidelity etc but it feels I could just look indefinitely. I appreciate that there is a difference in fees, but they all seem much of a muchness and surely if one provider out performs another (which can't be predicted), then the fees matter less?

I'm at the point of just picking one at random, which isn't usually how I would do this sort of thing, but at the moment seems as good as any other way of doing things!

The money will be invested between myself and my wife so we can open two ISAs and will hopefully also add more.

I know there isn't one answer, but any advice appreciated or if you are in similar circumstances, how did you make the decision?

Thanks

dunstonh

How do you buy anything or get any job done? You either DIY or you pay someone to do it for you.

You dont appear to want to pay anyone to do it for you as you have not listed that option. So, that means you want to DIY. However, you say you dont want to DIY either. So, you are making it difficult.

I've looked at Moneyfarm, Cavendish, Fidelity etc but it feels I could just look indefinitely.

All very different options there. A bit like saying you want a vehicle but not knowing whether it should be a car, motorbike or helicopter.

but they all seem much of a muchness

The three you mention are not the same. Two are similar but one is very different.

I know there isn't one answer, but any advice appreciated or if you are in similar circumstances, how did you make the decision?

You need to understand investment risk and select what is right for your knowledge, behaviour and attitude to risk as well as you capacity for loss. Before you select a provider/platform or investments, you need to have an idea about this. So, make that your starting point.

itc262626

Thanks for your comments.

I would rather someone did it for me, but again there are numerous options and there seems to be a degree of how much input you have yourself when setting up the ISA, depending on who you go with.

I am happy with the risks of S&S ISAs and feel that over a 10 year period this will help to minimise the risks as I am happy to wait and won't need the money back earlier.

HL, Cavendish, Moneyfarm, Nutmeg, Fidelity all do ready to go ISAs (as do others), but I can't see how you would choose between them. Nobody can tell which of the ready to go options will perform better over a 10 year period, so it feels like guess work? These all have low, medium, risk options but there is still no guarantee what any of these options will or won't return.

It feels like I'm supposed to be assessing something else about these organisations and there suitability, but I'm not sure what that is!

badger09

itc262626 wrote: »

Thanks for your comments.

I would rather someone did it for me, but again there are numerous options and there seems to be a degree of how much input you have yourself when setting up the ISA, depending on who you go with.

I am happy with the risks of S&S ISAs and feel that over a 10 year period this will help to minimise the risks as I am happy to wait and won't need the money back earlier.

HL, Cavendish, Moneyfarm, Nutmeg, Fidelity all do ready to go ISAs (as do others), but I can't see how you would choose between them. Nobody can tell which of the ready to go options will perform better over a 10 year period, so it feels like guess work? These all have low, medium, risk options but there is still no guarantee what any of these options will or won't return.

It feels like I'm supposed to be assessing something else about these organisations and there suitability, but I'm not sure what that is!

May I suggest you have a browse around this website. Easy to understand language, though it does have a bias towards passive investment. No bad thing for a newbie investor with a modest sum to start with IMHO.

http://monevator.com/

Have you used your cash ISA allowance of £15240 his year? The reason I ask is that if you haven't, you could open any instant access cash ISA now, before the end of the tax year on 5 April) so you can preserve your allowance.

This will buy you some time to research what you want to hold in your S&S ISA and where you want to hold it. Then you can ask your chosen S&S ISA provider to xfer your cash ISA to them.

You'll have another £20k ISA allowance from 6th April.

Sean473

I had a similar dilemma and after looking around, decided on TD Direct... Their fees are reasonable: Platform Charge of 0.3-0.35% and the annual charge gets waived if you have >5100 in your ISA... Not an issue for me...

Also transfer outs are completely free if I ever become unhappy with them..

They give a 3 month discount on the trading price too.... Was a total no brainer...

If you want to make a start investing, suggest the Vanguard LifeStratergy Portfolios... The VLS40.60,80,100 let you spread out the risk pretty well..

Then have a look at the more specific HSBC, Fidelity, Schorders Funds...

Fairweather76

I use Hargreaves L' so can only comment on them, but their fees are good in comparison to others, and fees have a massive affect on your return so pay attention to them. If you look at their multi-manager in house portfolios (fund of funds) you'll see that you'll at least be able to hedge the risk of an individual institution going pop. There can be a risk though that a lot of the funds within a fund are a little to similar. To get round that issue you could invest in different markets, i.e. having a UK based FOF, and a Euro' FOF and perhaps something more risky like a developing market FOF.

badger09

Fairweather76 wrote: »

I use Hargreaves L' so can only comment on them, but their fees are good in comparison to others, and fees have a massive affect on your return so pay attention to them. If you look at their multi-manager in house portfolios (fund of funds) you'll see that you'll at least be able to hedge the risk of an individual institution going pop. There can be a risk though that a lot of the funds within a fund are a little to similar. To get round that issue you could invest in different markets, i.e. having a UK based FOF, and a Euro' FOF and perhaps something more risky like a developing market FOF.

May I ask which others you have compared to reach this conclusion?

dunstonh

I use Hargreaves L' so can only comment on them, but their fees are good in comparison to others,

Apart from them being one of the most expensive platforms.

and fees have a massive affect on your return so pay attention to them.

Not as much as the investment returns themselves. Annual charges can equate to a few minutes activity on the stockmarket.

If you look at their multi-manager in house portfolios (fund of funds) you'll see that you'll at least be able to hedge the risk of an individual institution going pop

1 - no you dont.
2 - they are expensive options and easily improved upon.

To get round that issue you could invest in different markets, i.e. having a UK based FOF, and a Euro' FOF and perhaps something more risky like a developing market FOF.

no thank you. That is far too expensive and mostly pointless.

bowlhead99

Fairweather76 wrote: »

I use Hargreaves L' so can only comment on them, but their fees are good in comparison to others, and fees have a massive affect on your return so pay attention to them. If you look at their multi-manager in house portfolios (fund of funds) you'll see that you'll at least be able to hedge the risk of an individual institution going pop. There can be a risk though that a lot of the funds within a fund are a little to similar. To get round that issue you could invest in different markets, i.e. having a UK based FOF, and a Euro' FOF and perhaps something more risky like a developing market FOF.

One bit of that is sort-of right. Basically HL by having percentage based fees are pretty cheap compared to paying fixed annual fees to maintain your account and fixed fees every time you want to buy an investment, if the amount of investments you actually have are really small.

If you only have £1000 invested then 45p per year of platform fee does not seem like a big number and will be less than all the fixed fee providers. It is of course still 80% more expensive than the cheaper percentage-based providers that only charge you 25p per year. Once you have £10k or £100k of investments and are paying £45 vs £25 elsewhere or £450 at HL vs £250 elsewhere, the idea of paying a fixed 0.45% of your investments instead of 0.25% of your investments elsewhere, becomes quite a bad one.

The idea of using a "fund of funds" for a specialist area like "equity income" or "European equities" or "emerging market equities" because you have no clue which fund to buy, might initially sound attractive. However it means you are paying a fee to the manager of the fund of funds, and another layer of fees to the managers of the underlying funds he selects, and it can end up at 1.5%, which when combined with a high platform fee can be about 2%.

2% is like taking a third of the 6% you hope to make each year and throwing it in the bin.

If you are only investing small amounts anyway, which is the reason you are using a high-platform-fee provider like HL, you don't need a fund of funds manager to allocate your cash into his favourite specialist funds in a particular specialist sector. You can just buy one generalist fund which allocates the money broadly across asset classes and regions. A "mixed asset fund" or "multi asset fund".

If you have a lot more money than a novice looking for a home for a few thousand, e.g you have a hundred thousand plus, then you could appoint an independent financial advisor (IFA) to set you up with a selection of funds tailored to your needs. By avoiding the high fees of fund of funds and high platform fees of HL, you'd save enough to buy personal advice.

jimjames

Fairweather76 wrote: »

I use Hargreaves L' so can only comment on them, but their fees are good in comparison to others, and fees have a massive affect on your return so pay attention to them.

I guess if by others you mean SJP then yes you might be right. When HL cost 0.45% it's not quite so good compared to Fidelity or Charles Stanley for small amounts as they charge 0.25% or other platforms for larger numbers