Cheapest platform for trackers

dunstonh

fred990 wrote: »

Okay,,,,these two are part of a bunch outside of my DB pension (maxed out). Thought I was being clever going to Vanguard...this is getting complicated....

Holding it outside of a tax wrapper means you can be subject to income tax, capital gains tax and inheritance tax. In the case of not holding it in a pension, you are also missing out on tax relief.

hat would constitute 'messing about with the allocation' mean to the uneducated?

Asset allocations (how much % is held in each area) are built using a structure and assumptions based on economic data. Whilst models are different based on different assumptions, they all follow a certain structure. Picking a single sector at random and adding a random amount to it means you are making management decisions without any structure. You are going to be reliant on luck rather than judgement.

Teaandscones

jamesd wrote: »

HL cap their platform charge at £200 for ETFs and investment trusts and there are even more tracker ETFs than standard funds, with comparable prices. You will pay dealing charges, though. It's useful for buy and hold, with standard funds used for ongoing investing until the trade cost of switching a chunk into the ETFs is worthwhile.

I have used HL and found they have good service but they are expensive for funds if we are talking around 170k. I stayed with them but switched my tracker funds to equivalent ETF's on a buy and hold basis to keep charges down (though there were one-off dealing costs).

jamesd

fred990 wrote: »

Jamesd..... I can't recall the exact figures but I thought Vanguard was waaaay cheaper? Less than 0.2 % overall, am I missing something major?

Just that nil platform charge and 0.08% or 0.12% in various proportions is less than half of 0.22% for the Lifestrategy funds on platforms. An extra 0.1% for them doing the rebalancing work from time to time.

But my post gives only a few funds so maybe someone who likes the Lifestrategy investment mix might want to find the cheapest HL offered funds and ETFs to replicate it based on their published holding mixtures. A bit of work but potentially some useful money saving for the many Lifestrategy fans here. Funds for the people with smaller pots, ETFs for bigger with a bit in the funds to cut the number of rebalancing transactions.

Teaandscones wrote: »

I have used HL and found they have good service but they are expensive for funds if we are talking around 170k. I stayed with them but switched my tracker funds to equivalent ETF's on a buy and hold basis to keep charges down (though there were one-off dealing costs).

Yes, that's the way to go there for bigger tracker holdings, ETF versions rather than standard funds.

Triumph13

Very interesting about HL and ETFs. I've been putting off researching the details of the most efficient places to invest as it's all in employer's pensions at the moment, but I'd been dismissing HL as too expensive. I'd also been putting off the research as still a few years to go and everything seems to be changing so fast anyway!
For say £500k in a couple of trackers where I ideally want to sell 0.3% per month, might it make sense to hold it at HL in ETFs, sell 3.6% once a year to incorporate some rebalancing, take 1/12 as cash and buy funds with the other 11/12 and sell 1/12 each month?

AnotherJoe

Triumph13 wrote: »

Very interesting about HL and ETFs. I've been putting off researching the details of the most efficient places to invest as it's all in employer's pensions at the moment, but I'd been dismissing HL as too expensive. I'd also been putting off the research as still a few years to go and everything seems to be changing so fast anyway!
For say £500k in a couple of trackers where I ideally want to sell 0.3% per month, might it make sense to hold it at HL in ETFs, sell 3.6% once a year to incorporate some rebalancing, take 1/12 as cash and buy funds with the other 11/12 and sell 1/12 each month?

Why would you buy funds and then sell them almost straight away ????????

There are many places where the concept of "buckets" of cash/equity are discussed, very crudely (as there can be a lot of detail and sophistication to this that I'm glibly ignoring) you'd have say a couple years or so spending in cash available and then each period you either draw down from that cash, or from your equities, depending how the market has gone.

If the market did well, draw down from market and top up cash if it needs it, if its dipped, draw down from cash. The idea is to avoid drawing down from equities if there's been a crash. Obviously you can only put this off for so long but studies using past data show it can make quite a difference to how long your overall funds will last.

jamesd

The Guyton-Klinger rules that I like formalise taking money from equities when high to put into cash to draw on when they are low. Worth a look.

EdSwippet

Triumph13 wrote: »

For say £500k in a couple of trackers where I ideally want to sell 0.3% per month, might it make sense to hold it at HL in ETFs, sell 3.6% once a year to incorporate some rebalancing, take 1/12 as cash and buy funds with the other 11/12 and sell 1/12 each month?

It might. HL would charge £200 for the SIPP and £11.95 for each ETF trade.

But then, of the flat-fee platforms, iWeb charges £180 for the SIPP and £5 for each trade, and you would be free to use funds as well as ETFs without facing egregious fund holding charges. Interactive Investor/Motley Fool also undercuts HL and has no added fund holding charges. Most ETFs are distributing, making fund accumulation units very useful for long-term buy and hold portfolios.

coyrls

Triumph13 wrote: »

Very interesting about HL and ETFs. I've been putting off researching the details of the most efficient places to invest as it's all in employer's pensions at the moment, but I'd been dismissing HL as too expensive. I'd also been putting off the research as still a few years to go and everything seems to be changing so fast anyway!
For say £500k in a couple of trackers where I ideally want to sell 0.3% per month, might it make sense to hold it at HL in ETFs, sell 3.6% once a year to incorporate some rebalancing, take 1/12 as cash and buy funds with the other 11/12 and sell 1/12 each month?

I personally wouldn't choose a platform where I couldn't invest in funds because of the cost. Putting everything in ETFs, ITs and shares seems an artificial restriction.

Triumph13

AnotherJoe wrote: »

Why would you buy funds and then sell them almost straight away ????????.

Because I'd like to sell a fixed percentage every month and that would be the cheapest way with HL. By selling a fixed percentage I get the equivalent of pound cost averaging rather than try and time the market and guess at which point of the year to sell.
If I'm on a platform with dealing charges I'll probably end up settling for quarterly, but monthly would be my ideal. A lt of it is psychological that if I try and time the market then see it go up immediately after I sell I know I'll get grumpy.

Triumph13

jamesd wrote: »

The Guyton-Klinger rules that I like formalise taking money from equities when high to put into cash to draw on when they are low. Worth a look.

Thanks James. I'll take a look as I've also played about with that kind of idea, but not come to any conclusions. What I really want is a relatively simple and low stress method that I'll find easy to live with. If the markets are down I'd rather have less to spend that fret about whether they'll recover before my cash runs out, but if there is a good mechanistic process I can 'fire and forget' then I'll be happy.