How much will fees hurt me?

Zola.

My OH and I both invest via HL in a S&S ISA.

I invest in Vanguard LifeStategy 80%. OH invests in LS 100%, as she is just getting started. We are both in our early 30s (32, 30).

We plan to hold this for the long run, an extra retirement buffer.

HL charge 0.45% per year for their S&S ISA. Vanguard also charge 0.22% for their platform via HL.

I see Vanguard now offer direct investing. How can I easily work out just how much we would be getting stung with via HL based off a few basic assumptions?

dunstonh

HL charge 0.45% per year for their S&S ISA. Vanguard also charge 0.22% for their platform via HL.

I am sure that is just a typo. The 0.45% charge is the platform and wrapper. The 0.22% charge is for the fund. Total is 0.67%

I see Vanguard now offer direct investing. How can I easily work out just how much we would be getting stung with via HL based off a few basic assumptions?

The difference between the two totals.

Glen_Clark

dunstonh wrote: »

Total is 0.67%

Doesn't sound much until you realise its a percentage of the capital, not the earnings, and its taken every year.:eek:
Why not follow Warren Buffets advice to his wife? An S&P 500 tracker with annual charge of 0,07% and no platform fees for holding in an ETF

BLB53

I see Vanguard now offer direct investing. How can I easily work out just how much we would be getting stung with via HL based off a few basic assumptions?

HL charge a platform fee of 0.45% and Vanguard charge 0.15% so you are paying an extra £3 p.a. for each £1,000 invested.

ColdIron

Glen_Clark wrote: »

Why not follow Warren Buffets advice to his wife? An S&P 500 tracker with annual charge of 0,07% and no platform fees for holding in an ETF

I suppose that if the OP followed the advice to exchange his multi asset fund including fixed income and equities in geographies covering Europe and Japan through to China and Mexico for one in only North American equities he would need to consider it was worth a reduction in fees of less than two tenths of a percent. Just thinking aloud

Audaxer

If you have large sums invested it is best to go for a platform with a flat fee. Halifax Share Dealing has a flat annual fee of only £12.50. So even if you had £100,000 invested in a VLS with Halifax it only costs £12.50 in addition to the 0.22% OCF that will automatically come off your fund value. With HL you will have a platform fee of £450 and with Vanguard's platform fee at 0.15% you will be paying £150 on £100,000.

With a flat fee provider like Halifax you may also be paying £12.50 for each trade, but if you are only planning to do the odd lump sum investment, a flat fee provider is clearly the cheapest option for large investments.

Zola.

We drip feed £500 a month into the funds together, both less than £10k at present, just getting started really. Maybe no need to panic until we get a bit more in the fund.

dividendhero

BLB53 wrote: »

HL charge a platform fee of 0.45% and Vanguard charge 0.15% so you are paying an extra £3 p.a. for each £1,000 invested.

That's very much thin end of the wedge, these charges compound horribly

Take the OP's £1,000 and an annual return of 5%.

By my reckoning the return after 40 years the return will be £7,039. but after the excess charges of 0.3% the returns fall to £6,278. Around £800 pound difference !!! You can see why Warren Buffet is so keen on the 0.07% tracker - the costs on his billions will be massive

dunstonh

By my reckoning the return after 40 years the return will be £7,039. but after the excess charges of 0.3% the returns fall to £6,278. Around £800 pound difference !!!

So, not very much at all when taken over 40 years.

You can see why Warren Buffet is so keen on the 0.07% tracker - the costs on his billions will be massive

Yet that is not how he invests.

dividendhero

dunstonh wrote: »

So, not very much at all when taken over 40 years.

It's still a loss of 11% of your final capital sum, you might be cool with that but many won't be

dunstonh wrote: »

Yet that is not how he invests.

His will is on record that his instructions are for his 90% of bequest to his heirs to be invested in S&P trackers

eskbanker

dividendhero wrote: »

His will is on record that his instructions are for his 90% of bequest to his heirs to be invested in S&P trackers

You're not far off but what he actually said (in http://www.berkshirehathaway.com/letters/2013ltr.pdf) was advice and suggestion to the trustee rather than instruction as such:

One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)

dunstonh is of course right that it's not how he himself invests though!