Funds for idiots

oz0707

Excuse the title. I'm looking for advice on funds I should be investing in. I have a modest sum split across a few banks (FSCS limit) and i'm steadily realising inflation is eroding this. I do occasionally need a lot of working capital for my business but i'm thinking the least I could do is max out every years ISA allowance into one of these tracker or index funds. Wasn't it a lot easier before BOE rate fell and you could just about starve inflation off with a steady savings account!

So i've had a quick look at Vanguards website. Sort of understand whats going on with the different funds but will I have to open up a new ISA with them? If so will i still be allowed to keep my existing S&S Isa with halifax? I only use this for a bit of 'gambling' on the odd individual share here and there.

As for risk I appreciate this is an individual decision subject to specific outlook/lifestyle/goals. Im around 30 and as I said am happy to put away 15k (still the ISA limit?) a year into one of these funds and (sort of) forget about it. In the unlikely event I need to sell up everything to release money for myself i'll just have to deal with the consequences - down cycle etc.

So apart from Vanguard, what are the places/funds you lot are using to invest. I want something passive, quite a global outlook, minimal fees and ideally ISA wrapper. Does this mean i'm more suited to a index tracker? Sorry for the amateur questions I bet you're answering this once a week.

oz0707

I have since done a bit more research this afternoon! I see I can purchase these funds through my halifax S&S ISA. So i suppose the answer to my first question is I can keep and hold within my Halifax ISA. Just whether this is the most cost effective platform. 12.50 a trade and a small annual fee I think. Doesn't seem too bad to me, perhaps there are better out there?

DennisTenus

ISA limit is 20K and for next tax year it's the same i believe.

I prefer to use a platform like IWeb for example who are cheap and then invest in Vanguard and other funds from there instead of moving to Vanguard itself and only be able to invest in their funds.

Just my thoughts.

Eco_Miser

Monevator has both a table and a tool to compare brokers (platforms). SnowMan's spreadsheet can be customised to your exact needs.

You can subscribe new money to just one S&S ISA each tax year, but you can leave your old ISA open, and continue to buy and sell within it including re-investing dividends (but adding no more), or transfer it to a new provider, not necessarily the same provider you use for new money.

oz0707

I would prefer to stick with my at present platform and invest in the funds that way too. Halifax may not be the cheapest but i'd have to check out the cost v effort of changing. If i'm going to save 10 quid a year i'll stick with what i've got. If its approaching 50 quid a year it's worth my time moving. Also it lets me continue to have a small flutter on individual shares without having to remember yet another password, favourite meal, most memorable date, first girlfriends favourite knickers and so on!

Yes just seen ISA limit increasing. All of a sudden might not be maxing out ISA limit each year, quite a commitment!

DennisTenus

A Password Manager can help you with that, it can sync across all devices and makes life so much easier. I have over 300 accounts setup in mine. Yes it could be hacked but anything can be so for things that are really sensitive like banking/finance i miss the odd character out so in the VERY unlikely event of someone hacking it they still wouldn't be able to get straight in.

soti84

HL do not have charges to buy or sell funds.
Their platform fee is 0.45% and as you may well be aware, every fund has an ongoing charge which has to also be factored in. It's worth noting that they have discounts on most of the funds which, on certain occasions, produces a reasonable net ongoing charge.
I would need to check out the suggestion from Eco Miser and figure out if there's another platform that would suit me better.

Kind Regards,
Soti84

oz0707

Reading this bogleheads wiki. Suddenly I understand I have two goals here which seem to be seperate.
Invest for my future (say retirement?)

Protect a modest sum from inflation, at a very low risk so in the likely event I would like to draw on it during a downturn to invest in my business I can.

Every day a school day eh

EdSwippet

oz0707 wrote: »

Just whether this is the most cost effective platform. 12.50 a trade and a small annual fee I think. Doesn't seem too bad to me, perhaps there are better out there?

Halifax Sharedealing and its alter-egos iWeb and Lloyds Sharedealing Direct are pretty much as cheap as they come for decently sized fund holdings. Hargreaves Lansdown is one of -- and perhaps the -- most expensive.

Your actual cost with Halifax would depend on how much you trade in a year, but by way of example, two trades and one annual management charge there comes to £37.50. By comparison, Vanguard charges 0.15% to hold their funds directly with them. So on these assumptions, Halifax would be the cheaper place to hold Vanguard funds once you hold more than £25k in total.

If you're going to be trading more actively, investigate regular investing discounts, or perhaps a Lloyds account, with a £40/year charge but just £1.50 for fund trading.

And yes, platform pricing is currently an unholy mess of niche charges, fees, and other things that make direct comparisons among platforms far more complex than it should be. So much so that there are now online tools that try to do the comparisons for you.

bostonerimus

I'm tempted to be flippant in my answer to the OPs question, but I won't. You are not an idiot, just a bit uneducated and it looks like you are doing sensible things.

You can buy Vanguard funds with Halifax in your existing ISA or you can open another one with Vanguard, but you'll have the usual limits.

For a beginner a multi-asset fund like the Vanguard Lufw Strategy is good as it gives you a good mix of stocks and bonds in a single fund. Take some time to understand how whatever fund you buy is invested.

green_man

Halifax comes into its own with higher fund values on which you don’t trade much, however they will fulfil your needs here fine and unless you are regularly trading (which it sounds like you won’t be) the difference in charges won’t be worth worrying about at present.

You could read up about multi asset funds which would be a reasonable place to start, however you should be wary if you don’t think you can commit to 5++ years investments and won’t panic sell when the inevitable crash/correction comes in a few weeks/months/years time.