S&S ISA by financial advisor - opinions needed

Audaxer

Linton wrote: »

I think you may have missed a key difference between the funds. A difference that leads me to believe that the VLS60 fund is the more risky in its bond allocation. HSBC is very high in Corporate Bonds at the moment. At some point in the future the figures could be quite different. VLS60 doesnt have the choice as to its bond allocation. It is what it is.

At the moment safe government bonds are at extremely high prices. So high that people question whether they would be better off leaving the money in cash as the bond prices have little room to go higher and a very high likelihood of falling significantly at some time. So in my view a tactical move into lower risk corporate bonds and property makes a lot of sense at the moment.

That's interesting. I was a bit concerned that HSBC GS Balanced fund that I have just invested in alongside VLS60 was more risky because of so many corporate bonds. The corporate bond fund they use is HSBC's own actively managed fund which has made decent returns in recent years, but I was a bit concerned it might fare worse than the VLS bonds in a falling market, but maybe not in view of what you say. I still have faith in VLS long term, so I think it's still a good bet to hold both funds.

BananaRepublic

Fatbritabroad wrote: »

Shall I start a new discussion thread entitled 'is bananarepublic childish and does valiant son need to grow up? '

An excellent cure for insomnia, no doubt. And a nice change from the excitement of compound interest, risk profiles, and financial regulation.

bostonerimus

Any IFA who charges 0.75% and then subcontracts the portfolio construction and management at a fee of 1.25% more should ask themselves whether they are providing good value and a good service to their clients. They should be looking to cut their own fee and reduce subcontractor costs. I"m sorry if some posters were mislead by my lumping in the Brewing, platform and funds fees in with the IFA fee, but where the money goes isn't as important to the customer as where it comes from.....ie out of their pocket. Paying 0.75% to the IFA is bad, having a total outlay of 2% is worse.

bcfclee27

Ok so if I were to go along the lines of 50% in VLS & 50% in HSBC to put into my S&S ISA.....

Obviously I can only put in 20k per year, so should I just sit on the rest and wait till the following April or can I put the rest of it in a GIA and then transfer 20k into the ISA every April ?

bowlhead99

bcfclee27 wrote: »

.....

Obviously I can only put in 20k per year, so should I just sit on the rest and wait till the following April or can I put the rest of it in a GIA and then transfer 20k into the ISA every April ?

That depends whether you want your money to be invested or you'd prefer it to be languishing in cash until the somewhat arbitrary date of 6 April 2019 when the tax authority gives you a new ISA allowance enabling you to put more of your assets in a tax shelter.

Personally, I would invest it in the GIA while waiting. Your overall goal is to get it all invested. If it shrinks due to market downturn, then the fact that the shares are cheaper means that when you sell and re-buy them inside the ISA, you'll be doing that with more units at a time to use up your new £20k allowances. If it instead grows, you have the 'nice problem to have' that you have even more spare value above the £20k allowance and need to wait for another year's allowance to be able to wrap up the money in a tax wrapper.

But "shall I invest it all, or not invest some of it just yet" is an impossible question for anyone other than yourself to answer. If you don't want the higher risks and rewards of the surplus money being invested rather than being in cash, leave it in cash. Alternatively, you could still invest the whole lot but simply select lower risk investments for your overall (ISA and GIA) portfolio.

Audaxer

bcfclee27 wrote: »

Ok so if I were to go along the lines of 50% in VLS & 50% in HSBC to put into my S&S ISA.....

Obviously I can only put in 20k per year, so should I just sit on the rest and wait till the following April or can I put the rest of it in a GIA and then transfer 20k into the ISA every April ?

Yes, you could put the rest in a general investment account until the next April. Or you and you wife could each invest £20k in an S&S ISA this tax year if you have not already used any of your ISA allowances.

bostonerimus

bcfclee27 wrote: »

Ok so if I were to go along the lines of 50% in VLS & 50% in HSBC to put into my S&S ISA.....

Obviously I can only put in 20k per year, so should I just sit on the rest and wait till the following April or can I put the rest of it in a GIA and then transfer 20k into the ISA every April ?

After you have paid off any high interest debt and put 6 months to a years spending in a something 100% safe like an insured bank savings account then I'd open a regular investment account to compliment your ISA. Dividend and capital gains tax should not be an issue at the levels of money your are investing.

BananaRepublic

bcfclee27 wrote: »

Ok so if I were to go along the lines of 50% in VLS & 50% in HSBC to put into my S&S ISA.....

Obviously I can only put in 20k per year, so should I just sit on the rest and wait till the following April or can I put the rest of it in a GIA and then transfer 20k into the ISA every April ?

As others have said, make sure you have suitable cash reserves first. Once you've done that, the general recommendation is that time in the market is key. What I have done in the past when I've had money to invest, and it exceeded my ISA allowance, was to use the full ISA allowance, and then buy unit trusts outside of the ISA wrapper. A year later I sell the unit trusts, and transfer the funds into an ISA. The gains did not attract CGT as they were within the personal allowance, and the only extra tax I paid was on dividends, which was not such a big deal.

However, what will you do when your investments drop in value by 50%, which is quite possible, or 30%, which is more likely? Do you have the 'bottle' to sit it out? I recommend sticking your head in the sand, and I mean that in a perfectly polite metaphorical sense. It's what I do. Then a year or two later, you can come out of hibernation (I'm mixing my metaphors), and admire your huge wealth.

BananaRepublic

bostonerimus wrote: »

Any IFA who charges 0.75% and then subcontracts the portfolio construction and management at a fee of 1.25% more should ask themselves whether they are providing good value and a good service to their clients. They should be looking to cut their own fee and reduce subcontractor costs. I"m sorry if some posters were mislead by my lumping in the Brewing, platform and funds fees in with the IFA fee, but where the money goes isn't as important to the customer as where it comes from.....ie out of their pocket. Paying 0.75% to the IFA is bad, having a total outlay of 2% is worse.

I and many others pay close to 1% for my active funds, however you do make a fair point that the total fees this person is paying are somewhat on the high side. They should be closer to 1%. I haven't checked up, but I suspect the Dolphin people take a decent cut in addition to the charges from the underlying funds. The OP needs to find a better IFA, or DIY. The OP did say that his father in law did very well with this chap, but we weren't given any details, so perhaps we would be less impressed.

bostonerimus

BananaRepublic wrote: »

The OP did say that his father in law did very well with this chap, but we weren't given any details, so perhaps we would be less impressed.

The reported performance of investments has a lot in common with the claimed size of the fish that anglers catch. The father-in-law's performance is not described in detail so just how good is it? the one thing I do know from the OP's posts is the level of the fees.