s&s isa newbie

MissG80

Some obvious questions coming up...


I just opened up a LISA with AJBell. I'm 37 and figured best get my skates on if I want another one next year too. I only put the £25 minimum in it as a placeholder for now.


I am a tad confused and should wait to read all the documentation, but basically if I buy £25 of passive funds, does that count as a holding? It says it's a £25 fee to transfer out each holding (cash transfer is free). I don't know why I would want to transfer (LISA to LISA?) - is that likely? I can switch between funds within AJBell right? e.g cautious to adventurous, without charge?


My plan was to pay in £150 p/m - I've maxed out my work pension up to its 6% matched contribution - and £150 is what I've got left after maxing out putting money into a 5% regular savings account. What's the best thing to do? Do I buy £150 of passive funds a month? Or put in a lump annual sum of around £1,800?


Yours, confused!

MissG80

I think I may have answered my own question on their website, it looks like I can put more money into the same fund, doh!

Alexland

Welcome to the world of investing - we are currently running a 10% off previous stock market prices promotion!

Yes owning units in a fund count as holdings.

The transfer out charge would only apply if you wanted to leave AJ Bell and move holdings to another platform such as the Hargreaves Lansdown LISA if the same funds are available on the new platform.

HL are a good LISA provider who don't charge for fund trades but have a higher ongoing platform charge of 0.45% and better suited to regular investments. To help offset the higher platform fee they get discounts on some fund OCFs.

AJ Bell are also a good LISA provider with a lower platform charge of 0.25% but best suited to lump sum investments as they charge £1.50 per fund trade (buy or sell). Although the are no charges if buying their own funds for a limited time until Jan 19.

However their own funds have higher ongoing fees than similar low cost mixed asset funds available on the same platform. For example the AJ Bell Balanced fund has an OCF of 0.50% compared to the HSBC Global Strategy Balanced fund at 0.19%.

Remember the LISA bonuses will probably be added as cash so you have to invest those too.

For example if you invested £150 per month once the offer has ended that would be £1.50 in trade cost (1%) plus the later £37.50 bonus would incur a further £1.50 trade cost (4%). Some planning is required to avoid paying 24x £1.50 trade fees per year. Eg grouping up a previous bonus and current month contributions into one trade.

So for the remainder of this year it probably makes sense to stick with the AJ Bell funds as the higher OCF is less than you would spend in £1.50 fees. At a total of 0.75% it is still a bit more than the HL total charge to own HSBC Balanced (0.64%) or an adventurous discounted Blackrock Consensus 85 (0.54%) or 100 (0.55%) fund.

Then reassess your options in December when you have had time to form your own thoughts.

Ps I believe AJ Bell would still charge £1.50 to sell their own funds during the promotion period so you don't want to be switching frequently. After the promotion has finished the switch cost would be 2x £1.50 to sell and buy.

Alex

badger09

Alexland wrote: »

Welcome to the world of investing - we are currently running a 10% off previous stock market prices promotion!

..........

Alex

But I'm unable to tell you whether next week we'll be having our BlueX 25% off sale, or whether we'll put our prices back up to their pre promotion level

Not that that matters

ValiantSon

badger09 wrote: »

But I'm unable to tell you whether next week we'll be having our BlueX 25% off sale, or whether we'll put our prices back up to their pre promotion level

Not that that matters

We are all hoping, however, that the Closing Down Sale won't be coming.:D

MissG80

Hi Alexland thanks for your reply, very helpful. I had read a few of your posts and glad you commented as you clearly know a lot!

Alexland

MissG80 wrote: »

Hi Alexland thanks for your reply, very helpful. I had read a few of your posts and glad you commented as you clearly know a lot!

Thanks but probably not as much as some others who lurk around here.

Oh and don't forget to leave some cash in your AJ Bell LISA to pay platform fees as contributions are limited and it would be a shame to have to incur a £1.50 cost to sell some units to pay the fees.

Alexland

ValiantSon wrote: »

We are all hoping, however, that the Closing Down Sale won't be coming.:D

All stocks must go....

It's when they start including share certificates alongside the toys in Happy Meals that I will start worrying.

TheShape

Alexland wrote: »

Oh and don't forget to leave some cash in your AJ Bell LISA to pay platform fees as contributions are limited and it would be a shame to have to incur a £1.50 cost to sell some units to pay the fees.

A £1.50 charge would be a shame. Unfortunately the disinvestment charge to pay fees appears to be £29.95.

https://www.youinvest.co.uk/lifetime-isa/charges-and-rates

AJ Bell's fees and fee payment options put me off their LISA. I went with HL as I preferred their fee structure and fee payment options.

Alexland

Yes sorry should have mentioned that too. It's only £1.50 if you sell units to pay fees before they do it for you at a punative cost. I generally assume people are in control of their money, not always true.

I generally like AJ Bell as a quirky Manchester version of HL and use their Quickranker tools several times a day but it was cheaper for them to administer my Halifax SD SIPP at a fixed cost than continue with my old YouInvest SIPP at a percentage cost. So I am still kinda with them.

I don't like too much money in one place so that rules out AJ Bell for our LISAs which we will move from Nutmeg to HL eventually for the marginally lower cost.

I just struggle to motivate myself to move small accounts to save a tiny decimal place in fees. Especially when you can lose years worth of savings being out the market due to volatility during transfer. I guess the risk is less when the valuation is lower.

Still need to do it before Nutmeg run out of cash. Unless HL buy the customer base which might save some paperwork. The sharks must be smelling blood. I bet they would love to put former Nutmeg customers into their expensive portfolio funds....

Alex

lolamancity

Alexland wrote: »

Still need to do it before Nutmeg run out of cash. Unless HL buy the customer base which might save some paperwork. The sharks must be smelling blood. I bet they would love to put former Nutmeg customers into their expensive portfolio funds....

Alex

:eek: Alex- what do you meeeeean!? i've just opened my LISA with Nutmeg and stuck £200 in it for starters, for the long run!