Platforms vs Platforms

coyrls

dqnet wrote: »

Technically true but if one was new the the investment portal and wanted to experiment with a few hundred pounds with a fund and also test a diversification strategy then they're out of a luck if the minimum is £1000. It's more of an inconvenience rather then a disadvantage of the platform for new investors.

I often see this argument that you need to put money into something to "test" it. It makes no sense to me. You can monitor a fund's performance with or without putting money into it and also look at historical performance, regardless of whether you've had money invested in the fund in the past or not.

dqnet

I think we are all getting a little ahead of ourselves here...
Completely agree on the cost-saving benefit being more valuable and I know I mentioned that it wasn't important. The real priority was getting good support and I'm glad AJ Bell is good at providing that (everything dealt with on the single call when I called them few times). I was just a little disappointed that HL managed to negotiate such low investment amounts [£100 compared to £1000]. I know that only a few funds have this requirement but it was still a shame. It wasn't about testing the fund's performance as all information is available in the KID as you say.

Anyway, I think AJ Bell might be the way forward as the support issue is resolved and now it's about costing. As an earlier post recommends, I should now start to add individual costs of each fund and see what works out cheaper in the long run.

Thanks all

dqnet

Wassa123 wrote: »

Newbie investor here...

Why would OP be better off with 4k in one fund rather than being diversified in several?

This question remains un-answered however

Credit-Crunched

I am in a very similar position to you regards to my ISA and SIPP.

Contributions will be circa £8k p.a into each with a transfer of £40k from my olds work pension with L&G.

My investment time frame is 25 years +

I like the idea of building my own portfolio through research, experience and education. So a multi asset fund will underpin my portfolio to start, but I will be looking at region / asset class specific funds to invest in myself.

I think HL seems preferable, due to my investment amounts, unless someone can correct me.

I will also be holding some AIM shares in my portfolio if that makes any difference.

Sorry to hijack the thread!

bowlhead99

dqnet wrote: »

Wassa123 wrote: »

Newbie investor here...

Why would OP be better off with 4k in one fund rather than being diversified in several?

This question remains un-answered however

Sorry I thought I had addressed that in my middle two paragraphs of post #21.

When you are only dealing with small numbers, any gains from making it more complicated are, inherently, going to be quite small.

So when you look at your £3500 portfolio and think, OK, I'm going to take it up to be a £4000 portfolio and I am going to select a different fund for that last £500... if that £500 outperforms the average of the rest of your portfolio by a not inconsiderable 1% over the long term (e.g. you get 7% from the first part of the portfolio but 8% from this new part), you are gaining by 1% of £500, which is a fiver.

You probably have a day job which pays you five to ten thousand fivers a year. It is far from critical to your success that you incur the research time and cost (and potential extra dealing cost, dependent on platform) just to try to make another one. It will take you at least an hour or two to do any reasonable review work on that fund you propose to add. And then if it turns out to be a successful one over the first couple of years of your ownership, you risk saying to yourself "aha, see, it *was* worth putting that token £500 into this other fund, it's made me more than a fiver" and repeating that again with another bunch of small low value investments without recognising that over the long long term the results could be very different as what goes up often comes down.

So, for a newbie investor as Wassa123 is, £4000 is too small an amount of money to really need a bespoke four-fund solution. You can cover the major sectors across asset classes, depending on your investing style, with maybe 8-15 specialist funds or one generalist mixed-asset fund. At the £4000 level, it's the single generalist fund that strikes me as the obvious approach to take.

If OP had been talking about fund minimums getting in the way on a £40k or £400k portfolio it would be an issue to look into and he would be right to bring it up if there was a provider where it was a genuine problem, but nobody would have batted an eyelid at the idea of someone using several separate funds to deploy the whole £40k or £400k. Whereas on a £4k portfolio it is more of a curiosity as to what is the point of even trying to do two £500 investments within a portfolio that only really needs one fund; haven't you got better things to do with your time.

The fact that the OP was also concerned about the theoretical issues that the minimum investments would cause if he put £1000 into a fund instead of his preferred £500, and then the whole £1000 became worthless and he lost all that capital... also flagged him up as a newbie investor who was not very familiar with the investing concepts and might benefit from the suggestion to 'keep it simple'.

HTH

bowlhead99

Credit-Crunched wrote: »

I think HL seems preferable, due to my investment amounts, unless someone can correct me.

Not really on the £48k you'll have this year, if it's mostly going to be in Funds, at least compared to other choices on this thread, from a cost perspective.

HL would be charging £200+ as annual admin fee on the £48k portfolio (0.45% a year, with the fee cap on the AIM part of the portfolio only kicking in when you have north of £40k of shares and exchange-traded stuff within the total) whereas AJ Bell would be closer to £100.

0.45% vs [0.25% and a few dealing fees at £1.50 each] makes the 0.45% look quite expensive when it's being levied on £40k to start and increasing by £8k (plus investment growth on the whole lot) each and every year. After five years or so you'd be looking at potentially a £100k portfolio being charged at £450 with HL versus £250+ with AJB.

On bigger portfolio amounts a 'fixed fee' rather than percentage based provider can get a much better result (e.g. IWeb), though I use AJ Bell for my own SIPP (which is heavy on shares and ITs so hits the cap for non-fund holdings).

Credit-Crunched

bowlhead99 wrote: »

Not really on the £48k you'll have this year, if it's mostly going to be in Funds, at least compared to other choices on this thread, from a cost perspective.

HL would be charging £200+ as annual admin fee on the £48k portfolio (0.45% a year, with the fee cap on the AIM part of the portfolio only kicking in when you have north of £40k of shares and exchange-traded stuff within the total) whereas AJ Bell would be closer to £100.

0.45% vs [0.25% and a few dealing fees at £1.50 each] makes the 0.45% look quite expensive when it's being levied on £40k to start and increasing by £8k (plus investment growth on the whole lot) each and every year. After five years or so you'd be looking at potentially a £100k portfolio being charged at £450 with HL versus £250+ with AJB.

On bigger portfolio amounts a 'fixed fee' rather than percentage based provider can get a much better result (e.g. IWeb), though I use AJ Bell for my own SIPP (which is heavy on shares and ITs so hits the cap for non-fund holdings).

Many thanks for taking your time and effort to reply in detail, it is very much appreciated.

For user experience would you say iweb or AJ Bell is a better bet? Or even II

dqnet

bowlhead99 - Another thank you from me.

credit-crunched - bare in mind that if you do decide to go with AJ Bell and setup regular monthly investment amounts you will be charged £1.50 per fund. So if you have 3 funds each drip fed with £200 a month it will cost you £4.50 with AJ Bell and nothing with HL. You need to factor those costs in to when deciding. It's not just about the custody charge being cheaper with AJ, there are other things to factor.

In any case both are great companies. I've called them both a few times now and feel comfortable dealing with any of them. It's about balancing your costs now. Choose your funds, check the ongoing fees and minimum amounts, decide if you will be doing more of a drip feed or lump sum and factor any currency conversions (if necessary).

bowlhead99

dqnet wrote: »

- bare in mind that if you do decide to go with AJ Bell and setup regular monthly investment amounts you will be charged £1.50 per fund. So if you have 3 funds each drip fed with £200 a month it will cost you £4.50 with AJ Bell

In that situation (running a £600pm direct debit) you could of course just rotate what you invest in so you buy £600 of Investment A in month one of the quarter, £600 of B in month two, £600 of C in month three, then repeat. Of course, that requires you to log on once a month to make the change, to save the unnecessary £3 of charges by buying three things each and every month - you could easily keep it to one £1.50 transaction per month if a couple of minutes of your time is worth £3.

Alternatively if you can't be bothered logging in - simply have your direct debit set up for £600pm but set up your combination of three-regular-investments to be £400 or £600 each for a total investment cost of £1200 or £1800. Then you fund the account as normal, £600 a month, but one or two months out of every three you just get a message saying you had insufficient funds to process the "regular investments" you had selected, and they will try again next month.

For example, I only pay £2-300 a month into my Youinvest SIPP because only in the last few months of the year do I really decide how much I want to commit to pension this year versus ISA or VCT or cash or spending. My direct debit is set to a pretty nominal level relative to my salary. However, I don't usually want to pay £1.50 to deploy only £200 of funds (£250 with tax relief) as it's over half a percent of what I'm buying.

So iI would typically set my "regular investments" page to have at least £500 of purchase and if there isn't enough cash in the account to execute the purchase this month, so be it. Or maybe it's set up for £1000 across two investments, depending on mood. If insufficient cash, the order just rolls to next month.

If I have recently sold something or got dividends from something there's often a bit of spare money lying around which can be spent as part of the regular investment process so maybe the regular investment will execute on the 10th of the month after all. I have a pretty extensive set of holdings and part of my money is quite "actively" invested. But for someone keeping it simple with just one or two or three main funds holding all their pension money, there is really no need to buy all of them every month. If each fund gets a bit of cash every other month, or every quarter, or every half year, it's still receiving a reasonably consistent drip drip drip of money over the decades.

Credit-Crunched

Thanks, I think I will buy £400 in a fund each month, so 2 a month until I have my portfolio complete with the funds I want, then I will start at fund 1 and repeat.

Looking at diversifaction of funds and asset classes, how does this look to you?

Asia Pacific
Emerging Market
Global Smaller Comp
European Equities
Japan
North American
UK Large and Mid Cap
Uk Smaller Companies
Commodities
Commercial Property Fund

SO in essence having 10 funds in my portfolio that have £400 a month added to them and the £40k i transfer in from my old pension split equally across them.