New Investor Advice AJ Bell S&S ISA

Alexland

If you want to invest £50 per month in a fund you would be better transferring the S&S ISA to Cavendish (0.25% platform fee, no trade cost) than AJ Bell (0.25%, £1.50 trade cost) or Vanguard Investor (0.15%, no trade cost but £100 minimum per month).

I echo the above comments about the benefits of low cost global multi-asset funds such as VLS, HSBC GS, L&G MI and Blackrock Consensus however believe they are suitable for small, medium and large investments. If investing for 20 years then a fund with somewhere between 70% and 100% equities (with the rest of the fund in fixed interest bonds, or maybe property, etc) sounds sensible. Also if you can invest until age 60 then consider a LISA (although you would want to reassess platforms again as there are less choices) for the government 25% bonus.

Historically 100% equities has generated the highest return however the volatility is likely to be too much for most people to cope with and in that situation if you would be tempted to sell (and crystallize a big loss) or it would make you very unhappy then probably best avoided.

However if you do have or develop 'balls of steel' then it's also worth looking at dedicated 100% equity funds such as L&G International, Fidelity World or HSBC All-World funds which are all good choices. I would never suggest you concentrate your equities into emerging markets only.

In many ways if you are young, investing long term and starting from a zero account balance that might make it easier to take greater risk as your future contributions will help materially reduce the percentage downside in the event of an early market crash. Once you get a big pot future contributions (even if they increase with earnings) make less of a difference and you can see large paper losses along the journey. Still if you hold your nerve you can put the valuation fluctuations in your big pot down to being a 'nice problem to have'.

Alex.

Trundley27

Hi Alex

Thank you for a wealth of information. I am thinking L&G or Vanguard to start. I think L&G seem a little expensive when you use there fees calculator compared to Vanguard but could this extra cost be justified with better quality or is Vanguard equally as good as L&G?? for example L&G £5000 Equates to £38.00 per year, were as vanguard @ 0.15% £5000 equates to £7.50 per year.

I think at the moment I want to seek minimum 15 years to 20 years investment, longer if my finances allow me in the future.

I was thinking of the Vanguard Life Strategy "80" or the L&G Multi Index higher risk. I don't my the higher risk because 1. I am 30 and 2. Drip feeding money in monthly.

Would you suggest that 80% equities are a good starting point? Or should you be a bit more riskier? Its just getting a few thought on what people would do at my age etc etc, I feel like I should start high risk and then over the years taper it down to lower risks.

dunstonh

L&G and VLS are not that much diference. I wonder if the L&G calc you are using is MiFID II compliant and includes transaction charges whereas the VLS one isnt.

VLS is 0.22% plus 0.11% transaction charges. You generally ignore the transaction charges figure as it is flawed. So, you look at the OCF of both. L&G is a bit more but not the level you are suggesting.

AlanP_2

I think the Vanguard figure is their own platform charge whilst the L&G charge might be fund only so comparing apples with oranges a bit?

You need to compare FUND + PLATFORM charge in each situation.

Vanguard v L&G on a neutral platform such as HL, Cavendish etc. will be pennies different per year on £5k.

Using Vanguard funds on Vanguard platform will be cheaper but on £5k you are probably talking around £5.00 a year if it was a lump sum, about half that if drip fed over the year.

Being pragmatic the slight differences that will occur in price gain / loss between the two each and every day will drown that level of cost difference out.

Low cost is a reasonable aim but choose the fund(s) for the objective(s) you have first and then look for the cheapest way to acquire and hold them not the other way round.

Trundley27

Thank you everyone again for your helpful advice. I have taken all this on board. I think after all this discussion it is narrowed down to either L&G or Vanguard. I do have another suggestion would it be worth if I am investing £100 p/m maybe my partner could invest £50 into L&G and I could invest £50 into HSBC so this would give an annual but spreads into more funds? Is this a good idea or not?

Either way I will be going to Vanguard or L&G

MallyGirl

you could split like that but if you pick a platform that charges, say, £1.50 per transaction then you are incurring 2 lots of £1.50 so that is 3% loss instyantly

Alexland

Trundley27 wrote: »

Thank you everyone again for your helpful advice. I have taken all this on board. I think after all this discussion it is narrowed down to either L&G or Vanguard. I do have another suggestion would it be worth if I am investing £100 p/m maybe my partner could invest £50 into L&G and I could invest £50 into HSBC so this would give an annual but spreads into more funds? Is this a good idea or not?

Either way I will be going to Vanguard or L&G

To be honest the choice between these funds is marginal especially with the low regular contribution so you might as well go for the one with the lowest total fund, platform and investment costs, which offers you the % equity/other mix you want on the cheapest platform that will accept your monthly contribution rate.

In which case for your £50 per month (assuming your partner's £50 would go into their own account) it would probably be the Vanguard fund on the Cavendish platform as the minimum regular contribution on the Vanguard platform is £100 per month.

Alex.

dunstonh

If you ended up in HSBC, VLS or L&GMI (with the closest matching risk profile equivalents between them - and note they do not match risk profiles apart from one area), then no-one is going to bat an eyelid over which one is best. They will have short term periods where one is better than the other two and switch around all the time. However, all in the same ballpark.

No point splitting on £100pm. Nothing to gain from that at all.

Trundley27

Thank you all once again. I think I will either as said go Vangaurd or L&G only £100 investment p/m and drop some lump sums in from time to time, I know it!!!8217;s not a !!!8216;huge!!!8217; sum but the point being !!!8216;starting small!!!8217; and working from there over the next 5 years etc.

If there was more clarity maybe more people would dare to invest! I will update on what my move was in the next week. But all your advice collectively has been priceless! I am really grateful for it!

Ash

Alexland

But then if there wasn't the complexity of competition in the market and everyone bought the same product then the cost to invest would not have reduced so much in recent years. For example my workplace pension now offers a Blackrock developed markets global equities equities fund with an OCF of just 0.02%.

Choice is generally good even if it means you have to spend a bit of time thinking about it.