ISA advice - more to do with the admin and costs

LondonCalling1961

Dear all,

I am planning to invest in ISAs for myself and children future.

My plan will be to invest a regular amount around £400 into two different funds (2 x 200).

So basically 12 / 24 transactions per year.

Monies will be for the long term, and ethical.

I am unclear on the charges and frankly, what will be the best company to invest through.

Thank you in advance.

xylophone

Do you plan on opening a stocks and shares Junior ISA for each child and an ISA for yourself?

Might Vanguard suit?

https://www.vanguardinvestor.co.uk/need-help/answer/do-you-have-ethical-funds

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0002&gclid=EAIaIQobChMInNOmm_nI5AIVFODtCh3mRAqMEAAYASAAEgLd7_D_BwE&gclsrc=aw.ds

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa?cmpgn=PS0517UKPABJI0002&gclid=EAIaIQobChMIv7XaqfnI5AIVDbDtCh3-oQntEAAYASAAEgLE8_D_BwE&gclsrc=aw.ds

bowlhead99

There are 30,000 investment options and most of them would allow an investment of £200 a month.

Generally the choices are, on the one hand 'open ended' funds bought through an investment platform where if you want to put more money in you just subscribe for more units and they are created for you. Or on the other hand, closed funds such as investment trusts or ETFs which are listed on a stock exchange and if you want to put another £200 in you would have the stockbroker buy you some more shares from somebody else in the market who wants to sell them.

Managers of investment ISAs typically offer both types of investments within their ISAs (unless they only offer their own limited range of products) but might have different fee structures for their investment platform or brokerage services. So platform fees can vary depending what you hold. Historically it was common for platforms to offer access to open ended funds with some annual percentage-based fee based on the average amount they are holding for you over the course of the year, regardless of whether you were doing 12 or 24 or 100 transactions a year. While the investment trusts and ETFs traded on the stock exchange would have a fee each time you bought or sold but a relatively low or capped annual fee for maintaining your investment account.

However, many ISA managers these days have some sort of hybrid fee structure and you can shop around to see which fees are competitive depending what investments you want to hold and how often you want to add more money. There are various comparison tools to check fee structures between different ISA managers.

On top of the fees from the ISA manager themselves, there are fees for the actual investment products - they all have annual ongoing charges which include management fees and other running costs. Investment funds which passively track a market index or set of indexes, will not cost a great deal to run. While investments that involve a decision-maker deciding from day to day what the fund might like to buy and sell, will be more costly. The funds with lowest charges will not necessarily be the best performers but it is one area to consider when deciding what type of product you want.

All the funds you look at will publish their charges so if you are unclear on the overall charges after reading the literature on the investment fund and the literature on the ISA manager's ISA product, ask here.

Unfortunately although there are thousands of investment options that you could hold on your ISA, making them "ethical" restricts the choice a lot because most investment funds are not specifically ethical and different people will have different views on what ethics are good ones to have and what aligns with their personal morality or religion.

Most 'ethical' funds will make their portfolio by screening out or liimiting exposure to certain company types or certain industry sectors, and this can add to fund costs (because it's more work to try to produce the same quality of returns and diversity of holdings from a more limited selection of options). Different funds will try to appeal to ethical investors in different ways, so if that's important to you, you will have to study them closely.

You mention 2x £200, but also investing for yourself and children (i.e. more than one child), and using ISAs (plural). But that would be one adult and two junior ISAs, which is three separate accounts, requiring more monthly purchases (if you were going to contribute as frequently as every month to all account).

Perhaps what you mean is, as the amount you are investing is relatively low (£4800 a year being nowhere near your annual £20000 ISA allowance), you will just hold one investment fund for you, and one for the kids, all within your own personal ISA. It's a simple approach that works well for many people, and avoids any issues with the kids getting automatic access to their junior ISA at age 18 if the parents would prefer that they not be given the money until later .

Albermarle

Some investment funds are 'ethical lite' or 'light green' where all they do is avoid a few sectors , like armaments or tobacco. Others are more 'dark green' and actively invest in perceived environmentally friendly companies . The problem with the latter is that it does restrict flexibility and can possibly lead to poorer growth.
One well known very large fund manager who has actively gone public about climate change etc and started offer new ethical/environmental funds is Legal & General .
https://www.legalandgeneral.com/investments/isas/
You are restricted to just L&G funds, and not the cheapest in terms of charges, but an easy/simple option.

DrSyn

(a) These can help you concerning charges and platforms:-

https://monevator.com/compare-uk-cheapest-online-brokers/

http://www.comparefundplatforms.com/


(b) As for ethical, that is another matter. What is ethical depends just on what you consider is ethical and who you talk to. Being able to get ethical funds that meet all your criteria may be more challenging than you might think.


(c) Watch both of these:-

http://www.kroijer.com/
https://www.ifa.com/indexfundsthemovie/

Then consider investing in a Global Multi Asset Fund, which has wide diversification while minimising risk, at low cost. Invest at a risk level you are happy with. Two such low cost funds are:-

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds?intcmpgn=lifestrategyfunds_learnmore_link

https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/

You can open the Vanguard fund directly here:-

https://secure.vanguardinvestor.co.uk/en-GB/Process/Registration/Apply/Select


(d) Other Global Multi Asset find you could look into are:-
L&G Multi Index Funds
Blackrock Consensus
Architas Passive