S&S ISA newbie

Tiggypud

Well done on opening an account, a good start to the new year. I am a firm believer in putting something away, even in small amounts, it's a great start.

I nervously opened a s&s Isa at the end of 2018, initially 'losing' money, but it has crept up and us now doing well. I probably check it too much, but I enjoy the thrill and I too am learning.

I opened it with Virgin Money and add money every month, now considering transferring my pretty useless premium bond savings too.

mikeb89

Hi guys,

I opened up a S&S ISA with Hargraves Lansdown around 7 months ago to try my hand at stocks and shares. I originally bought into the S&P 500 but didn't really see much movement in the past 7 months so after some research I decided to move it over to a Fundsmith Equity fund instead.

My desire is to keep paying amonthly direct debit into it for the forseeable so I can hopefully reap the benefits of compound interest (it looks so easy in the graph pictures!) in a similar way that my pension will work.

I'm open to a high amount of risk as I am only 30 so I was wondering if any of you have done anything similar and have any advice?

I'm aiming to pay around 4-6K into this annualy (whilst trying to overpay the mortgage and save)

Thanks in advance.

lpgm

mikeb89 wrote: »

My desire is to keep paying amonthly direct debit into it for the forseeable so I can hopefully reap the benefits of compound interest

You won't get any interest, compound or otherwise.

SonOf

opened up a S&S ISA with Hargraves Lansdown around 7 months ago to try my hand at stocks and shares. I originally bought into the S&P 500 but didn't really see much movement in the past 7 months so after some research I decided to move it over to a Fundsmith Equity fund instead.

An economic cycle nowadays is a little over 10 years. So, with just 7 months, you were barely in the market you invested in.

My desire is to keep paying amonthly direct debit into it for the forseeable so I can hopefully reap the benefits of compound interest (it looks so easy in the graph pictures!) in a similar way that my pension will work.

There is no compound interest. And the same goes if you held the same investment in your pension.

I'm open to a high amount of risk as I am only 30 so I was wondering if any of you have done anything similar and have any advice?

Its good that you are open to high levels of risk as you stand to lose upto 50% during major downturns. However, you really need to learn a bit more about investing before diving in at the deep end as you have.

Your statement about changing it as it did nothing over 7 months just has alarm bells ringing. A car crash waiting to happen.....

TheShape

mikeb89 wrote: »

I opened up a S&S ISA with Hargraves Lansdown around 7 months ago to try my hand at stocks and shares. I originally bought into the S&P 500 but didn't really see much movement in the past 7 months so after some research I decided to move it over to a Fundsmith Equity fund instead.

It looks like the 7 months from 3rd June to 3rd January the S&P 500 moved from 2744.45 to 3234.85. That's around 18% increase. May to December the performance wasn't nearly so strong, but you're then excluding the strong growth in the last month.

mikeb89

Thank you for the feedback - That is exactly why I am posting in the newbie section.

If the S&P went up by 18% then I am not sure why the UBS S&P500 Index (Class C - accumulation) on Hargraves Lansdown that I was buying into only went up by around 5%. Is there another S&P 500 fund on HL that went up by 18% in the same timeframe?

Either way I am not planning on moving it around constantly as I agree that will not work out well in the end.

Can you elaborate on why it wouldn’t be a compound interest effect please. Wouldn’t the reinvestment of the dividend sharers over time compound the overall investment?

Many thanks

lpgm

mikeb89 wrote: »

Can you elaborate on why it wouldn’t be a compound interest effect please. Wouldn’t the reinvestment of the dividend sharers over time compound the overall investment?

Well, you're talking about dividend income now, but before you were talking about interest.

Yes, if you get dividend income and use it to buy more shares and then get more dividend income from those new shares - yes, that's compounding. But your 'total return' comes from 'capital growth' as well as dividend income. And a lot of US companies in the S&P 500, and in your new Fundsmith fund, don't pay dividends.

You talked about putting money in each month, which suggests to me you rightly hope prices will stay put, or even fall, so you can benefit from something called 'pound cost averaging', rather than compounding. There's certainly no interest involved.

jimjames

mikeb89 wrote: »

If the S&P went up by 18% then I am not sure why the UBS S&P500 Index (Class C - accumulation) on Hargraves Lansdown that I was buying into only went up by around 5%. Is there another S&P 500 fund on HL that went up by 18% in the same timeframe?

Many thanks

If you had a fund in the USA priced in dollars then it should go up by roughly the same amount. But you presumably have a fund priced in pounds so your investment will also be subject to exchange rate variations - check the change in rates over the same time. Pound increasing in value will reduce the value of assets you own in dollars

mikeb89 wrote: »

Can you elaborate on why it wouldn’t be a compound interest effect please. Wouldn’t the reinvestment of the dividend sharers over time compound the overall investment?

I think it was the word "interest" that was being picked up on. You will certainly benefit from compounding over the long term but shares can pay dividends not interest although the net effect is the same

wiltshiregirl69

I hold investment accounts (ISA, non ISA S&S trading accounts, SIPPS) on the following platforms:
idealing
ii (interactive investor)
Hargreaves Lansdown
Nutmeg.

I also have a tracker with Vanguard.

I advised my children to each open a Nutmeg account to hold a lifetime ISA and a pension. Both are invested according to the 'roboinvesting' choice of funds based on attitude to risk. Nutmeg is by far the easiest 'invest and leave' set up and is well suited to a low cost monthly/regular investor. Interactive investor and idealing are both low cost platforms more suited to an experienced investor who trades regularly. I would recommend ii to a beginner DIY investor as its platform is easy to use and offers friendly investment advice.

Hargreaves Lansdown is similar in layout to interactive investor but more expensive and very much orientated to funds (this is how HL they make their money) - if you want to invest in individual shares - other on line platforms are better value. HL is akin to the Waitrose of the supermarket world. Reassuringly expensive and looks pretty.

Nutmeg has returned a nice 9% over this last 9 months and this return has compared favourably with my individual investment choices over my diversified portfolio. For a small investor I think it could be a good choice over the long term as the charges are low. Vanguard is OK too - but their layout isn't as user friendly (imo).

One word of warning - the US and UK stockmarkets have had a very long bull run and what goes up will come down in the short term - or at least there is a strong risk of this. However over the very long term (10+ years) such crashes and dips will seem like foothills in the upward road of investment growth. Investing is not for the emotionally faint hearted. If you think you aren't ready for it (i.e active trading) - stick to a Nutmeg and/or Vanguard and drip feed into the account and leave it alone for years.

pip895

Nutmeg make HL look cheep!
0.75% +0.19% /annum + 0.06% spread

HL
0.45% + 0.22% VLS80

Vanguard
0.15% + 0.22% VLS80