S&S isa / SIPP advice

Mrc44

Hi ,
Please could you give me some advice / guidance before I take the plunge and open a s&s isa and SIPP , I am a total novice when it comes to investing so like the idea of the LifeStrategy funds were I can leave my money to hopefully grow with minimal interference from me other than monthly contributions, the money will be good for 10+ years so I’d be looking at the Ls80 fund, my question is really would I be better off opening the isa with vanguard themselves if I’m just buying the LS funds as opposed to buying the funds through another isa provider? I could get £105 cashback opening a legal and general s&s isa or £160 for opening a fidelity one would the low cost of the vanguard be better over the long run?
Also regarding the SIPP i am waiting on the vanguard to be announced which will hopefully be soon, unless you can point me in the direction of other good options? That will be loaded with a lump some and then topped up monthly and then a lump some each April.
Thank you for any help (Apologies if I posted in the wrong section before I don’t know how to delete the other post)

eskbanker

Mrc44 wrote: »

I am a total novice when it comes to investing so like the idea of the LifeStrategy funds were I can leave my money to hopefully grow with minimal interference from me other than monthly contributions, the money will be good for 10+ years so I’d be looking at the Ls80 fund, my question is really would I be better off opening the isa with vanguard themselves if I’m just buying the LS funds as opposed to buying the funds through another isa provider? I could get £105 cashback opening a legal and general s&s isa or £160 for opening a fidelity one would the low cost of the vanguard be better over the long run?

There are too many variables to be able to determine which is the cheapest platform just from that, so try putting your numbers into the likes of:

http://monevator.com/compare-the-brokers/
http://www.comparefundplatforms.com/
https://forums.moneysavingexpert.com/discussion/5583030
https://www.boringmoney.co.uk/calculator/

Mrc44

Thank you eskbanker, I shall have a look at that and put some figures in.
I was just thinking if I was only going to be buying LifeStrategy funds then it would probably be cheaper to stick with vanguard.
I’ll take your advice and use the monevator comparison and see what it brings up.

bowlhead99

Mrc44 wrote: »

Thank you eskbanker, I shall have a look at that and put some figures in.
I was just thinking if I was only going to be buying LifeStrategy funds then it would probably be cheaper to stick with vanguard.
I’ll take your advice and use the monevator comparison and see what it brings up.

If you were looking at £160 cashback with Fidelity (presumably Topcashback, Quidco or similar) then you are probably putting £15k+ in to the ISA. Vanguard's platform fee works out as £15 a year per £10k on the platform, with Fidelity over double that for holding Vanguard funds. So using Vanguardinvestor instead over the coming decade you'd make your 'lost' cashback back, via lower ongoing fees.

Fidelity are only funding the cashback as a marketing/ customer acquisition cost in the hope you will stick around because you like the service or the product range or you lazily never move after the welcome offer. They hope to make so much money from you that they're willing to pay the cashback site more than £160 so you can be paid £160 and the cashback site makes money too

Of course, just because you sign up and get cashback doesn't mean you have to stay there the whole decade to keep it. Some MSEs would not care about the long term value proposition from Fidelity or L&G, and simply grab the value from the intro offer and move after the bare minimum term that allows them to keep the cashback. Personally I can't be bothered moving to Fidelity and back with my own ISA, even though there's free money available, as it involves some effort and I don't really want them long term as they're no better than what I have.

Mrc44

Thank you bowlhead99 I appreciate your very helpful informative reply , yes the cashback promotion was through Quidco and after what you have said, as I’m pretty new to this I don’t think setting up different isas and then keep switching around would be the best idea right now. The £22.50 platform fee for vanguard doesn’t sound to bad at all.
Also bowlhead what would you recommend regarding the SIPP? Hang on a few more weeks and wait for the new vanguard SIPP to be announced or look elsewhere.
Thank you

bowlhead99

If you want a SIPP there is no particular reason to wait for Vanguard. If you invest £10k or whatever this week, you might get a month or two of growth on it before the Vanguard product even launches. 6% a year growth, which is not unreasonable over the long term, is half a percent a month. Vanguard is not cheaper than others by as much as half a percent a year.

So delaying to wait for Vanguard's pension product does not make a whole lot of sense and hopefully you haven't been procrastinating for the last couple of years since it was rumoured to be coming.

If/when Vanguard have it up and running in the new tax year you can easily open an account with them and start funding it with monthly contributions because they don't charge a fee for every transaction, while stopping funding whatever SIPP you have opened this week. You could then transfer that existing SIPP over to it in due course next year. So even if Vanguard SIPP is your medium to long term solution, I would just get on with opening a pension now at somewhere that doesn't have large exit fees.

Or perhaps just stick your lump sum into your workplace pension (could be even more lucrative if you can do it as a salary sacrifice) and then just start using vanguard's new product for the spare money that becomes available to you next tax year.

SonOf

There is also more to life than Vanguard. If you use the Vanguard Personal Pension then you are limited to Vanguard funds and Vanguard are not the best in every area and won't be the best forevermore. Hence, whole of market options are usually a better consideration.

Rich1976

There is more to life than Vanguard absolutely though you wouldn't think so by the amount of people jumping on the bandwagon and assuming because everyone else seems to be recommending the LS100 fund then that is what they must do also!

Mrc44

Thank you for your reply’s and help , bowlhead I shall certainly take your advice regarding not waiting for the new vanguard SIPP to be announced and get one open this week.

“Or perhaps just stick your lump sum into your workplace pension (could be even more lucrative if you can do it as a salary sacrifice) and then just start using vanguard's new product for the spare money that becomes available to you next tax year.“

I am self employed so no workplace pension or salary sacrifice available but the SIPP will give me good tax relief from paying 40%.

Sonof
“There is also more to life than Vanguard. If you use the Vanguard Personal Pension then you are limited to Vanguard funds and Vanguard are not the best in every area and won't be the best forevermore. Hence, whole of market options are usually a better consideration.“

Thank you for your reply, I am fairly new to the sas isa’s so don’t fully know the “best” one for what I would be looking for (invest a lump sum and leave to do its thing over 10+ years with monthly contributions along the way) , the main 3 i hear of are vanguard , Aj bell and fidelity. Although there is a cashback incentive on Scottish friendly, shepherds friendly , nutmeg and fidelity, would any of these be a cheaper option for me?
I appreciate any help / guidance in pointing me in the right direction.

Rich1976
“There is more to life than Vanguard absolutely though you wouldn't think so by the amount of people jumping on the bandwagon and assuming because everyone else seems to be recommending the LS100 fund then that is what they must do also!“

Appreciate your reply , what other platforms would you suggest be a good option for a 10/15k lump sum investment followed by monthly contributions which requires little work to manage?
Thank you

Albermarle

the main 3 i hear of are vanguard , Aj bell and fidelity. Although there is a cashback incentive on Scottish friendly, shepherds friendly , nutmeg and fidelity, would any of these be a cheaper option for me?

You can not compare some of these products . Scottish Friendly only offers one fund . Vanguard only offer their own funds ( but are low cost ) Aj Bell and Fidelity offer thousands of investment choices ( including Vanguard funds ) 

You should concentrate more on what funds you want to invest in and not worry about the cashback too much .

Mrc44

Thank you Albermarie 
so do you personally think it’s a better option to go with either Aj bell or fidelity and then say invest 50/50 in to VLS80 and HSBC global funds for example as opposed to going directly through vanguard which is slightly cheaper but limits for options for other investments?