First time investment plans

kuratowski

Albermarle said:

However when the market goes through a bad patch , not everybody can stomach the big and fast drops, even though beforehand  they thought they could. Personally I am a bit more the cautious type, so even if I was younger I would probably not go for 90% equities, even though the historical evidence would be in favour of it. 

I'm very grateful that, when I was in my 20s, there was no internet portal (nor app) where I could view the latest value of my pension.  I got a valuation statement once a year in the post, usually about 2 months after the valuation date, if memory serves.  Which means I was never truly conscious of the large drops, at least not in £ terms, of my allocation to 100% global equities.  The current era of having constantly up to date information in the palm of your hand is not an unequivocal gain.

rundmc-k

Thanks @bowlhead99 and @Albermarle, my question was of course very much dependent on the risk acceptance of the person answering the question. In my case, I feel I could probably handle the risk associated with 100% equities for LISA/SIPP due to the fact that it is very unlikely (of course not impossible) that either of them will be required for well over 20 years. I can't be certain if my feelings would change in a really major dip, but I hope not.
My consideration will have to be whether I have the stomach to do that with an ISA. My feeling is that as it is the 'accessible' pot and therefore the 'potentially required' pot, I may be more likely to go for something a little less equities heavy, as both of you have discussed. Possibly the VLS80 or VLS60.
So I'm definitely going to look at AJBell for LISA/SIPP requirements. Any thoughts on whether iWeb might be worth looking at for an ISA with a VLS product? I'm not sure if the lower fees make it worth using a different platform to the LISA and SIPP?

bowlhead99

rundmc-k said:

 Any thoughts on whether iWeb might be worth looking at for an ISA with a VLS product? I'm not sure if the lower fees make it worth using a different platform to the LISA and SIPP?

Let's say you had £4k in the LISA and £10k in the SIPP and your remaining £6k was going to go into the ISA.

 £6k for a year with a 0.25% charge at AJBell is £15, plus the £1.50 initial transaction fee to buy it, so £16.50. While at 0.15% at Vanguard and no transaction fee it's £9, but that's not much cheaper than AJBell and it's an extra set of login details to remember.

At IWeb it would be £5 transaction fee plus an account opening fee which by itself would be more than the entire year charges at AJBell, but in the second year you wouldn't have the account opening fee, just a cost to do another transaction if you added more money.

As the account balance goes up, the charges for an ISA at Bell and Vanguard would go up, while at IWeb they wouldn't. However if you were adding money every month, it would be a fiver every time at IWeb, which is £60/yr ; even adding quarterly is £20/yr. The fee to add new money into a fund at AJ Bell is a third of that and at Vanguard is nothing, because they're making money off you via the annual percentage-based fees.

So, you'd have to add up how much you are actually planning to invest and what your ongoing pattern of investments might be; some people are more cost-conscious than others and some people value having a 'one stop shop'. Others don't value a one stop shop because they are happy to have their long term retirement funds with one provider and their 'current', accessible investments with another, just like they might have a different logon for their current accounts and credit card and workplace pension.

Albermarle

and it's an extra set of login details to remember.

Plus you have to learn how to navigate around each different platform, which all have their little quirks.

bowlhead99

Albermarle said:

and it's an extra set of login details to remember.

Plus you have to learn how to navigate around each different platform, which all have their little quirks.

True, although most people are pretty internet savvy these days and anyone in their mid thirties who logs into an investment platform once a year to add some money and buy some more shares of the fund or check what their balance is, and can't figure out how to do that within a few minutes of getting to the website, probably needs shooting.

rundmc-k

@bowlhead99 Thanks for all the help breaking down the fees in that post. Looking at the maximum charges for an ISA in AJBell, it seems like it would be max £30 in custody fees per year, so taking into account the £1.50 transaction charge, it wouldn't ever break £40 p.a. if I add money <6 times per year? 
If that's right, then compared to iWeb it wouldn't be a really significant difference considering the benefit of having all products together.
Vanguard would be cheaper up to about £25k-ish and then would be more expensive than AJBell?

bowlhead99

rundmc-k said:

@bowlhead99 Thanks for all the help breaking down the fees in that post. Looking at the maximum charges for an ISA in AJBell, it seems like it would be max £30 in custody fees per year, so taking into account the £1.50 transaction charge, it wouldn't ever break £40 p.a. if I add money <6 times per year? 
If that's right, then compared to iWeb it wouldn't be a really significant difference considering the benefit of having all products together.
Vanguard would be cheaper up to about £25k-ish and then would be more expensive than AJBell?

Note at AJ Bell the 0.25% capped at £30 per year is their custody charge for holding investments which are listed on a stock exchange such as shares, investment trusts and ETFs.

If you are instead holding open-ended 'funds' such as OEICs or unit trusts via their investment platform (e.g. Vanguard Lifestrategy 60% Equity Accumulation is a 'fund', rather than a share traded on the stock exchange), then the charge is also 0.25% of the asset value per year but it isn't capped at £30, the percentage doesn't reduce until you get to £250k

Annual shares custody charge
 (including investment trusts, ETFs, gilts and bonds)

0.25% of the value of the shares in your account

Maximum £7.50 per quarter

Annual funds custody charge 
(including unit trusts, OEICs and structured products)

0.25%on the first £250,000 of funds

0.10%on the value between £250,000 and £1m

0.05% on the value between £1m and £2m

As a percentage based product, Vanguardinvestor is cheaper than AJ Bell's percentage but they only offer their own products and don't have LISAs

As a fixed transaction fee product, IWeb is cheaper than AJ Bell for one off buy-and hold with minimal ongoing purchases, though they don't have LISAs and their pension cost is prohibitive in small amounts because the fixed fee is fixed quite high compared to the percentage-based charge that AJ Bell or Vanguard would charge for theirs.

macgyver

The charges will depend on the amount of money you have invested in there.
Here one of the comparisons on the internet.
https://www.moneywise.co.uk/pensions/manage-pension/check-out-fees-find-your-sipp-platform
You will see that if you have £50000 invested on AJ Bell platform, you pay £275 as fees compared to £400 when you have £100000 invested.
HTH

rundmc-k

Thankyou both, yes I'd misinterpreted the charges there, I'm learning with every post though!
That comparison site for SIPPs is quite useful, the intricacies of the charges when incorporating drawdown is really quite complex. Although I'm presuming the combined charge is only for the years when drawdown has commenced, which for me I'm planning to be ~10 years total, as opposed to the 22-ish years of saving prior to that. 

Can I ask the question, if I made the decision (which I haven't yet) that I understood and accepted the volatility risks of purchasing a 100% equity fund such as the HSBC FTSE100 All World Index tracker, would there be anything inherently "wrong" about putting all my LISA, all my SIPP and all my ISA into that one fund, just spread over those 3 different accounts? Is there something I'm making a mistake with there? Is it safer to have the accounts each investing in a different single tracker, or is there absolutely no difference?

rundmc-k

Anyone any thoughts on the above?
Also if I decided the ISA part of my investment plan would be best with Vanguard, what would be a similar tracker on their platform to the HSBC?