Newbie ISA and SIPP - Active vs Passive ?

Alexland

AnotherJoe said:

You pay the dealing charge once on shares . You pay the 0.45% every year on funds. 

On a HL ISA and SIPP you pay the 0.45% on shares too (although it's capped eventually).

It's the unwrapped HL Fund & Share Account where there is no 0.45% fee on shares.

There's no reason for the OP to pay trade fees on their current account valuations.

AnotherJoe

asitaram said:

You pay the dealing charge once on shares . You pay the 0.45% every year on funds. 

If I keep investing small amounts as and when I am comfortable with money, will I not be paying the dealing charge every time I do that ?

Yes thats a good point, if you are putting in say £50-£100 a month dealing charges would be excessive and then you'd have to decide whether to change tactics and put it all in at the start of the year or just go for funds in which case HL isnt the cheapest platform. Though at these levels the difference is only a few quid so maybe doesn't matter anyway especially if you like the functionality of it.

Linton

asitaram said:

Whilst you are only talking about a few £Ks or even a few £10Ks, as long as you are well diversified, stick to the mainstream

Thanks. As you have rightly spotted, I am over thinking. What do you mean by mainstream ? are you suggesting I stick to my current portfolio or move to a Global core tracker and stay away from the app ?

A definition of "Mainstream" could be a fund worth more than say £100M from a significant fund manager in an area where other fund managers provide similar funds.

As a matter of principle if you have no well-considered reason to change, dont change.  From your posting it would appear that you do not.  Perhaps just keep track of what your chosen tracker would have done and as an educational exercise investigate why there is a difference in terms of the funds objectives and its underlying investments.  You could then begin to develop an overall strategy and justifications for any changes in the future.

Linton

asitaram said:

You pay the dealing charge once on shares . You pay the 0.45% every year on funds. 

If I keep investing small amounts as and when I am comfortable with money, will I not be paying the dealing charge every time I do that ?

Yes, though some platforms are free or close to free for fund tradng, or have special rates for regular trades.  If your chosen platform charges more than an insignificant % of your monthly contribution you could always let your contributions accumulate for a few months.

Alexland

Linton said:

If your chosen platform charges more than an insignificant % of your monthly contribution you could always let your contributions accumulate for a few months.

Unless something has changed recently HL only let you make regular share trades at the reduced rate from new contributions not the account cash balance (one of the reasons we transferred out) so if the OP really must make trades into shares (not that I believe it is necessary at this valuation) then it would be better to let the money accumulate in their bank account and then make a single regular contribution trade.

asitaram

Linton 

Perhaps just keep track of what your chosen tracker would have done and as an educational exercise investigate why there is a difference in terms of the funds objectives and its underlying investments.  You could then begin to develop an overall strategy and justifications for any changes in the future.

Great advice... I will add a global tracker to my "Watch list" and compare the performance regularly to see what is happening. Thanks

asitaram

I am thinking of adding £1000 each to both ISA and SIPP.  Current portfolio is:

ISA (£3500) and SIPP (£1000)

• FUNDSMITH EQUITY 50%
• ROYAL LONDON GLOBAL SUSTAINABLE EQUITY 50%

Is there any danger in splitting the new £1000 into different funds, say for Growth and Small Caps ? I have these in mind..

• BG LONG TERM GROWTH (SMT IT's fund version ?)
• BG GLOBAL DISCOVERY (EWI IT's fund version ?)
• RATHBONE GLOBAL OPPORTUNITIES
  

If any of these are good.. I would like add them to the portfolio. This may give me a bit of diversification and avoid sticking to one or two fund managers. 

I know that you guys have been investing for long time and built up great amounts by now. As a new starter, I am trying to (I know I am over thinking) identify different funds with different objectives and construct a long term portfolio.. once achieved I will drip feed into the set % everytime I have a bit of money and review couple of times a year. In the end, I would like to get to a portfolio containing 4 x 25% or 5 x 20% funds.

bowlhead99

asitaram said:

I am thinking of adding £1000 each to both ISA and SIPP.  Current portfolio is:

ISA (£3500) and SIPP (£1000)

• FUNDSMITH EQUITY 50%
• ROYAL LONDON GLOBAL SUSTAINABLE EQUITY 50%

Is there any danger in splitting the new £1000 into different funds, say for Growth and Small Caps ? I have these in mind..

[snip]

. As a new starter, I am trying to (I know I am over thinking) identify different funds with different objectives and construct a long term portfolio.. 

You did already have your own dedicated thread talking about what you have and what you might like to add. But the general rule is there is no real need to 'construct a long term portfolio' when you only have five to ten thousand quid. There are loads of off-the-shelf managed investment funds which can be bought as an entire portfolio and at this stage of your investing journey - with your relatively small amounts invested in different types of assets around the world - the amount you are investing is much more important than the specifics of what you're investing in, within reason.

To your question, "is there any danger in splitting the new £1000 into different funds" -there isn't any real 'danger' in doing that per se, other than the funds you select being worse performers in terms of returns and volatility compared to other things you could have bought. As you say, you are in danger of overcomplicating it for a sub-£20k portfolio. You may think you are 'learning something useful' by building a complex portfolio, but you could do the same by just monitoring a fantasy portfolio.

asitaram said:

 In the end, I would like to get to a portfolio containing 4 x 25% or 5 x 20% funds.

One thing you would learn if going down the road of studying asset allocation theory is that investment professionals generally wouldn't create a mixed portfolio using individual specialist funds held in an arbitrary equal allocation such as 4 funds at 25% each or 5x 20% each. There is almost no chance of that delivering the specific mix of risk, returns performance and volatility that you would be aiming for. It's just a "hit and hope: find five things that sounds different and buy each of them because I don't know what I'm doing" strategy.

Sorry if that sounds blunt

asitaram

Sorry if that sounds blunt

No, that's absolutely fine.. "blunt" is what I need at this point and you did that well. I was in a massive confusion (stay Alert) as a "never invested in my life" newbie and now I think I am a bit clear (stay Home). Thank you.

Albermarle

As said by a couple of posters already -this is the main point:
the amount you are investing is much more important than the specifics of what you're investing in, within reason.