S&S LISA - fund/tracker options

noclaf

Alexland said:

p.s. if you are late 30s and thinking of moving to a S&S provider... do it before becoming 40 as the forum is not aware of any S&S LISA providers currently accepting transfer requests from people with existing LISAs who have since turned 40. This means you need to trust the provider to keep their offer attractive as you might not be able to leave them for 20+ years.

Alexland, thanks for the info...that last paragraph in particular has set off some alarm bells lol. I do have time but think it would be wise to get the ball rolling now, did not even think about those implications. Maybe a noob question but let's say I hit 40 next year (before the end of 20/21 tax year) do I still continue to get the £1k uplift from HMRC for tax year 21/22 or does that stop once I hit 40?
Good point on platform/trading costs..I don't need bells and whistles so happy to use eqi or AJ Bell...from a usability and general reliability standpoint any preference for either?
Re employer matching contributions 12% is the maximum they offer and in fact for more recent joiners they won't receive that as they are tightening their belts. My 8% contribution reduces my taxable salary to just above higher rate so I could potentially add more though there would be no additional employer matching.
For the Lyxor fund/tracker you picked on AJ Bell, is this mainly due to the low cost? I only ask as have never heard of it but the low cost is certainly attractive.

Alexland

noclaf said:

Maybe a noob question but let's say I hit 40 next year (before the end of 20/21 tax year) do I still continue to get the £1k uplift from HMRC for tax year 21/22 or does that stop once I hit 40?

You will continue to get the 25% uplift on new contributions which are possible until your 50th birthday. The final bonus might even arrive after your 50th birthday it's the date of contribution that matters. You just can't open a new LISA for new contributions after your 40th birthday. The LISA rules allow openings for transfers after your 40th birthday but none of the S&S providers have implemented the process. They may do in time as more people have bigger LISAs to move around.

noclaf said:

I don't need bells and whistles so happy to use eqi or AJ Bell...from a usability and general reliability standpoint any preference for either?

I haven't used EQi but they should be competent for traditional OEIC funds (others might comment) and AJ Bell's pricing is good for exchange tradable assets such as ETFs, Investment Trusts or individual company shares (not that I would suggest you go there). Of that list only the traditional OEIC funds have FSCS protection. In both cases the providers allow you to check their investment choices online in advance of opening an account. Both Equiniti and AJ Bell are established well regarded companies although AJ Bell have been more consistent with their charges over the years as a slightly cheaper manc version of HL.

Albermarle

noclaf said:

Albermarle said:

I have two pensions; current employer is just over £50k and £25k in a previous employer pension scheme

Are you aware of how they are invested ? Are they also 100% equities ? How £75K is invested is more important than the £15K LISA.

I will be honest and it's lazy of me... but haven't paid much attention to the funds invested in so far. I believe they are the default funds for each defined contribution scheme and both invested in Standard Life funds of some variant ( I can check the exact fund if needed). I tend to track the amounts every now and then but that's as far as my involvement has been so far.

I guess you can see that there is a lack of logic here . You are asking ( valid ) questions on here about your LISA and ISA and should you have less UK exposure , stay with 100% equity etc 
At the same time with your much bigger investment in pensions , you are not even sure what they are invested in .
It is quite a common phenomenon actually, and why I asked the question in the first place .
Suggest some studying of your pension investment options is in order.

noclaf

Albermarle - completely agree, I need to look at the pensions given that making choices now even if it takes a bit of research might pay dividends(pardon the pun) further down the line. On another thread someone mentioned that many of the default funds were quite poor in terms of performance which surprised me but maybe they play it too safe with the asset allocation who knows. I will take a look at both and after analysing maybe post a separate thread on options and next steps etc
Just going back to my op and the s&s Lisa, would there be any benefit in splitting the £15k across more than one fund/tracker? I appreciate that's a 'how long is a piece of string' qu and goes against my earlier 'simple setup' requirement but just curious how others might approach it. I'm not keen on individual stocks..one day I will take a dip again but after getting burnt badly quite a few years back when I was playing roulette with AIM mining stocks am more wary now. There were a couple of good picks (non-mining) but the miners balanced the gains out..for the worse!

Albermarle

that many of the default funds were quite poor in terms of performance which surprised me but maybe they play it too safe with the asset allocation who knows.

There is a misconception that all default funds are similar , which is what you would expect really . However there are some considerable differences in make up and performance . I hate to say it but I think the Standard Life ones are some of the performance laggards.....

noclaf

Albermarle said:

that many of the default funds were quite poor in terms of performance which surprised me but maybe they play it too safe with the asset allocation who knows.

There is a misconception that all default funds are similar , which is what you would expect really . However there are some considerable differences in make up and performance . I hate to say it but I think the Standard Life ones are some of the performance laggards.....

.....and here's the irony of it all..last 3 employers who are fairly sizeable firms and/or banking heavyweights all use Standard Life for the employee pension schemes! The other irony of course is my lack of knowledge with investing but that's for another day....

noclaf

I am swaying towards AJ Bell for the S&S LISA platform/account no other reason than I've heard of them before and they seem competitive on charges.
Let's assume I want to split the initial £15k between 2-3 global funds or etf's, I assume the following would be key considerations when determining the combination of funds I will pick:
- Annual cost/OCF
- Regional/Geography split e.g ex-UK, Developed Vs EM
- % Asset allocation both at the regional level and by individual firms/sub-funds 

As this is for the long-term view I don't want to get too far into the weeds with short term events such as Brexit, US elections etc As mentioned on this thread by posters and other threads it's probably best not to exclude or overly-focus on particular asset classes or regions either e.g: UK, EM, Non-Equities such as Commodities exposure. It's fine if the investing gurus want to do that but I'd rather have a balanced exposure globally if that makes sense.
Any other aspects I should think about?
Next steps (aside from applying for the S&S LISA) is probably to put the provisional funds/ETFs in a table just to compare each of the above. Does this seem a reasonable approach?

Alexland

noclaf said:

Let's assume I want to split the initial £15k between 2-3 global funds or etf's

Why would you do that when you can get a single global tracker fund that ticks all those boxes? The more investments you make the higher your trade fees would be on AJ Bell to invest the contributions, bonus and rebalance. If you really want to hold a few different funds then that would favour EQi's charges. As you have already detailed the LISA is less significant than your pension(s) so keep it simple where possible.

noclaf

Alexland said:

noclaf said:

Let's assume I want to split the initial £15k between 2-3 global funds or etf's

Why would you do that when you can get a single global tracker fund that ticks all those boxes? The more investments you make the higher your trade fees would be on AJ Bell to invest the contributions, bonus and rebalance. If you really want to hold a few different funds then that would favour EQi's charges. As you have already detailed the LISA is less significant than your pension(s) so keep it simple where possible.

Valid point and those trading costs will add up over time...I was looking at it from a 'eggs in one basket' perspective but would that be overthinking it when considering global trackers from the likes of HSBC, BlackRock,Lyxor, L&G etc?
Also, is it the case that an ETF will not have FSCS protection Vs an index fund/tracker? I'm curious on that point as surely if you are accepting the risks of investing and could potentially lose all your investment what difference does it make or am I missing something here?

Alexland

noclaf said:

Valid point and those trading costs will add up over time...I was looking at it from a 'eggs in one basket' perspective but would that be overthinking it when considering global trackers from the likes of HSBC, BlackRock,Lyxor, L&G etc?

Those index tracker funds and ETFs tend to have a few thousand underlying holdings so plenty of eggs and in terms of the basket if you are worried about putting it all with one fund manager then stick to a traditional OEIC fund where you get FSCS protection up to £85k if they fail to protect your assets from internal fraud etc. Something like the HSBC FTSE All World fund I mentioned earlier on EQi perhaps? Over 3,000 eggs for 0.20% platform (capped at £40 pa) + 0.13% fund mangement. That's even cheaper than the 0.15% + 0.22% you are paying to have VLS100 in your Vanguard S&S ISA. Others might chip in and comment on the service they have received from EQi as some other forum members use them.