LISA S&S Bonus investment advice

ljayljay

My son has recently opened a S&S LISA with AJ Bell with 4K in HSBC FTSE All World Index Fund Acc C, in part due to the low charges.

He has now received the £1K bonus and is unsure whether to add to the HSBC fund or, as it is a bonus, whether to invest in a potentially higher return fund, obviously with higher risk. My only advice to him is to be aware that over a period of time the charges on different funds will start to have a bigger affect that will be an even bigger negative if the returns are poor.

Does anyone have any views on whether it would be a good strategy to add additional funds or would it be just over complicating things and diversifying for diversity sake? My head tells me to keep it simple with the one fund already in place, especially taking into a/c subsequent years investing/bonus additions. However, my heart tells me that he looks to take a bigger risk with the bonus additions.

csgohan4

using AJ bell for funds for S+S ISA has slightly higher fee than say Iweb  EQI 

Investing with the extra 1k will depend on what his investment strategy is, whether he wants to have satellite funds to cover sectors/ geography. 

No harm in consolidating the index fund he already has

Herbalus

That fund is already quite well diversified, and at these amounts, I see little benefit in playing with additional funds. I’d stick with it.

Alexland

csgohan4 said:

using AJ bell for funds for S+S ISA has slightly higher fee than say Iweb with no yearly costs.

This is a Lifetime ISA so iWeb is not an option but EQi would be cheaper than AJ Bell but we found they only accept cash transfers so there would be time out of the market. In terms of the question assuming this is an investment to age 60 then I would stick with the HSBC fund if he is happy with it. It's already pretty high risk with the possibility of dropping around 50% in a bad market crash.

csgohan4

Alexland said:

csgohan4 said:

using AJ bell for funds for S+S ISA has slightly higher fee than say Iweb with no yearly costs.

This is a Lifetime ISA so iWeb is not an option but EQi would be cheaper than AJ Bell but we found they only accept cash transfers so there would be time out of the market. In terms of the question assuming this is an investment to age 60 then I would stick with the HSBC fund if he is happy with it. It's already pretty high risk with the possibility of dropping around 50% in a bad market crash.

Doh, sorry didn't see the Lisa, EQI is currently the cheapest which I am using at present however for funds as they have no fees to buy funds

Another_Saver

ljayljay said:

My son has recently opened a S&S LISA with AJ Bell with 4K in HSBC FTSE All World Index Fund Acc C, in part due to the low charges.

He has now received the £1K bonus and is unsure whether to add to the HSBC fund or, as it is a bonus, whether to invest in a potentially higher return fund, obviously with higher risk. My only advice to him is to be aware that over a period of time the charges on different funds will start to have a bigger affect that will be an even bigger negative if the returns are poor.

Does anyone have any views on whether it would be a good strategy to add additional funds or would it be just over complicating things and diversifying for diversity sake? My head tells me to keep it simple with the one fund already in place, especially taking into a/c subsequent years investing/bonus additions. However, my heart tells me that he looks to take a bigger risk with the bonus additions.

If he's planning on buying a house with it anytime soon he really ought to be in a cash one.
iWeb will be cheaper.
That fund is already a 100% global equity index fund - maximum long term returns potential, maximum diversification. He really does not need to go looking to add something else.

Alexland

Another_Saver said:

iWeb will be cheaper.

Is the answer to any question around here always iWeb? They don't offer Lifetime ISAs.

ljayljay

Thanks all for your prompt and unaminous replies.

I think it is unlikely that he will be able to buy anything for a few years yet so is happy to go along the S&S route rather than cash. Plus already has the max £12K in a HTB ISA. In years to come he may choose to move this money over to S&S as realises bonus can not come from both on house purchase.

csgohan4

Alexland said:

Another_Saver said:

iWeb will be cheaper.

Is the answer to any question around here always iWeb? They don't offer Lifetime ISAs.

outside of LISA, they are very competitive, Although I almost used them for my Sipp before I looked at their yearly charges were significantly more than AJ bell. I prefer the layout of AJ bell, rather than the no frills Iweb, but you get what you pay for

Alexland

ljayljay said:

I think it is unlikely that he will be able to buy anything for a few years yet so is happy to go along the S&S route rather than cash. Plus already has the max £12K in a HTB ISA. In years to come he may choose to move this money over to S&S as realises bonus can not come from both on house purchase.

He can use the HTB ISA bonus towards a qualifying property purchase (noting the lower price cap outside london) and the LISA bonus towards age 60+. If he is using the 100% equities investment Lifetime ISA towards a property purchase then I would hope it is at least 5 years away so that if markets crash the investment has time to recover? We had a quick crash recovery this year but it has previously taken several years although if he is still regularly adding money that should speed up his recovery.

Eco_Miser

Alexland said:

Another_Saver said:

iWeb will be cheaper.

Is the answer to any question around here always iWeb? They don't offer Lifetime ISAs.

No, sometimes it's Vanguard - depends on the question.