Opening a stocks and shares ISA

Elmer_Dudd

HI all..not been on for a while but have a few questions about Stocks and Shares ISAs that are causing me a few headaches.

I currently have £106k in Ford Money cash isa that is locked up until May 2021..I transfered it all previously from a Coventry BS cash ISA but did not add to it so still have 20k allowance for this current tax year...so if I open up say a Freetrade s and s ISA tomorrow and fund it with say £5k of the £20k  will I be able to transfer across the total £106 k cash ISA in May to this Freetrade ISA or will I have to open another Freetrade s and s ISA for the year 2021/22  to enable me to move it across?.

I picked Freetrade as it says it is only £3 a month to run these ISA's as opposed to 0.37% of your total investments say with Vanguard Lifestrategy 60 (which I was originally considering )but which would cost me around £400 a year in costs.

I have looked at a few youtube vids about opening Freetrade accounts but as a novice in the stocks and shares isa field want to know if this is possible.

Also is there a similar vehicle as the Vanguard Lifetrategy 60 available on

Freetrade??..I see that Vanguard has 29 listed stocks and etfs on Freetrade that you can put isa money into but should I be looking at something else to invest such a big sum (it is for me)into.

As I say all this is new ground for me so go easy..thanks

Elmer

Alexland

Elmer_Dudd said:

I picked Freetrade as it says it is only £3 a month to run these ISA's as opposed to 0.37% of your total investments say with Vanguard Lifestrategy 60 (which I was originally considering )but which would cost me around £400 a year in costs.

Freetrade are just the platform which is the equivalent service that Vanguard Investor would have done for 0.15%. The other 0.22% was for the VLS fund management and whatever ETF(s) you buy on Freetrade would also have ongoing percentage management charges.
Personally I wouldn't feel comfortable holding any substantial investments on Freetrade especially over the FSCS limit until they become a better established and profitable business.
In terms of the investment choices on Freetrade they are limited to exchange traded assets not traditional OEIC funds such as VLS, HSBC Global Strategy, etc. While you could construct a portfolio similar to VLS using various ETFs you would still incur the fund manager costs and it's going to require periodic rebalancing.
On the old cash ISA with contributions from previous tax years you should be able to transfer it into the S&S ISA account whenever you want presumably after the fixed rate ends if there is a penalty for early access.

Elmer_Dudd

Thanks very much for the reply Alexland.

I see that even if I go with Freetrade there will still be ongoing management charges..didnt see that explained clearly on their site but thought it was too good to be true...but I would not pay the 0.15% on say £106k or more..saving roughly £160 a year...but have to pay a OCF of somewhere between 0.07% to 0.09% on some of the Vanguard etf's on Freetrade..so expect to shell out £80-100 per annum plus the £3 a month. Are there any other fees I am missing?

Is the OCF what they call ETF management fees or are they different?

Also when a cash isa is transferred into Freetrade does it come across as a cash total that you then have to use to buy the etf's of your choice?

If that is the case what would be an example of what to look to invest in the Freetrade ISA world and how much to put into each to achieve something similar toVanguards Lifestrategy 40 or 60?

Does it pay to just stick with GB etf's to avoid other fees ot taxes as I see a spot fx cost of 0.45%..is this for buying non UK stocks and shares etf's? 

This is not as easy as it first looked..made all the more difficult as my wife as the same amount in cash ISA's as well that she wants to put into these investments..pressure on!!

You were right in surmising that our cash ISA's have a penalty for early access that I am trying to avoid.

I would say our attitude to risk is about 3 to 4 on the Vanguard scale..I guess I have had enough of the low interest rates on our cash isa's and have been mulling this change to stocks and shares isa's for a few years but these type of questions pop up in my head and I then put the whole thing off....just trying to invest to grow them steadily for the next 3 to 5 years but  knowing that there are no guarantees in the stocks and shares world.

Cheers

Elmer

masonic

Elmer_Dudd said:

Thanks very much for the reply Alexland.

I see that even if I go with Freetrade there will still be ongoing management charges..didnt see that explained clearly on their site but thought it was too good to be true...but I would not pay the 0.15% on say £106k or more..saving roughly £160 a year...but have to pay a OCF of somewhere between 0.07% to 0.09% on some of the Vanguard etf's on Freetrade..so expect to shell out £80-100 per annum plus the £3 a month. Are there any other fees I am missing?

Is the OCF what they call ETF management fees or are they different?

The OCF is the management fee for the ETF yes, but this won't be something extra you'll have to 'shell out' as it is deducted from the value of the ETF itself and is therefore reflected in its performance.

Elmer_Dudd said:

Also when a cash isa is transferred into Freetrade does it come across as a cash total that you then have to use to buy the etf's of your choice?

If that is the case what would be an example of what to look to invest in the Freetrade ISA world and how much to put into each to achieve something similar toVanguards Lifestrategy 40 or 60?

Does it pay to just stick with GB etf's to avoid other fees ot taxes as I see a spot fx cost of 0.45%..is this for buying non UK stocks and shares etf's? 

Yes, you'd need to choose your investments and buy them yourself. There are lots of ways you can achieve a broadly similar asset allocation as VLS in ETFs. I guess an approximation would be VWRL (All world ETF), ISF/VMID (FTSE 100/250 for UK bias), and then VAGP/VGOV for currency hedged global/UK government bonds. I'm not aware of any single multi-asset ETF that would do the job. There would be no need to venture into non-UK listed investments.

Elmer_Dudd

Thanks for the reply Masonic

With regards to the line:

"The OCF is the management fee for the ETF yes, but this won't be something extra you'll have to 'shell out' as it is deducted from the value of the ETF itself and is therefore reflected in its performance."

...does this mean that I won't be paying any more up front extra fees on top of the £3 a month Freetrade charge but in reality the OCF (0.22 % on VRWL all world etf for example) is already added into the cost of each share I would buy (£80.22 on Vanguard at the moment) through the Freetrade platform.

If I use the basic example of £106k invested in say in the VRWL ETF would I be right in thinking the only upfront costs per annum would be just £36 Freetrade ISA platform charge?

How exactly is the 0.22 % OCF cost of approx £233 p/a taken...sorry if this seems a daft question..just need to get it straight in my head.

Elmer

masonic

Yes the OCF is taken on an ongoing basis from the value of the ETF so it is reflected in the share price. Assets held within the ETF are taken by the fund manager to cover the fee. The other cost is the bid/offer spread, which is also reflected in the share price - this is the difference between the price to buy and sell shares, and you will face this cost each time you trade but not while you are holding the investments.

Alexland

If you really want to invest in VLS60 it seems a bit artificial to be trying to create a similar portfolio using ETFs on Freetrade to avoid the difference in platform fees beteen £36 pa and 0.15%.

Have you considered holding the VLS60 fund on the fixed price iWeb platform (part of Halifax who are well established) where after the £100 setup then it's only £5 per trade with no ongoing charges. If you only trade once a year (because you buy the accumulating version of VLS60 and if you do not intend to make regular payments) then over 4 years that would cost £120 which is £30 pa so even cheaper than Freetrade.

https://www.iweb-sharedealing.co.uk/

https://www.markets.iweb-sharedealing.co.uk/funds-centre/fund-supermarket/detail/GB00B3TYHH97

masonic

Also, I don't know why anyone would opt to pay £36 a year to Freetrade when an equivalent service can be obtained from Trading212 for £0 a year. I'd still opt for the better reputation and greater choice available at iWeb.

Alexland

masonic said:

Also, I don't know why anyone would opt to pay £36 a year to Freetrade when an equivalent service can be obtained from Trading212 for £0 a year. I'd still opt for the better reputation and greater choice available at iWeb.

Being a bit old fashioned I would rather trust my money with a platform like iWeb/HSD, AJ Bell, etc where you can lookup their filings history at Companies House going back many years and see they are solid, profitable well run companies. Then do my best to use their products in a way that gives them as little profit as possible from running my account :-)

Elmer_Dudd

Thanks to both of you for taking the time to explain and give me some ideas.

I think I will use the IWeb option to setup a S and S ISA and go for the Vanguard 60 LFS through this platform..makes things a lot easier and understandable for me although I have now learned a few things about this type of investing through your help.

I will probably put in 5k this week after setting it up and transfer the rest of my cash ISA in May when it can be moved penalty free.

I may take a look at Freetrade just as a trading platform and dabble in buying and selling a few hundred pounds of shares just as an experiment but avoid their ISA platform.

Cheers all

Elmer

Elmer_Dudd

Just a quick update..I eventually got all my cash ISA's into the Vanguard S and S ISA Vanguard 60 LFS with Iweb although they did lose my transfer application that in effect delayed my purchase of the shares and cost me a few bob although they did give me some compensation back after admitting it was their error.

So things seem to be going ok as the moment..the website is basic and you have to be on your guard especially when selling shares as you have to manually input the exact amount of shares you wish to sell as it defaults to the whole amount of shares you own otherwise!!

Timing when to sell shares is also a bit difficult..sold a few as an experiment and it took a few days for the sale to go through so you dont get the share price of the day you sell but almost 2 days later and then another few days for the money to get back into the Iweb cash account and a further delay of a day or so before you can withdraw it to your bank..so not instant.

But as I speak they are doing quite well..much better than if it was in a cash Isa so thanks everyone for the advice.

Elmer