Stocks and Shares ISA or not??

Cathyandtwins

Hi all,

I was wondering if the wonderful people on the forum might be able to advise me please, as I know virtually nothing about this subject and find so many of the 'guides' equally confusing!!

My Mum has given me some money (around 15k) - this is kind of an early inheritance, but I want to keep it safe in case it might be needed for her care costs further down the line. I have been advised by a financial adviser that a stocks and shares ISA is the way to go. I have been told that the growth is between 4 - 9% and attached to that is the joining fee of 5%, with an added annual management fee of between 1.5 - 1.9%.

At the moment I have got a Premium Bonds account that holds a) my redundancy money and b) a smaller amount of cash that my Mum gave me sometime back.

I guess my questions are:

1. Is it advisable to go through an FA and accept the cost of fees and annual management charges?
2. Are there any other options other than going through an FA, or would that a) not be as safe and b) not get me the same growth amount?
   
3. Is this a better option than just adding the extra money to my existing Premium Bonds account?

Thanks LOADS everyone,

Cathy

Albermarle

Cathyandtwins said:

Hi all,

I was wondering if the wonderful people on the forum might be able to advise me please, as I know virtually nothing about this subject and find so many of the 'guides' equally confusing!!

My Mum has given me some money (around 15k) - this is kind of an early inheritance, but I want to keep it safe in case it might be needed for her care costs further down the line. I have been advised by a financial adviser that a stocks and shares ISA is the way to go. I have been told that the growth is between 4 - 9% and attached to that is the joining fee of 5%, with an added annual management fee of between 1.5 - 1.9%.

At the moment I have got a Premium Bonds account that holds a) my redundancy money and b) a smaller amount of cash that my Mum gave me sometime back.

I guess my questions are:

1. Is it advisable to go through an FA and accept the cost of fees and annual management charges?
2. Are there any other options other than going through an FA, or would that a) not be as safe and b) not get me the same growth amount?
   
3. Is this a better option than just adding the extra money to my existing Premium Bonds account?

Thanks LOADS everyone,

Cathy

It is unusual to even get a financial advisor interested at this level of money . Although they are charging a lot to compensate .
The most important point is that no advisor or investment product can guarantee that it will grow by between 4 and 9% . It might and it might not , although if you leave it invested long enough ( > 10 years ) you should normally see a positive result - maybe more like 4 to 6% . Less if you are paying the FA a % as well.
Next point is that the only way to keep the money 100% safe is to put it into a savings account with a bank. Investing is about trading some risk against the possibility of better growth . The longer you are invested the lower the risk.

If you can afford to tie the money up for ten years , or at least seven( although accessible in an emergency ) then a S&S ISA is probably the right way forward. For someone with little knowledge you are probably best with a robo advisor platform .

If you read this MSE guide , you will see some good guidance and some robo advisors mentioned. 

Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)

sevenhills

https://www.hl.co.uk/investment-services/isa

Investing in shares is great, but not for the faint-hearted. Some are predicting a stock market crash within 12 months, it may never happen, in the meantime, the stock market should beat inflation, this year the FTSE is up 10%, but who knows what will happen next year.

I love the gamble of investing in individual shares, unit trusts may be a safer bet for yourself.

A unit trust puts your money in the hands of an expert fund manager together with other investors.

https://www.hl.co.uk/partners/search/guide-to-investing-in-funds-wv?theSource=PCGUU&Override=1&adg=G+FDSU+UTR+E+AB+RSA+WHITE&gclid=Cj0KCQiAkNiMBhCxARIsAIDDKNXaQpICrzHa1Qe1CCsiUdrSBagqdMqTDvMvpNoHgx_gJLqcp8c5sUoaAovlEALw_wcB

Worried_fool

You should not have to pay any kind of 'joining fee'. The money that you have available is modest, and for an FA to be paid properly for the time involved the percentage charge for you would be unreasonably high. In other words, in your situation it is not a good idea to use an (I)FA.

A robo adviser would probably give you results as good as those that an (I)FA could obtain, and at a far lower cost to you. In other words, you would end up with more money in your pocket.

This is a DIFFERENT option than just adding the funds to your premium bond account. With premium bonds you cannot lose any money (apart from the effects of inflation). With stocks and shares there is always the possibility of loss, although on average you are likely to end up with more money after ten years (or even five) than you would with premium bonds.

tebbins

I can't comment on whether a S&S ISA, or what kind of asset allocation is appropriate for you, however a few things.
With a bank account, you know that the rate "is" x%. With investing, you don't know that "the growth is 4-9%", all you can do is try to make a less uneducated guess.
For that amount it's barely worth an IFAs time and I would suspect (i.e. speculate/guess/ if you did DIY, say in a comparable risk multi-asset fund to the (I)FAs recommendation (in your circumstances something like VLS60-80, HSBC GS Balanced/Dynamic) seems sensible, you'd save a lot of your money for probably similar results, maybe better results before the difference in costs.
https://monevator.com/dont-wait-to-open-your-stocks-and-shares-isa/

london21

My recommendation would be low-cost tracker funds.
I use Hargreaves Lansdown Stocks and shares ISA
Like others have recommended, worth reading the HL guide to investing in funds and other usful resources.

Alexland

london21 said:

My recommendation would be low-cost tracker funds.
I use Hargreaves Lansdown Stocks and shares ISA

For low-cost tracker funds why would the OP pay HL 0.45% when Vanguard Investor platform fee only 0.15%? Even if they wanted a wider choice then Fidelity are 0.35% or AJ Bell are 0.25% (but have £1.50 trade charges).

london21 said:

Like others have recommended, worth reading the HL guide to investing in funds and other usful resources.

Do HL have any guides that don't end up with the suggestion that you consider a mostly expensive fund from their wealth list or an extremely expensive fund from HL themselves?

Rather than going entirely passive equities (and suffer occasional circa 50% stock market crashes) the OP might prefer lower volatility and consider a multi asset fund series such as Vanguard LifeStrategy, HSBC Global Strategy, etc as tebbins suggested above. Either way fund fees should not need to be more than around 0.2%

Once they have built an understanding with passive or multi asset funds they will be in a better position to determine if they want to try and select any actively managed investments which may do better or worse.

london21

Alexland said:

london21 said:

My recommendation would be low-cost tracker funds.
I use Hargreaves Lansdown Stocks and shares ISA

For low-cost tracker funds why would the OP pay HL 0.45% when Vanguard Investor platform fee only 0.15%? Even if they wanted a wider choice then Fidelity are 0.35% or AJ Bell are 0.25% (but have £1.50 trade charges).

london21 said:

Like others have recommended, worth reading the HL guide to investing in funds and other usful resources.

Do HL have any guides that don't end up with the suggestion that you consider a mostly expensive fund from their wealth list or an extremely expensive fund from HL themselves?

Rather than going entirely passive equities (and suffer occasional circa 50% stock market crashes) the OP might prefer lower volatility and consider a multi asset fund series such as Vanguard LifeStrategy, HSBC Global Strategy, etc as tebbins suggested above. Either way fund fees should not need to be more than around 0.2%

Once they have built an understanding with passive or multi asset funds they will be in a better position to determine if they want to try and select any actively managed investments which may do better or worse.

Fair point, can only give advice on what i do.
OP will have to shop around for the best value for money.
For general investment knowledge without trying to push an agenda better to buy books and read.

LEGAL & GENERAL US INDEX CLASS C - ACCUMULATION (GBP) Wealth Shortlist fund

Net ongoing charge: 0.06%

LEGAL & GENERAL INTERNATIONAL INDEX TRUST CLASS C - ACCUMULATION (GBP) Wealth Shortlist fund

Net ongoing charge: 0.08%

FIDELITY INDEX WORLD CLASS P - ACCUMULATION (GBP) Wealth Shortlist fund

Net ongoing charge: 0.12%

LEGAL & GENERAL FUTURE WORLD ESG DEVELOPED INDEX

Net ongoing charge: 0.18%

SeniorSam

Vanguard would be best. Lowest charges, a wide range of funds and if you look at You Tube and input vanguard funds, there is a great deal of information that you will find easy to absorb and it will help you for the future. No need to go through a financial adviser where you have to pay his charges as well as a platform fee much higher. Good luck, but do come vack with more questions so that you can learn more as you get into investing. Good luck

Alexland

Yes I was aware of a small number of cheaper options on the wealth list which is why I said "mostly expensive". The discount on L&G funds doesn't compensate for the high HL ongoing charge and the Fidelity World fund is cheaper to buy on Fidelity themselves where they discount by 0.02% which is great if used in their free child SIPP/JISA accounts. The whole point of going passive is to get as close as possible to your fair share of market returns which means keeping charges super low.

jimjames

london21 said:

Alexland said:

london21 said:

My recommendation would be low-cost tracker funds.
I use Hargreaves Lansdown Stocks and shares ISA

For low-cost tracker funds why would the OP pay HL 0.45% when Vanguard Investor platform fee only 0.15%? Even if they wanted a wider choice then Fidelity are 0.35% or AJ Bell are 0.25% (but have £1.50 trade charges).

london21 said:

Like others have recommended, worth reading the HL guide to investing in funds and other usful resources.

Do HL have any guides that don't end up with the suggestion that you consider a mostly expensive fund from their wealth list or an extremely expensive fund from HL themselves?

Rather than going entirely passive equities (and suffer occasional circa 50% stock market crashes) the OP might prefer lower volatility and consider a multi asset fund series such as Vanguard LifeStrategy, HSBC Global Strategy, etc as tebbins suggested above. Either way fund fees should not need to be more than around 0.2%

Once they have built an understanding with passive or multi asset funds they will be in a better position to determine if they want to try and select any actively managed investments which may do better or worse.

LEGAL & GENERAL INTERNATIONAL INDEX TRUST CLASS C - ACCUMULATION (GBP) Wealth Shortlist fund

Net ongoing charge: 0.08%

If you buy through HL this fund for example will cost you 0.53% pa in fees - the 0.08% fund plus 0.45% HL fee. A Vanguard fund would need to cost under 0.38% pa to make it cheaper to hold on their platform (where the fees are 0.15%) and the majority are lower than this.