Some basic questions about opening an S&S ISA online
in ISAs & tax-free savings
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I (a complete novice to investing, 61) wish to convert (transfer) my £63K cash ISA to a S&S one. This will be a longish-term investment and am happy to ride out the market ups and downs. Following Bogle and Kroijer I have decided to put it all into an all-world tracker. As far as I can see the MSCI ACWI Index is as good as any, and the iShares MSCI ACWI UCITS ETF (Acc) looks like an appropriate vehicle (if that is the right term) for it.
My strategy is "Buy and Hold". I do not envisage doing any significant trading once the funds are invested (though later on I envisage making an annual £20K transfer to the ISA from a similarly invested SIPP - once that is set up). So the iWeb platform seems to be the cheapest option: there is a one-off £100 cost but no subsequent annual fee. Each time I buy or sell it will cost me £5 (I think - though see below) but I intend to do a bare minimum of that.
Assuming no-one wants to object already at this point that my whole approach is wrong-headed, I have some questions arising from looking at the relevant iWeb page viz https://www.markets.iweb-sharedealing.co.uk/etf-centre/details/IE00B6R52259/0IB3.
1. I believe this to be a physical (not synthetic) ETF, which is what I want, but I cannot see anything on this page to reassure me about that. Where should I look for this information?
2. Under "Fees and Charges" there is something called "Typical Transaction Cost" (which is 0.188%). What is this? Do I really have to pay this for each transaction as well as the £5 per trade? (In which case the "£5 per trade" claim is very misleading, surely?) And what does "typical" mean here?
3. Under "Breakdown" it says it is an Accumulation fund but it also says "No dividends". Is this a contradiction, or is it tautologous ie is it just a way of saying that dividends ARE in fact paid, but are automatically added to the fund holding rather than into some other cash account of mine (which is my understanding of what "Accumulation Fund" means)?
4. I have (elsewhere) seen that this fund is "domiciled in Ireland". Is this any kind of an issue for a UK-based investor?
Thanks for all and any help.
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I am a bit puzzled when you say
"If you were buying a fund then Iweb would be the cheapest . If you buy an ETF , then you could look at AJ Bell and Fidelity as they have capped charges for ETF type investments at £42 and £45 respectively .
For a Sipp it would be £100 and £45 . Both charge £10 for buying the ETF. Plus there are no extra charges for a SIPP , which I think there are with Iweb"
I am looking at https://monevator.com/compare-uk-cheapest-online-brokers/, and unless I am misinterpreting the chart there it seems to indicate that the £42 (AJBell)/£45 (Fidelity) caps for ISAs are caps on the annual fees; if so then after three years iWeb's one-off £100 fee would be cheaper. (I haven't yet thought about where to set up the SIPP) Have I missed something?
Yes on a GIA or ISA then over several years iWeb will work out cheaper if you buy an accumulating ETF/fund and don't trade much. Perhaps Albermarle was giving some other options with capped ongoing charges as iWeb are known to have extremely long transfer times.
If you are happy to hold an ETF (not funds) also consider Jarvis X-O who have no setup or ongoing charge on such accounts but are 95p more per trade and eventually charge a £50+vat closure charge on ISAs. You can email them in advance to confirm they have the ETF you want. I expect they would be a lot more efficient transferring the existing ISA.
Moving from cash to a 100% equities global tracker is a big change in risk profile - are you accepting that your account valuation may drop around 50% and take many years to recover?
You are right, Vanguard is mentioned so often by new posters that I was maybe on auto pilot.
Regarding the platforms . You mentioned also opening a SIPP . Iweb have extra charges for this and the other two mentioned do not , so that could swing the balance.
Also many people are happy with Iweb ( especially the costs ) but the website is rather old fashioned and the admin side can get slow as they are only a small operation .
If you can get similar costs with a bigger player then that might be better .