Transferring ISA to avoid Fees?

silvercue

Hi,

I have an ISA with Money Farm.  They have a good track record, but I invested in late December and the markets have been rough since.  Therefore I do not think they are a poor company, but I have lost money through them every month.  

Now my initial period of fee free ISA is drawing to an end and although I don't particularly blame them for my investment dropping in value in this tough time, I do think charging me for the privilege of losing me money is more than I want to accept.

So, I was wondering if any people here transfer their ISAs to take advantage of a fee free period and whether they do this regularly or have recommendations of where to transfer from Money Farm?

I have added my £20k allowance with Money Farm and it is split between a S&S and Cash portfolio (I added this a little later).  The Cash portfolio was so I could use up allowance but drip feed to S&S depending in my confidence in the markets

Thanks

Albermarle

I have an ISA with Money Farm.  They have a good track record, but I invested in late December and the markets have been rough since.  Therefore I do not think they are a poor company, but I have lost money through them every month.  

Virtually all investments have gone down in 2022. The size of the drop depends on the type of investments you have, but typically will be 10 to 20%. 

So, I was wondering if any people here transfer their ISAs to take advantage of a fee free period and whether they do this regularly or have recommendations of where to transfer from Money Farm?

Fee free periods are mainly only offered by newer players in the ISA market and for limited periods. Although cashbacks are sometimes offered by the more established providers. However most people would not be changing S&S ISA providers just for this reason. Although fees are important they are small compared to differences in performance of the actual investment funds ( as you have found).

silvercue

Thanks for answering.  I guess I just hate fees....but paying for someone to lose me money just rubs me up the wrong way!!

ColdIron

You aren't paying them to lose money, you are paying them to operate their platform and provide a service to you. There is a cost for this that does not disappear when markets are down

MX5huggy

You’re going to be paying fees whoever you use. I’m too lazy to be chasing after offers, Vanguards 0.15% platform fee an fund fees of between 0.06 and 0.23% (avoiding anything active) suit me on similar sized ISA. 

silvercue

ColdIron said:

You aren't paying them to lose money, you are paying them to operate their platform and provide a service to you. There is a cost for this that does not disappear when markets are down

Obviously.  

dunstonh

silvercue said:

Thanks for answering.  I guess I just hate fees....but paying for someone to lose me money just rubs me up the wrong way!!

They are not fund managers.  They are carrying out administration tasks.   Administration tasks that need doing whether the fund goes up or down.

although I don't particularly blame them for my investment dropping in value in this tough time, I do think charging me for the privilege of losing me money is more than I want to accept.

In which case, you need to stop using investments and stick it in a savings account instead.  Although ironically, a savings account has higher charges than modern investments.  You just don't see it as banks charge implicitly with savings accounts whereas investing is explicit.

So, I was wondering if any people here transfer their ISAs to take advantage of a fee free period and whether they do this regularly or have recommendations of where to transfer from Money Farm?

Being out of the market during a transfer can cost you far more.    For example, if you exited the market last week on a transfer and it reinvested this morning, you would have lost around 5% of growth.   If the cost savings is 0.1% a year with the alternative then you can see how many decades it would take to break even.

There comes a point where micromanaging the charges to the lowest can actually cost you more.

 The Cash portfolio was so I could use up allowance but drip feed to S&S depending in my confidence in the markets

Do you have the knowledge, understanding and experience to have confidence in your own confidence?
i.e. Broadly speaking, the best times to invest is when people or fearful and the worst time is when everyone is confident.    So, by the time you become confident, you have probably gone past the point it was best to invest.  Statistically, phasing results in lower returns most of the time.   Trying to time the market even more so.  Especially if you don't understand that investments will go down as well as up and those negative periods have nothing to do with the administrator of your investments

silvercue

dunstonh said:

Do you have the knowledge, understanding and experience to have confidence in your own confidence?i.e. Broadly speaking, the best times to invest is when people or fearful and the worst time is when everyone is confident.    So, by the time you become confident, you have probably gone past the point it was best to invest.  Statistically, phasing results in lower returns most of the time.   Trying to time the market even more so.  Especially if you don't understand that investments will go down as well as up and those negative periods have nothing to do with the administrator of your investments

Yes, I have been investing in stocks and crypto for some time and have experienced much better returns than the ~10% S&P 500 for example.  The main improvement I need to make is selling when we are at highs rather than holding too long, as opposed to finding good buying opportunities.  

The reason I am using my ISA allowance is that I just want to spread my investments around more, so not just my manually manged stocks/cryptos, but ISAs, higher interest savings accounts etc.

I still have some cash I am looking for a home for.  

Albermarle

 The main improvement I need to make is selling when we are at highs 

We would all like to buy low and sell high, but unfortunately it is a lot more difficult in practice and very easy to get it wrong.

Most of the people on this forum are 'Buy and Hold' investors, as in the long term you are ( almost) guaranteed to make a positive return above inflation.

jimjames

MX5huggy said:

You’re going to be paying fees whoever you use. I’m too lazy to be chasing after offers, Vanguards 0.15% platform fee an fund fees of between 0.06 and 0.23% (avoiding anything active) suit me on similar sized ISA. 

iWeb charge no fees for the portfolio although you still pay fund manager.

jimjames

silvercue said:

I have added my £20k allowance with Money Farm and it is split between a S&S and Cash portfolio (I added this a little later).  The Cash portfolio was so I could use up allowance but drip feed to S&S depending in my confidence in the markets

The time to invest is when markets are low not when they've risen. Look up the quote from Buffett about being fearful.