Vanguard Index / EFT fund and transferring Cash ISA in process

typeractive

Alistair31 said:

typeractive said:

Alistair31 said:

typeractive said:

Alistair31 said:

Have you thought about transferring it all over in one go and investing in money market funds (cash-like) what you are not comfortable investing in equity funds initially? You could then sell down monthly within the ISA and purchase your chosen equity fund. All with no transactions fees if done via Vanguard. 

I’ve been doing that over the last year (VWRP and VASTMGA).

Something to consider, but get comfortable with money market funds first. It certainly sounds like you are capable and willing to do your research before wading in - commendable! 

good luck

Hi @Alistair31, thank you so much for the reply. No, I haven't considered doing this but this may be the / a solution if I can't do the trading 212 route. A quick look at VASTMGA and I see it is a very new fund. There is platform fee (0.12%), and I can't work out the current interest rate. If it is competitive then it could be an option. And if not, but 'one of the safer ways to transfer in over time' then I might need to opt for something like this just for the service alone. 

I see you chose VWRP, any particular reason you selected it? I know we all have differing criteria, volumes and risk appetite / interpretations. Just curious / part of doing research / nosey    lol.

Thank you kindly for the comment on the research. I still feel like I'm lacking a too much information. I think I've got into 'paralysis by analysis' and it is holding me back from actioning!!

You won’t see a fixed interest rate because that’s not how it works, see…

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/how-it-works/investment-explainer-what-is-a-money-market-fund

Also, since the Vanguard MMF benchmark is SONIA, see…

https://www.bankofengland.co.uk/markets/sonia-benchmark

In short, returns will not be far away from the prevailing BOE interest rate, less the 0.12% fee, over your holding period. 

You may prefer the certainty of a fixed rated but I think it highly unlikely you’ll be able to transfer on a monthly basis between cash/s&s ISA. 

Personally, I chose VWRP because of the exposure it offers, large/mid + emerging markets, a relatively low fee and accumulating nature. I’ve a long time horizon so this works for me. 

Thanks @Alistair31, I've read your links a couple of times. So these money markets are essentially like low risk loans to corporations with the balance sheets / reputation to be able to pay back. They follow interest rates which are OK at the moment. Granted I take your note on the fees of 0.12%, but I am also think you're probably right about being able to drip feed funds across over a lengthy period of time. Maybe I can straight up ask trading 212! 

Interesting on VWRP. May I ask your time line / expectation? Hope I'm not being too nosey. Thanks for helping!  

Some more reading for you on MMF here…

https://monevator.com/money-market-funds/

Personally I’m very comfortable using them in the short term, but I intend/hope to be 100% in equities before long, my only hesitation is investing at these valuation levels, rational or not.

For a bit of context, and since you ask, I’m 34 and my ISA is intended to fund an early retirement, from 50 to 58, then SIPP kicks in before LISA a few years later. Rightly or wrongly, my projection for this plan is based on a 7% real return.

Thanks again, and especially for sharing your personal planning / thoughts. Well done doing so with time on your side. I can fully understand your viewpoint of moving everything across, and also a 7% as a figure. It's very hard to gauge but I think a sense of perspective, reality and not expecting miracles helps. Yep on the same token, we need to have some kind of positive outlook. 

typeractive

The perfomance figures are just simple maths - look at price now and price (say) 5 years ago and calculate the annual growth rate - it is NOT averaging the individual year-on-year percentages. To take your (unrealistic) example if you start at a price of 100 and have a 50% drop one year (price now 50) and then +50% the next (price now 75) that is a 25% drop, not zero.

Yeah, I picked that up from another MSE'r on my other thread. Makes perfect sense. I would like to learn how to calculate that - just the learner in me if nothing else.

Not familiar with VAFTGAG but it's quite dear at 0.23%. Personally I see no point at all in having multiple funds tracking the same global indexes - I'd go for the cheapest option. Keep it simple.

Understand this too, just exploring ideas. I need to look more into these fees as I was beginning to think 0.22 / 0.23 is about standard on these products (keeping in mind most things i have looked into are Vanguard, trading 212 and investengine based on information about their investing and fees.

In an earlier post you said something about platform fees and I wonder if you have misunderstood this. Choose a broker - ie 'platform' which suits you and has low fees. That may be Vanguard, AJ Bell, Iweb. Lloyds, Hargreaves Lansdown etc etc. The best depends on the amount you have and how often you buy and sell (as little as possible!). Monevator have a guide and table https://monevator.com/compare-uk-cheapest-online-brokers/. Then once you have transferred your money in you can buy ETFs/funds etc within it -the fees for those are embedded in the price.

This could be my terminology (sorry, I do have a habit of confusing friendly MSE'rs!!) I think I need to say 'account fee' not platform. Vanguard is as you say 0.15% or capped at £250,000 to £375, then there is a 0.22%/0.23% ongoing charge for most the funds I have been looking at. I thought the fees would basically equate to a total of 0.37/0.38% (account fee + ongoing charge) on an annual basis if I regularly invested. The key investor information pages states this for the ongoing charge (0.22/0.23%)

This sounds overcomplicated too. The more often you buy in your S&S ISA the higher your costs.

Yeah maybe, I need to know more about this. I have used up my £20k allowance already this year and I'm unsure I can setup some of the vanguard products as it says minimum of a monthly direct debit £100. So I might need to just move to either a money market as said, or another cash isa (purely for a slightly better rate), or sit still until the new allowance opens. I wish I'd just started in the very beginning with a S&S ISA rather than having to do all this. Thanks for helping!!

incus432

Understand this too, just exploring ideas. I need to look more into these fees as I was beginning to think 0.22 / 0.23 is about standard on these products

You can easily find fund fees in the range 0.1-0.15% now. 

https://monevator.com/low-cost-index-trackers/

Vanguard is as you say 0.15% or capped at £250,000 to £375, 

£375 pa is a lot in my book.  As I mentioned before Iweb have zero ISA annual charge and AJBell cap it at £42 pa if you hold ETFs. Of course depends on how much you are putting in whether a % or flat rate platform fee is cheaper.  0.15% of 20k is only £30 so pretty irrelevant until your pot gets larger. Charges are your enemy - I'm ruthless about minimising them!

Edit - link to Iweb ISA details. https://www.iweb-sharedealing.co.uk/our-accounts.html

typeractive

Hi @incus432

Still reading. Looking at iweb charges (not managed to specify the right index / fund just yet, finding that a little challenging on their site). They have an example of a typical investor on their system and breakdown how that would compare to some of the other companies. They charge £5 per UK trade, and £5 per fund trade.

So if I price cost averaged into them each month buying an ETF / index would that be £5 each month as it's classed as a trade? 

There is a cost of 1.5%FX charge for an international trade. I'm hoping I would avoid that if the ETF/Index was priced in GBP £'s? If that's how it works?

Just looking at the HSBC FTSE All World Index C Acc (which I have seen other people talk about, but I have not fully looked into the holdings yet). OCF is 0.13% (which is less than a vangaurd account fee, let alone the OCF fee). But there is as 0.188% typical transcation cost. Then the dealing commission of £5 I mentioned above.

So would the fees stack up a bit like this:

0.13% x whatever is in the account across the term (e.g. day / week / month / year).
£5 every time I pay into the index (so 12 x per year = £60)
0.188% each time I place a trade as well? (I'm lost on this cost - sorry)

Thanks again!

InvesterJones

typeractive said:

Hi @incus432

Still reading. Looking at iweb charges (not managed to specify the right index / fund just yet, finding that a little challenging on their site). They have an example of a typical investor on their system and breakdown how that would compare to some of the other companies. They charge £5 per UK trade, and £5 per fund trade.

So if I price cost averaged into them each month buying an ETF / index would that be £5 each month as it's classed as a trade? 

There is a cost of 1.5%FX charge for an international trade. I'm hoping I would avoid that if the ETF/Index was priced in GBP £'s? If that's how it works?

Just looking at the HSBC FTSE All World Index C Acc (which I have seen other people talk about, but I have not fully looked into the holdings yet). OCF is 0.13% (which is less than a vangaurd account fee, let alone the OCF fee). But there is as 0.188% typical transcation cost. Then the dealing commission of £5 I mentioned above.

So would the fees stack up a bit like this:

0.13% x whatever is in the account across the term (e.g. day / week / month / year).
£5 every time I pay into the index (so 12 x per year = £60)
0.188% each time I place a trade as well? (I'm lost on this cost - sorry)

Thanks again!

Yes, would be £5 a month - some platforms have cheaper trade fees for regular investments, some don't charge at all for fund trades (and a few don't charge for ETFs either) - it may be cheaper to accumulate on a trade fee-free platform then transfer to low/zero holding fee platform only once a year or so.

If the fund is quoted in GBP or GBX there's no FX fee, correct.

The 0.188% is internally taken from the fund before you ever see it, so this isn't an extra charge you'll pay from the platform. It's slightly confusing calling it a transaction fee, that just means in this case it's not a fixed fee for the fund (that's the 0.13% one) but it represents variable costs the fund incurs.

incus432

Where did you get the 0.188% transaction cost? Looks very wrong (tenfold)

see Monevator list

HSBC FTSE All-World Index Fund C (GB00BMJJJF91) TCO 0.15% (OCF 0.13%, Transaction 0.02%)

So the TCO is inclusive of that transaction cost.  You don't actually see or have to directly pay that - it's buried in the price of the fund. But that one is one of the cheapest.  The fees you will see and get deducted from your pot are the platform cost (zero for iweb, 0.xx% of total pot for others) and the trading fees - £5 for each buy and sell order.  Which is why its not cost effective to do many small trades.

How much would you be putting in a month?

incus432

InvesterJones said:

Yes, would be £5 a month

It's £5 a trade (which is 5/month in this example)

some platforms have cheaper trade fees for regular investments, some don't charge at all for fund trades (and a few don't charge for ETFs either) - it may be cheaper to accumulate on a trade fee-free platform then transfer to low/zero holding fee platform only once a year or so

Yes - AJ Bell charge just £1.50 /trade for funds (5 for ETFs) and Vanguard are free to buy /sell/switch AFAIK (but you have to accept less choice of funds and their awful website).  As you say doing all your buys in one platform then switching to (eg ) iweb might be cheaper.  If a bit more of a faff

typeractive

Hi @InvesterJones,

Thank you for the quick reply ....so much to consider. Well £5 per monthly trade sounds OK to me. But I'm still going to keep looking. I guess it's a bit of a balancing act between the trade fee, account fee and ongoing fee. 

Thanks for the clarity on the FX fee and also the 0.188%. So I kind of just need to forget about that bit and focus on the 0.13%.

I looked on trust pilot for iweb-shares and whilst they have a good review profile the number of reviews is low. I tried to find them on the FSCS and FCA and feel like I'm struggling to know of they are safe / reputable. On the FCA they are listed as Halifax Share Dealing. Same ref number, different address. Web link on FCA takes to Halifax main site. 

Can't find them under iweb on the FSCS.

Any thoughts on this?

Yet another question I have. A lot of platforms will provide ETF's, but not index. Is that due to the way they are traded or something?

typeractive

incus432 said:

Where did you get the 0.188% transaction cost? Looks very wrong (tenfold)

see Monevator list

HSBC FTSE All-World Index Fund C (GB00BMJJJF91) TCO 0.15% (OCF 0.13%, Transaction 0.02%)

So the TCO is inclusive of that transaction cost.  You don't actually see or have to directly pay that - it's buried in the price of the fund. But that one is one of the cheapest.  The fees you will see and get deducted from your pot are the platform cost (zero for iweb, 0.xx% of total pot for others) and the trading fees - £5 for each buy and sell order.  Which is why its not cost effective to do many small trades.

How much would you be putting in a month?

If you click this link, and then fees and charges. It states typical transaction cost. There is a caveat that "*This is an indication based on the market average. The fund’s actual transaction cost will be shown before you place a trade."

Sorry it's all new to me (as I am sure everyone can tell!!).

Per month....well this is a good question and I am still yet to work all this out. Either:
1. Transfer my cash lump, and then come April put circa £9k in and then do £1k a month.
2. Try to drip feed my lump over a period of time by transferring it regularly (unsure I will be able to actually achieve this) and then £1,666.67 a month. 

incus432

On their webpage "The IWeb Share Dealing Service is operated by Halifax Share Dealing Limited. Registered in England and Wales no. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager."

I feel like you're getting yourself in a pickle. Choose your platform and crack on