Basic questions about fees for Stocks and Shares ISA

CheckDigit

Hello,

I'm new to investing and considering opening a Stocks and Shares ISA. I'd like to invest in ETFs, as I’ve been told that they tend to be less risky. My plan is to contribute £100 per month for the next 8 years, primarily for my son's future.

I’m having some trouble understanding the fee structures.

With AJ Bell, they charge a 0.25% account fee (capped at £3.50 per month) and a £5 dealing charge. Does this mean that, if I contribute £100 per month, I’ll be charged £5 plus an additional 25p each month?

As for Trading212, it seems there are no fees, but I’ve noticed there are fewer ETF options available. Is that correct?

Are there any other fees or considerations I should be aware of when choosing between platforms?

Thanks!

masonic

Less risky than what? Less risky than putting the money in a single company in most cases, but the risk varies greatly between different ETFs.

Trading212 should have a sufficient range of ETFs available. It would be worth sticking to popular mainstream options and not investing in niche things.

The fees at AJ Bell include the 0.25% (on the value of your investments including any growth). After a year you'd be paying 25p per month. After 2 years you'd be paying at least 50p per month assuming your investments didn't shrink in value. You can use their regular investing feature to reduce the dealing charge to £1.50 per month. Or use one of the 6%+ regular savers available to save £100 per month, then invest £1,200 in one go for a single £1.50 charge.

For small amounts, Trading212 will give you more flexibility with how you do things, as you won't need to worry about dealing charges.

wmb194

Another plus with Trading212 is that it offers fractional shares so you'll be able to invest the full £100 every time.

dunstonh

I'd like to invest in ETFs, as I’ve been told that they tend to be less risky. 

Whoever told you that is wrong or you have interpreted it wrong.   Less risky in what respect?
They are more risky than an equivalent OEIC/UT for example.

Hoenir

CheckDigit said:

 My plan is to contribute £100 per month for the next 8 years, primarily for my son's future.

Then you need to take a step back and consider whether you wish to take any investment risk at all. 

dealyboy

Hi OP ... you may find these two posts informative from a highly respected blog with comments from experienced amateurs ...
https://monevator.com/category/investing/passive-investing-investing/
https://monevator.com/compare-uk-cheapest-online-brokers/ 

InvesterJones

CheckDigit said:

Hello,

I'm new to investing and considering opening a Stocks and Shares ISA. I'd like to invest in ETFs, as I’ve been told that they tend to be less risky. My plan is to contribute £100 per month for the next 8 years, primarily for my son's future.

I’m having some trouble understanding the fee structures.

With AJ Bell, they charge a 0.25% account fee (capped at £3.50 per month) and a £5 dealing charge. Does this mean that, if I contribute £100 per month, I’ll be charged £5 plus an additional 25p each month?

As for Trading212, it seems there are no fees, but I’ve noticed there are fewer ETF options available. Is that correct?

Are there any other fees or considerations I should be aware of when choosing between platforms?

Thanks!

ETFs are not less risky. Is there any other reason you want to use them over OEIC/UTs ('Funds')? Because ETFs are exchange traded there is often a fee per transaction (Trading 212 or Vanguard Bulk Dealing excepted), while Funds tend not to have this (but instead may cost more when you are holding a large amount of them.

So if it only comes down to fees, you need to work out how many trades you want to do and what the total value is to discover the cheapest platform. For low value investments something like dodl might be the cheapest for Funds.

moorster

Hello. I have a stocks and shares ISA, opened through my financial advisor with Aviva. If I wish to pay my £20,000 annual allowance into the ISA she wants to receive 3% (£600) from me. Is that normal practice? Or sharp practice?!

eskbanker

moorster said:

Hello. I have a stocks and shares ISA, opened through my financial advisor with Aviva. If I wish to pay my £20,000 annual allowance into the ISA she wants to receive 3% (£600) from me. Is that normal practice? Or sharp practice?!

What does your agreement say about charges for additional funding?  Many would see it as very poor value for money to be paying 3%, but much will depend on exactly what you signed up to, and whether you're capable of looking after your investments yourself....

dunstonh

moorster said:

Hello. I have a stocks and shares ISA, opened through my financial advisor with Aviva. If I wish to pay my £20,000 annual allowance into the ISA she wants to receive 3% (£600) from me. Is that normal practice? Or sharp practice?!

If you have employed the adviser on a transactional basis then you normally pay an amount with each top up.   If you employ the adviser on a retained ongoing basis, then most advisers will not charge for top ups as that falls within the cost of the ongoing retainer.      Some may do a hybrid of the two methods.

Remember that only you pays the adviser.   So, if you are creating work and liability to the adviser, then it is you that pays for it, just like any other profession.   

If yours is transactional, then 3% in this case is reasonable (it wouldn't be if it was £200k at 3% but £20k at 3% is).  

MeteredOut

moorster said:

Hello. I have a stocks and shares ISA, opened through my financial advisor with Aviva. If I wish to pay my £20,000 annual allowance into the ISA she wants to receive 3% (£600) from me. Is that normal practice? Or sharp practice?!

It can be both normal (if that’s the agreement you have with your advisor), and sharp. But there’s no way I’d be paying 3% to invest into an ISA. How has their previous investment advice performed?