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Opened S&S ISA... and confused about the options now
I'm a newbie to investing. I've just opened an S&S ISA to use up the allowance for this tax year after receiving a small inheritance. I see that as a long term investment (ie to leave something to the kids).
My issue is that I'm not sure I really understand the various fund options on the AJ Bell platform. There's so many! I'm also nervous about the possibility of an AI-induced crash in the near future, so would rather avoid tech-heavy funds.
Is it safer to go with one of the AJBell (or other well-knowns like Vanguard) funds? I'm also a bit confused about fees - do I pay commision/fees for each individual trade, if I were to try to pick individual stocks? Or would it all be subject to the standard yearly management fee?
Ta.
Comments
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Are you sure investing is for you if you already have this nervousness and lack of understanding? Individual stocks are not for newbies, a global tracker fund gives you diversity.
There are really no guarantees and for some a cash ISA is the best option.
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Platform fee is 0.25. Capped at £3.50 / £42 a month / year for S&S ISA.
It is £5 per trade, however regular monthly investment is free.
You pay both.
You may want to do a bit more research into what to invest in.2 -
Have a read through the following link that discusses passive investing. I would personally advise against investing in shares in individual companies (I am not a financial advisor), I would look at global funds like those offered by Vanguard like VWRP or VALL, which are low cost and diversified across a huge number of companies globally.
Even these funds will go up and down in the short term, but long term they are likely to do better than savings in cash.
"We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein2 -
My issue is that I'm not sure I really understand the various fund options on the AJ Bell platform. There's so many!
Around 30,000 investment options on AJ Bell.
I'm also nervous about the possibility of an AI-induced crash in the near future, so would rather avoid tech-heavy funds.
It is a fairly common concern, and many investors are adjusting their portfolios accordingly.
Is it safer to go with one of the AJBell (or other well-knowns like Vanguard) funds?
It depends on which AJ Bell and Vanguard funds you are referring to.
I'm also a bit confused about fees - do I pay commision/fees for each individual trade, if I were to try to pick individual stocks?
It depends on the investment universe you select. For example, ETF charges differ from those on unit trusts and OEICs or shares.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Platform fee is 0.25. Capped at £3.50 / £42 a month / year for S&S ISA.- The cap only applies if you are invested only in shares/ETFs/ITs - for OEIC funds there is no cap
It is £5 per trade, however regular monthly investment is free. - £5 per trade for shares/ITs/ETFs - £1.50 for OEIC funds - free regular investing is only for specified funds.
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Is it safer to go with one of the AJBell (or other well-knowns like Vanguard) funds? I'm also a bit confused about fees - do I pay commision/fees for each individual trade, if I were to try to pick individual stocks? Or would it all be subject to the standard yearly management fee?
Buying individual shares is very risky and is best avoided by inexperienced investors.
No investment is safe as such. The whole idea is that you are taking a risk, in the hope of getting better returns long term than cash savings and inflation. However is it better for an inexperienced investor to invest in a low cost multi asset fund from AJ Bell or Vanguard, rather than randomly guessing at what to invest in, then the answer is yes.
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It's worth clarifying if you are talking about the "standard" AJ Bell platform, or AJ Bell's Dodl platform - which has a charge of 0.15% pa, but no cap (it's a minimum of £1/month, which would be exceeded if you have £8,000 in it).
Low-cost, little-effort investing app | AJ Bell Dodl
This has a smaller range of investments.
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DO NOT buy individual stocks - all you need is a low fee cost global index tracker fund. If you google "list of global index funds available in UK", the AI will give you a list of possibilities. Just pick one (accumulation version), check it's available in AJ Bell (if it's not just pick another and check). Put your money in it and then (the most important part) ignore it for at least a year. Check its value then and then just ignore for another year and ad infinitum. People will try to bombard you with ifs, buts and maybes - but this is all you need to do - especially if as it sounds like, this is very much a long term plan for your children. People have been predicting an AI crash for at least 12 months and yet it still hasn't happen. There will be a big crash at some point (of the 40% variety) because there always is. But you just ignore it and stay invested.
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My issue is that I'm not sure I really understand the various fund options on the AJ Bell platform. There's so many! I'm also nervous about the possibility of an AI-induced crash in the near future, so would rather avoid tech-heavy funds.
The number of funds can be overwhelming. As other have commented you may be better off focusing on a very few (and possibly only one) fund.
Unless you're very savvy investing in individual stocks is a mug's game.
You may find it beneficial to place the money in a general investment account with AJ Bell and then drip-feed this into an S&S ISA over the course of the year (aka pound cost averaging).
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The caveat to this advice is that many inexperienced/risk averse investors may well panic in the face of a big stock market crash, and pull out when the investment is really down. As this would be a very bad decision ( but many people do it), then for investors of a nervous disposition, a less volatile multi asset fund is a bette answer.
In the long term it would produce lower returns, but at least the investor would be more likely to stick out any crashes.
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