Stocks and Shares ISA's

doire_2

Hello,

I have just recently opended a stocks and shares ISA.

Is this a good idea in todays economic climate?

I intend to use it when i retire as im acontractor and my employer wouldn't contribute if i opened a pension.

Is it a good alternative to a pension?

Thanks

Ian_W

Interesting question which would take a very long answer to cover fully but there is a thread HERE which deals with it over 13 pages - well worth reading all the different comments and opinions.
Saving for retirement whether in a Pension or ISA is ALWAYS a good idea IMHO particularly if you add to it regularly [and increase your contributions at or ahead of inflation] over a period of many years. "To-days economic climate" is about to-day - your pension or retirement savings over many years should smooth out the peaks and troughs along the way.

doire_2

Thank you...........

dunstonh

I have just recently opended a stocks and shares ISA.

Is this a good idea in todays economic climate?

There is never a good time or bad time to buy an ISA. After all its just a tax wrapper that you place investments in. A container as such. The investments you place in the ISA are perhaps more subject to timing in the short term but you havent mentioned where you are investing.

I intend to use it when i retire as im acontractor and my employer wouldn't contribute if i opened a pension.

They will have to from 2012. It may be worth asking them what they plan to do in 2012 when they are forced to pay in 3% minimum into a pension. Many employers still dont know this is coming. However, those that day have been planning for it by building it up slowly (starting at 1% a year now but increasing by 1% a year until they hit 3% or even going straight to the 3% now).

Is it a good alternative to a pension?

Pros and cons of both. From only an income in retirement point of view, the pension will beat the ISA every time. However, retirement planning is not all about income but also capital provision. So it depends on what you are trying to achieve.

For most people a bit of pension and a bit of ISA is best.

doire_2

Thanks dunstonh

My ISA is being handled by an independent financial advisor. He then lets a company called Sterling do the investing

I have documents at home but cannot remember off hand where the money is to be invested.

dunstonh

My ISA is being handled by an independent financial advisor. He then lets a company called Sterling do the investing

Oh balls. The minute you said Sterling it took a potential turn for the worse.

Sterling a small fund supermarket which allows advisers to set their level of remuneration far higher than the big fund supermarkets. This allows a greedy adviser to take advantage of you and earn a lot more commission out of it then one that uses Cofunds, Fidelity or Selestia/Skandia (all of which offer 3 times as many funds as Sterling).

Whilst we dont know if you adviser has played fair and only taken the standard amount (or less), the minute you see Sterling you should be on guard. I suggest you check out the charges of your contract just to be on the safe side. If the charges are standard then you have piece of mind that your adviser hasnt ripped you off. If the charges are higher then you know now before you have paid years of contributions and can switch it to something cheaper now.

doire_2

dunstonh wrote: »

Oh balls. The minute you said Sterling it took a potential turn for the worse.

Sterling a small fund supermarket which allows advisers to set their level of remuneration far higher than the big fund supermarkets. This allows a greedy adviser to take advantage of you and earn a lot more commission out of it then one that uses Cofunds, Fidelity or Selestia/Skandia (all of which offer 3 times as many funds as Sterling).

Whilst we dont know if you adviser has played fair and only taken the standard amount (or less), the minute you see Sterling you should be on guard. I suggest you check out the charges of your contract just to be on the safe side. If the charges are standard then you have piece of mind that your adviser hasnt ripped you off. If the charges are higher then you know now before you have paid years of contributions and can switch it to something cheaper now.

The first £250 is due next tuesday and their initial charge is just over £11

Is this excessive?

If so can i demand that the IFA change to any one of the three you have mentioned?

dunstonh

£11 doesnt sound excessive. However, is that the only charge on there. Has an additional initial charge been added on?

If so can i demand that the IFA change to any one of the three you have mentioned?

You are the client. You can of course do that. However, if the initial charge is no more than £11 then dont be alarmed. Sterling are often used by ex Allied Dunbar advisers so he may be using Sterling if he is ex AD and feels more comfortable with their offering. As I said, its the potential for double charging effectively that you have to be on guard for but it doesnt mean there will be double charging. The majority of advisers are good and fair.

doire_2

dunstonh wrote: »

£11 doesnt sound excessive. However, is that the only charge on there. Has an additional initial charge been added on?

This is my first payment of £250 which is the amount i want to invset.

Sterling sent me a letter to tell me the ISA had been setup and the initial charge is just over £11.

On the same letter they gave me a breakdown of where they intend to invest. Together with the charge it came to a total of £250

You are the client. You can of course do that. However, if the initial charge is no more than £11 then dont be alarmed. Sterling are often used by ex Allied Dunbar advisers so he may be using Sterling if he is ex AD and feels more comfortable with their offering. As I said, its the potential for double charging effectively that you have to be on guard for but it doesnt mean there will be double charging. The majority of advisers are good and fair.

How much of a monthly charge would you deem to be excessive. Just so i know what to look out for.

Thanks for your help so far :beer:

dunstonh

Sterling sent me a letter to tell me the ISA had been setup and the initial charge is just over £11.

On the same letter they gave me a breakdown of where they intend to invest. Together with the charge it came to a total of £250

Thats looking ok then as the charges need to be fully disclosed.

How much of a monthly charge would you deem to be excessive. Just so i know what to look out for.

On investment collectives the typical maximum commission is 3% of the contribution. The average is 1.8%. However, that is on single premiums where discounting is much more common and there is a greater scope to discount.

Some funds dont have a commission=charge basis but may have 1 or even 2% more in charges than the commission. It is there that Sterling tend to lose out on where the others could be better. The bigger fund supermarkets discount more on the initial charge (i.e. invesco perpetual funds have a 5% initial charge if you buy direct from them. I believe Sterling is 4.75% but cofunds and fidelity are 3% with the IFA taking that 3% if no discounting has taken place).

We are probably talking differences of around £3-5 in per month because Sterling is being used.

doire_2

Thanks :beer: