Stocks & Shares ISA - regular top-ups

I've been doing a lot of research on S&S ISA's. I understand various platforms have different charging models (portfolio % charge, fixed annual charge & cost per trade, etc), but I'm not sure what route/provider is best for me.

I plan to save regularly throughout the tax year, putting in around £250 a month. This will go into a mixture of funds, bonds, shares - I understand it's important to diversify, etc.

Here are my questions:
    Every month, when I add the £250 in, how do I allocate this? Can I split this sum up and distribute it amongst my existing portfolio? Like topping up each account?
    Will each of these 'allocations/purchases' count as a new trade?

If I understand this process better, then I can make a decision the right platform, based on the costs. I've already run this through a few of the comparison sites, and they do recommend platforms, based on my requirements, but I don't understand the logic behind the recommendations.

Many thanks in advance.

Chris.
«1

Comments

  • MallyGirl
    MallyGirl Posts: 6,564
    Photogenic First Anniversary Name Dropper First Post
    Senior Ambassador
    you'd be better off just choosing one multi asset fund than trying to build in diversification yourself with those size of contributions.
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
    All views are my own and not the official line of MoneySavingExpert.
  • ColdIron
    ColdIron Posts: 8,897
    First Anniversary Name Dropper Photogenic First Post
    Forumite
    Are you sure about shares? They can be very expensive for small sums, most people starting out would use funds. Have you decided which fund(s) to invest in? Again most people would make this decision first and then choose the best platform for them and not the other way around. I'd echo MallyGirl's suggestion of a single multi asset fund
  • dunstonh
    dunstonh Posts: 116,033
    Name Dropper First Anniversary Combo Breaker First Post
    Forumite
    I plan to save regularly throughout the tax year, putting in around £250 a month. This will go into a mixture of funds, bonds, shares - I understand it's important to diversify, etc.

    It is important to diversify. However, at just £250 a go, there are far easier and better ways to achieve that then building a bespoke portfolio.

    For example, if you portfolio weightings had your Japan allocation at 3% then 3% of £250 is £7.5. Are you really going to carry out your research and analysis for something you are putting £7.5 into?

    Multi-asset funds are there to be used by those with smaller amounts.

    If you are using direct assets, like shares and bonds then the dealing costs are likely to be prohibitive and may prevent you ever turning a profit.
    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.
  • appro
    appro Posts: 18 Forumite
    Thanks for the responses so far - you may have convinced me about multi-asset funds. Cheers.

    But, in terms of my questions above - can I put my monthly £250 into my existing fund(s), and will this be classed as a trade?

    For example, if I go with one diversified fund, and add my £250 to it each month, will this be classed as 12 trades over the year (re charges)?
  • Vortigern
    Vortigern Posts: 3,242
    First Anniversary Photogenic Name Dropper First Post
    Forumite
    appro wrote: »
    For example, if I go with one diversified fund, and add my £250 to it each month, will this be classed as 12 trades over the year (re charges)?
    Yes 12 trades, but not all platforms have a per trade fee.

    Vanguard does not charge per trade for its Lifestrategy funds on its own platform.

    Baillie Gifford does not charge per purchase in its investment trust savings plan - but it does charge to sell and has to charge you for stamp duty on purchases.

    These are just examples; there are many more.
  • MallyGirl
    MallyGirl Posts: 6,564
    Photogenic First Anniversary Name Dropper First Post
    Senior Ambassador
    most platforms have a regular investment fee which is a lot lower than the adhoc fees - maybe £1 each for a monthly commitment.
    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
    All views are my own and not the official line of MoneySavingExpert.
  • thickasabrick
    thickasabrick Posts: 172
    First Anniversary Name Dropper First Post
    Forumite
    I recently started putting £100 a month into a Vanguard Stocks and Shares ISA.

    Trading and management costs could make it unviable given the amount I have to invest.

    I ended up buying units of an electronically traded fund. Namely the " Vanguard FTSE All-World High Dividend Yield UCITS ETF (VHYL) ".

    I already have their "Vanguard LifeStrategy" fund in my pension so was aware of the nature of an index tracker and "passive investing" with low costs. Although VHYL management costs are slightly higher at 0.29% there is more diversity.

    Bit of a shocker when you see that first trade go through and you see a loss due to the costs and the change in price. For me this is a learning experience so worth it.

    Worth checking the costs for other stocks and shares ISA providers. thisismoney have a list at this page
    thisismoney.co.uk/money/diyinvesting/article-1718291/Pick-best-cheapest-investment-Isa-platform.html

    Monevator has a page listing low cost index trackers although it might be out of date now as it's dated July 2017
    monevator.com/low-cost-index-trackers/
  • Cash-Strapped.T32
    Cash-Strapped.T32 Posts: 562
    First Anniversary Name Dropper First Post
    Forumite
    edited 6 July 2018 at 5:49PM
    Totally agree with the advice to the OP not to go into too much "fine detail", but just to give some context to his answers, so that the advice already given (hopefully) carries more weight..
    appro wrote: »
    I

    Here are my questions:
    • Every month, when I add the £250 in, how do I allocate this? Can I split this sum up and distribute it amongst my existing portfolio? Like topping up each account?
    Yes - within reason.
    In theory, every penny you pay into the S&S ISA can be used to purchase however much of whatever asset the platform has on offer - either buying into more of what you've already got, or adding new assets.

    In reality however, each fund will have a minimum allowable purchase, each share has a given price per share, etc... so you can't literally any amount into any asset.


    So let's say I've got 2x funds in my ISA which I wish to top-up.
    Each one has a minimum purchase of £100, and I pay in £150 per month.

    You can see how I can't buy into both funds each month - I'll either have to alternate each month, or buy £100 of one, and leave the £50 in cash until the next month, or some other such plan. You can see where this is going.


    The caveat to this, as alluded to by Mallygirl, is that if you set up a regular payment plan with the platform (often by direct-debit), then this minimum pay-in is often reduced, allowing you to buy into more funds with the same amount (obviously this is sepeate to whether it's actually sensible to buy into many funds with a small total amount).

    For instance, if my 2x funds above have the same £100 minimum cash buy-in, but a £10 minimum regular payment option, then I can easily split my £150 in any way I see fit across the two funds as 10 into 150 will go many ways.

    • Will each of these 'allocations/purchases' count as a new trade?
    Yeppers. Each purchase of a new asset, adding more of an existing asset, or sale of some/all of an existing asset is a trade.
    This is why it really pays to work out beforehand if a cheaper platform (but one that has a fee per-trade) is actually better in the long-run depending on how you plan your purchases.

    Chris.

    Hope this helps - I know much of this info was already alluded to by the more knowledgable posters above, just thought it would help to be explicit in some of the answers. :beer:
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    I recently started putting £100 a month into a Vanguard Stocks and Shares ISA.

    Trading and management costs could make it unviable given the amount I have to invest.

    I ended up buying units of an electronically traded fund. Namely the " Vanguard FTSE All-World High Dividend Yield UCITS ETF (VHYL) ".

    I already have their "Vanguard LifeStrategy" fund in my pension so was aware of the nature of an index tracker and "passive investing" with low costs. Although VHYL management costs are slightly higher at 0.29% there is more diversity.

    Bit of a shocker when you see that first trade go through and you see a loss due to the costs and the change in price. For me this is a learning experience so worth it.

    Worth checking the costs for other stocks and shares ISA providers. thisismoney have a list at this page
    thisismoney.co.uk/money/diyinvesting/article-1718291/Pick-best-cheapest-investment-Isa-platform.html

    Monevator has a page listing low cost index trackers although it might be out of date now as it's dated July 2017
    monevator.com/low-cost-index-trackers/

    Vanguard Investor don't charge any fees for trading (except on live priced ETFs).
  • appro
    appro Posts: 18 Forumite
    Thanks everyone - really useful advice. Much appreciated.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards