Stocks & Shares ISAs

Super_Whiskey wrote: »

I'm looking at investing and putting in an initial deposit of a few hundred pounds and then topping this up monthly by about £50 or so.


I've had a look at the guide and done some other research and I like the look of Vanguard's platform but don't want to necessarily discount the 'do-it-for-me' options in the guide even though they are smaller entities.


I assume if I'm drip feeding money in this will be used to purchase funds which may incur a fund buying fee if the platform charges one?


If anyone has any advice in general that would be great!

By, "do-it-for-me", I assume you mean robo-advisers like Nutmeg. There really isn't much point in using them. They are an expensive way of buying into (effectively) multi-asset tracker funds. You would be better off paying the significantly lower costs of buying a single multi-asset fund, like Vanguard LifeStrategy, HSBC Global Strategy; L&G Multi Index, or Blackrock Consensus. To give a comparison, Nutmeg will charge you 1% to invest in their "Fixed Allocation Portfolio", which is not significantly different from any of the funds above, whereas Vanguard LifeStrategy (using Vanguard Investor) will cost 0.37%, and HSBC Global Strategy on Cavendish (cheapest option) will cost 0.45%. For every £1,000 invested, therefore, your costs would be:

Nutmeg = £10 p.a.
Vanguard LifeStrategy = £3.70
HSBC Global Strategy = £4.50


Nutmeg is, therefore, 2.7 times more expensive than the Vanguard option (2.2 times more expensive than HSBC), and delivers nothing particularly different.

As you like the look of the Vanguard platform - I assume you also like the look of the funds too - then this would be the cheapest way of doing things. All four of the funds mentioned above should deliver what you are looking for, and at a fraction of the cost of using a robo-adviser.

It depends on which platform you use as to whether you will be charged trading fees. Personally, as you are someone with a small amount invested/to invest, then I would avoid any platform that wants to charge you a trading fee (hang your head in shame AJ Bell). Go for a percentage fee platform. If you decide on the Vanguard fund then use their platform, as it is by far the cheapest at 0.15%. For alternative funds then I'd consider either Cavendish or Charles Stanley Direct. Both charge 0.25% platform fee, although Charles Stanley also charge £10 per holding to transfer out (which you may want to do to a cheaper option later).

If using Vanguard Investor then you can elect to pay your fees by quarterly direct debit (a much better arrangement than other platforms), whereas Cavendish and Charles Stanley will either sell some of your assets to cover the fees, or (a better, but still not great option) you can leave a cash float in the account to cover them.

Super_Whiskey wrote: »

Thank you for your detailed response.


I'll do a bit more research and I think I will end up going with the Vanguard Lifestrategy 60% fund.



I have seen a few offers for Nutmeg which mean you don't have to pay any management fees for X number of months however given that Vanguard is so much cheaper I doubt it would be worth the hassle to use the offer and then switch the fund over once it has ended.

It could easily be the case that when the no-fee period end the fund will be down and you would then have the choice of selling at a loss to move to a different platform, or paying the higher fees until your investments return to profit. The no-fee offer is there for those taking a short term view, which is a terrible way to approach investment; investing needs a long term approach due to market volatility.