Stocks & Shares ISA help!

redxs · 18 April 2018 at 5:12PM

Hello!
The more about these I read... the more confused I get.

I have £14000 I can invest and I like the idea of a S&S ISA. Probably won't need to access the cash for at least 10 years. And I'm able to set up a direct debit out my bank for £25-50 per month.

Happy to go with a mix of medium and high risk to maximise growth. And I like the idea of accessing my ISA online to see how it's progressing.

I read about the charges... would circa £10 be taken out of my monthly investment in management fees?

What S&S ISA would you recommend for a modest lump sum and low monthly investment?

Thank you so much :beer:

jimjames · 18 April 2018 at 5:19PM

What bits are you confused about? Your situation seems quite well suited to using a S&S ISA but bear in mind a S&S ISA is only a wrapper that avoids paying tax, it's not an investment itself so recommending a S&S ISA is only the wrapper.

Charges would really depend which wrapper you choose but with one like HL you'd be looking at 0.45% fees plus the underlying investment charges so possibly a total of around 0.7% which is around £100 per year on £14k. £10 won't be taken out of your monthly investment with HL - that would be extortionate on £25 per month but it would be paid over the year from the £14k.

One like Vanguard might be suitable but others would be able to advise on the charges and costs of that. Fund choice would depend on your attitude to risk but they have funds that have different amounts of shares in them to give that choice.

redxs · 18 April 2018 at 5:54PM

Thanks for the prompt advice.

What bit confuses me... all of it, at first they seemed simple but the more I read the more confused I become.

I assumed the S&S ISA would be the easiest way to invest in stocks and shares give my relatively simple situation.

My mortgage is with Nationwide and I'm on their BMR, happy to stay with that and usually I make over payments.

I have £14k from an old ISA and am looking to reinvest it in an ISA with better rates so thought I'd take the plunge into S&S.

I earn less than £45 and probably won't need to access cash for at least 10 - 15 years. Employed in public sector so just moved onto career average pension so that isn't a worry.

To invest £14k now and £25-50 monthly thereafter in stocks and shares - is an ISA the best way?

redxs · 18 April 2018 at 6:01PM

jimjames wrote: »

What bits are you confused about?

When I read you get charged for deals... HL:

Number of deals in previous month Charge per deal
0 - 9 £11.95
10 - 19 £8.95
20+ £5.95

So I'm thinking if I pay in £25 every month by direct debit, I'm buying funds every month which will count as a 'deal'?

(Plus I take your point that the ISA isn't an investment product in itself - which I guess I'm just looking for an off the shelf ready made product!)

eskbanker · 18 April 2018 at 7:08PM

Probably best to spend some time on more research into the basics of investing, with the various MSE articles at https://www.moneysavingexpert.com/investments/ being a reasonable starting point oriented to their typical audience. Better guidance is available from sites like Monevator and there are also primers at http://www.hl.co.uk/tools#guides and other platforms, and plenty of similar newbie investor threads on this forum of course!

The distinction between funds and platforms is key to planning how to invest - sorting out what you want to invest in (e.g. a global multi-asset fund of funds is a popular means of achieving ready-made diversification) is the first step and then you can shop around to find the best platform on which to hold it, typically within a S&S ISA.

Dribbling a very small amount in every month is handled by regular investment plans on most platforms, although I think £50 is a typical minimum, but given dealing costs you'll need to consider carefully whether you'd actually want to be buying something with that every month, as opposed to keeping it in cash form in your account temporarily and batching up purchases every quarter or less frequently than that....

kidmugsy · 18 April 2018 at 10:17PM

redxs wrote: »

To invest £14k now and £25-50 monthly thereafter in stocks and shares - is an ISA the best way?

I've been looking into this recently. I wonder if your situation would be well-suited to Selftrade. If I understand their charges properly, your £50 per month would cost £1.50 per pop to invest, but that £18 per annum would be the only charge you'd face long term. Initially there would also be a charge for investing the original £14k, but if you put that into (say) one global tracker that too is pretty cheap.

One beauty of using an ISA is that it eliminates any need to perform tax calculations on income or capital gains. You could perhaps reduce the charges further by avoiding an ISA and just using a tax-exposed "dealing" or "trading" service, but my personal taste would be for avoiding tax calculations. Mind you, no list of charges is set in stone.

If you look at Selftrade and conclude that I have misunderstood their charges, please do let me know.

EDIT: the charges I quoted are on the assumption that you buy one passive ETF global tracker.

jimjames · 21 April 2018 at 6:26PM

redxs wrote: »

When I read you get charged for deals... HL:

Number of deals in previous month Charge per deal
0 - 9 £11.95
10 - 19 £8.95
20+ £5.95

So I'm thinking if I pay in £25 every month by direct debit, I'm buying funds every month which will count as a 'deal'?

(Plus I take your point that the ISA isn't an investment product in itself - which I guess I'm just looking for an off the shelf ready made product!)

A deal with HL is buying shares. There are no such charges for buying funds so they are a better option for £25 per month

Alexland · 22 April 2018 at 7:37AM

With a 5 figure lump sum and 2 figure monthly contribution the OP might be better with both a S&S ISA (for the lump sum on an execution only platform such as iWeb) and an unwrapped investment trust share plan (for the low monthly contribution with no platform or trade fees such as Baillie Gifford). It is unlikely any tax would be due in the medium term with such a low regular contribution but keep an eye on it.

Otherwise the OP ends up paying 0.45% (for HL if under £50 pm), 0.25% (for Canvendish if under £100 pm) or 0.15% (for Vanguard if at least £100 pm) ongoing on the lump sum for the convenience of having a low monthly contribution.

Alex

Stocks & Shares ISA help!

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