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  • FIRST POST
    • ileven1225
    • By ileven1225 12th Mar 18, 9:22 PM
    • 43Posts
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    ileven1225
    NATWEST Stocks & Shares ISA - good investment?
    • #1
    • 12th Mar 18, 9:22 PM
    NATWEST Stocks & Shares ISA - good investment? 12th Mar 18 at 9:22 PM
    Hi All,

    Hopefully my question was not too obvious to some of you.

    I have received an email from Natwest promoting their investment product 'Tax-free returns - invest using a Stocks & Shares ISA'. Basically I could create an stocks and shares ISA account with Natwest. As i don't have any ISA in 2017/2018, i could put in up to £20k into the ISA account. The money could be invested using Natwest product (Invest fund). Currently predicted low risk with 3.8% return, medium risk with 8.3% and high risk with 13.6% return. Also I could get 1% cash back in July 2018.

    It sounds good to me:
    1. It is tax free
    2. I already planned to invest up to £20k for something but haven't decided in which way. So what Natwest provides fits my needs.
    3. The return rate looks OK and I understand that there is risk.

    My question is that, do you agree with me above or you have anything else to recommend? I don't want a high risk high return way, I would like to have a reasonable risk with medium return.

    Hopefully the above makes sensw and thanks for everyone's answers/comments in advance!
Page 1
    • jimjames
    • By jimjames 12th Mar 18, 9:57 PM
    • 12,588 Posts
    • 11,238 Thanks
    jimjames
    • #2
    • 12th Mar 18, 9:57 PM
    • #2
    • 12th Mar 18, 9:57 PM
    An ISA is not a good investment one way or another, it's purely a wrapper that helps you avoid any tax on the contents. So Natwest are offering you some investments and a wrapper to hold them.

    Banks tend not to be very good for investments - well not very good for you anyway - generally they're good for them as they make money from them.

    I'd recommend reading up about investment on www.monevator.com so you understand a bit more but I'd suggest using platform for your S&S ISA rather than a bank as you'll have a much better selection of options.

    It sounds good to me:
    1. It is tax free
    2. I already planned to invest up to £20k for something but haven't decided in which way. So what Natwest provides fits my needs.
    3. The return rate looks OK and I understand that there is risk.
    !
    Originally posted by ileven1225
    1) All ISAs are tax free so that's irrelevant.
    2) Maybe true but so will many other options
    3) The return is not guaranteed so any numbers they show won't really tell you anything about future performance
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Alexland
    • By Alexland 12th Mar 18, 10:08 PM
    • 2,389 Posts
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    Alexland
    • #3
    • 12th Mar 18, 10:08 PM
    • #3
    • 12th Mar 18, 10:08 PM
    The 1% offer is basically a refund of the 0.60% fund and 0.35% platform fee for the first year. These fees are nearly 3x higher than you could pay with Vanguard Investor who do the well regarded LifeStrategy fund series at 0.22% fund and 0.15% platform fee.

    Given bond market conditions I would be cautious investing in a too cautious fund as we have seen months recently where cautious funds have seen losses where adventurous funds have seen gains. A balanced approach may be better but it depends on your volatility tolerance and investment timescales.

    Investing should be for at least a 5 year outlook preferably 7 to 10 years. The longer you are invested the less likely you are to make a loss.

    Alex
    • dunstonh
    • By dunstonh 12th Mar 18, 11:32 PM
    • 92,651 Posts
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    dunstonh
    • #4
    • 12th Mar 18, 11:32 PM
    • #4
    • 12th Mar 18, 11:32 PM
    Natwest have set up a robo-advice service. Its a basic option with a handful of bank managed funds that launched in 2016.

    They have a £10 initial charge on top of what they call a 0.35% platform charge (despite it not being a platform in the sense of what posters here and IFAs would consider a platform) and fnud charge of 0.6% p.a.

    So, its quite expensive for basic, low feature, guided process that is using bank funds. And as many people know, bank funds tend to be at the bottom end.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ileven1225
    • By ileven1225 13th Mar 18, 7:31 AM
    • 43 Posts
    • 7 Thanks
    ileven1225
    • #5
    • 13th Mar 18, 7:31 AM
    • #5
    • 13th Mar 18, 7:31 AM
    Banks tend not to be very good for investments - well not very good for you anyway - generally they're good for them as they make money from them.

    1) All ISAs are tax free so that's irrelevant.
    2) Maybe true but so will many other options
    3) The return is not guaranteed so any numbers they show won't really tell you anything about future performance
    Originally posted by jimjames
    Thanks a lot for your reply!

    Why itís not good for me? What type of investors those bank ISA is good for?

    I guess any product would not guarantee return. Itís hard to choose which product is good for myself. Can you please provide any advice on selection of product?

    Thanks!
    • ileven1225
    • By ileven1225 13th Mar 18, 8:17 AM
    • 43 Posts
    • 7 Thanks
    ileven1225
    • #6
    • 13th Mar 18, 8:17 AM
    • #6
    • 13th Mar 18, 8:17 AM
    The 1% offer is basically a refund of the 0.60% fund and 0.35% platform fee for the first year. These fees are nearly 3x higher than you could pay with Vanguard Investor who do the well regarded LifeStrategy fund series at 0.22% fund and 0.15% platform fee.

    Given bond market conditions I would be cautious investing in a too cautious fund as we have seen months recently where cautious funds have seen losses where adventurous funds have seen gains. A balanced approach may be better but it depends on your volatility tolerance and investment timescales.

    Investing should be for at least a 5 year outlook preferably 7 to 10 years. The longer you are invested the less likely you are to make a loss.

    Alex
    Originally posted by Alexland
    Thanks Alex, it looks like Natwest overcharged their clients.

    I will split the saving into 3 groups probably: £10k low risk, £5k medium and £5k high risk.

    I actually planned 1 year to see if I would spend more time on this type of investment. perhaps as you said, it not enough to see the outcome.
    • Alexland
    • By Alexland 13th Mar 18, 8:27 AM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    • #7
    • 13th Mar 18, 8:27 AM
    • #7
    • 13th Mar 18, 8:27 AM
    I wouldn't go as far as accusing them of overcharging as they are clear on their charges and I assume they apply them correctly. I would just observe they are on the expensive side of the market when compared to bigger players like Vanguard. I have some sympathy that it must cost lots to maintain a branch network.

    Investing for only 1 year has a circa 25% chance of ending in a loss. Basically you might just randomly hit a period where the market is declining and then crystallise a loss on withdrawal. The best investing is long term investing.

    Still if you are happy with the risk (and have nothing better to do with the money) and want to see the 3 funds go up and down then that's fine or you could stick it all in the medium risk fund. High street bank funds tend to be a bit more cautious anyway as they are aware their customers might not have much volatility tollerence which comes from confidence built from understanding the underlying assets.

    Alex
    Last edited by Alexland; 13-03-2018 at 8:47 AM.
    • dunstonh
    • By dunstonh 13th Mar 18, 8:58 AM
    • 92,651 Posts
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    dunstonh
    • #8
    • 13th Mar 18, 8:58 AM
    • #8
    • 13th Mar 18, 8:58 AM
    Why it!!!8217;s not good for me? What type of investors those bank ISA is good for?
    Like most bank products, they are aimed at people that wouldn't know good from bad and don't really care what they have.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • aj23
    • By aj23 13th Mar 18, 9:40 AM
    • 419 Posts
    • 153 Thanks
    aj23
    • #9
    • 13th Mar 18, 9:40 AM
    • #9
    • 13th Mar 18, 9:40 AM
    Banks are only there to serve their directors and big shareholders.

    I got my AGM from Leeds BS yesterday, and 5 of the directors got £50k pay increases last year, one of them to £420k. They only care about making profit off their customers, whom without they wouldn't exist for anyway.
    • coyrls
    • By coyrls 13th Mar 18, 11:54 AM
    • 979 Posts
    • 1,036 Thanks
    coyrls
    Given bond market conditions I would be cautious investing in a too cautious fund as we have seen months recently where cautious funds have seen losses where adventurous funds have seen gains.
    Originally posted by Alexland
    Iím a bit bemused by this statement, of course there will be months when there are losses in cautious funds and gains in adventurous funds, so that doesnít help anybody make a decision on whether to invest in an adventurous or a cautious fund.
    • Alexland
    • By Alexland 13th Mar 18, 12:46 PM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    We live in strange times and bonds are looking expensive so may not be as safe a choice as historically. I just advising caution if picking cautious funds that are heavy in bonds.
    • jimjames
    • By jimjames 13th Mar 18, 1:04 PM
    • 12,588 Posts
    • 11,238 Thanks
    jimjames
    Thanks a lot for your reply!

    Why itís not good for me? What type of investors those bank ISA is good for?
    Originally posted by ileven1225
    I wouldn't recommend it to anyone as there are far better options with lower charges and more flexibility. I can't think of anyone they would be good for unless you don't care about performance and cost and want everything with your bank.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • ileven1225
    • By ileven1225 13th Mar 18, 1:09 PM
    • 43 Posts
    • 7 Thanks
    ileven1225
    Natwest have set up a robo-advice service. Its a basic option with a handful of bank managed funds that launched in 2016.

    They have a £10 initial charge on top of what they call a 0.35% platform charge (despite it not being a platform in the sense of what posters here and IFAs would consider a platform) and fnud charge of 0.6% p.a.

    So, its quite expensive for basic, low feature, guided process that is using bank funds. And as many people know, bank funds tend to be at the bottom end.
    Originally posted by dunstonh

    if not bank fund, what fund you would recommend to invest? Thanks
    • eskbanker
    • By eskbanker 13th Mar 18, 1:21 PM
    • 7,161 Posts
    • 7,607 Thanks
    eskbanker
    Banks are only there to serve their directors and big shareholders.

    I got my AGM from Leeds BS yesterday, and 5 of the directors got £50k pay increases last year, one of them to £420k. They only care about making profit off their customers, whom without they wouldn't exist for anyway.
    Originally posted by aj23
    It's called capitalism - as with all other commercial organisations their primary raison d'etre is profitability and shareholder return, even if some companies successfully manage to dress this up more palatably with decent customer service.

    Obviously the government bailouts during the global financial crisis resulted in banks being demonised more than most (and hence the Pavlovian hissing on the likes of Question Time when the trigger term "bankers' bonuses" was deployed) but if they weren't there as pantomime villains for the tabloids then their place would be filled by utility companies, train operators, oil companies, etc, where there is similar resentment of profits being generated....
    • ileven1225
    • By ileven1225 13th Mar 18, 1:25 PM
    • 43 Posts
    • 7 Thanks
    ileven1225
    I would just observe they are on the expensive side of the market when compared to bigger players like Vanguard.

    Investing for only 1 year has a circa 25% chance of ending in a loss. Basically you might just randomly hit a period where the market is declining and then crystallise a loss on withdrawal. The best investing is long term investing.

    Still if you are happy with the risk (and have nothing better to do with the money) and want to see the 3 funds go up and down then that's fine or you could stick it all in the medium risk fund. High street bank funds tend to be a bit more cautious anyway as they are aware their customers might not have much volatility tollerence which comes from confidence built from understanding the underlying assets.

    Alex
    Originally posted by Alexland

    I will have a look at Vanguard, thanks.
    If bank funds tend to be more cautious, that is what I prefer. I believe the return could be less than other funds but I understand I couldn't get both.
    • dunstonh
    • By dunstonh 13th Mar 18, 1:48 PM
    • 92,651 Posts
    • 59,972 Thanks
    dunstonh
    if not bank fund, what fund you would recommend to invest? Thanks
    Originally posted by ileven1225
    I'm a regulated individual. I cannot tell you without being in breach of FCA guidelines. The board has historically discouraged recommendations as there are over 30,000 options out there. Nobody can tell you what is best for you on the basis of a few lines of text in a forum.

    Bank funds are just bad. Banks always find a way to make their own investments perform badly or damage the investments of the insurance company they are linked to (looking at you Lloyds bank and your destruction of Abbey Life, Scottish Widows and Clerical Medical)
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Audaxer
    • By Audaxer 13th Mar 18, 1:49 PM
    • 1,050 Posts
    • 607 Thanks
    Audaxer
    I will have a look at Vanguard, thanks.
    If bank funds tend to be more cautious, that is what I prefer. I believe the return could be less than other funds but I understand I couldn't get both.
    Originally posted by ileven1225
    Vanguard LifeStrategy funds are low cost globally diversified multi asset funds that come in 5 different risk levels - from a very cautious 20% equities to a high risk 100% equities. Other good options worth considering are HSBC Global Strategy funds and L&G Multi Index funds. A VLS60 (60% equities) for instance is medium risk and is a good option in my opinion. Bear in mind risk here means volatility, not risk of permanent loss. In a bad equity crash a VLS60 may drop 20% to 30% in value, but that would be a very bad time to sell the fund as that would crystallise your losses. More experienced investors would see that as a good time to invest more in the fund if they have spare cash available, because in the long term equities do continue to grow on an upward trend despite equity crashes every now and then.

    You can really learn a lot by reading this forum and searching for more info, as well as reading on sites like Monevator. Once you have a good grounding in understanding investments I think you will realise that going through a bank for investments is not the best option to take. You would not be decreasing risk by going via a bank, just increasing costs and lowering returns in choosing the same risk level than you can get by DIY investing in low cost multi asset funds.
    Last edited by Audaxer; 13-03-2018 at 1:52 PM.
    • cfw1994
    • By cfw1994 13th Mar 18, 8:52 PM
    • 116 Posts
    • 22 Thanks
    cfw1994
    (minor thread hijack, but relevant I believe!)

    If one was considering a LifeStrategy fund....is there a strong reason not to use their own ISA wrapper?

    Curious why folk would use HL or similar when Vangard themselves appear to offer the wrapper!
    Maybe if you have a bunch of other funds, but if that was the *only* one for the time being.....??

    & reading other threads, I think that is the reason.

    So maybe my statement might be "if you were early into investing and just planned to have the one LifeStrategy fund for the foreseeable (5+ years), probably no reason NOT to just go with Vangard "direct".

    Presumably in the future you could move that to another platform if desired....
    Last edited by cfw1994; 13-03-2018 at 8:57 PM.
    • dunstonh
    • By dunstonh 13th Mar 18, 9:03 PM
    • 92,651 Posts
    • 59,972 Thanks
    dunstonh
    If one was considering a LifeStrategy fund....is there a strong reason not to use their own ISA wrapper?
    Its a tied wrapper. e.g. only has Vanguard funds. So, you are stuck with them unless you transfer out later.

    Curious why folk would use HL or similar when Vangard themselves appear to offer the wrapper!
    Because there is more to life than Vanguard. Others are now undercutting VLS on price and returns at fund level. Vanguard trackers are the best in some sectors but not all sectors.

    So, if you want whole of market access, you dont use a platform that ties you to one fund house.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • cfw1994
    • By cfw1994 14th Mar 18, 1:44 PM
    • 116 Posts
    • 22 Thanks
    cfw1994
    Its a tied wrapper. e.g. only has Vanguard funds. So, you are stuck with them unless you transfer out later.

    Because there is more to life than Vanguard. Others are now undercutting VLS on price and returns at fund level. Vanguard trackers are the best in some sectors but not all sectors.

    So, if you want whole of market access, you dont use a platform that ties you to one fund house.
    Originally posted by dunstonh
    Thanks, understood....it strikes me (from a few different forums) that the Vanguard LifeStrategy funds are a reasonable way to get a broad global bucket at very low cost for a starter 'long term' investor.
    In my case I am thinking of suggesting my kids (young adults, not JISA candidates!) perhaps open one & I can help put funds in.

    Kind of interested in the approach lauded by Lars at www.kroijer.com - would you have any other broad suggestions of which other 'global' fund buckets might be worth checking into?

    (I think you might have said earlier you were regulated & therefore cannot give direct 'advice', but any pointers would be appreciated!)
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