£150 a month into an isa - cash or shares?
Discussion
I'm going to start a new isa for 2013/14 tax year. Not worried about risk as it's such a small sum - I will be using £150 per month standing order, it own't increase for the forseeable future. Should I put this into a cash isa or share isa?
I don't want a crappy share isa where I find out in years to come that all the increase was eaten up by charges, does that happen? I suspect so, but maybe it doesn't.
I don't want a crappy share isa where I find out in years to come that all the increase was eaten up by charges, does that happen? I suspect so, but maybe it doesn't.
The logic would be a basket of stocks, so the FTSE ETF would be best.
However, dealing costs will screw you. Even at £10 per side that's a 7% capital loss instantly on each £150.
As such, the best plan would be to put the £150 aside as cash each month and then every 6 months convert it to stock.
Over 15+ years this will give you the best results in theory by allowing a relatively regular buying in to both growth and income stocks while minimising costs.
However, dealing costs will screw you. Even at £10 per side that's a 7% capital loss instantly on each £150.
As such, the best plan would be to put the £150 aside as cash each month and then every 6 months convert it to stock.
Over 15+ years this will give you the best results in theory by allowing a relatively regular buying in to both growth and income stocks while minimising costs.
thanks. I have one cash isa already with ing with a lump sum in it, that I can't pay into any more- they said I have to open a new one. In oct 13 the rate falls to 1% so (at that point would be wise) are you saying I'm allowed to convert it into (a competitor's) stocks and shares isa?
DonkeyApple said:
The logic would be a basket of stocks, so the FTSE ETF would be best.
However, dealing costs will screw you. Even at £10 per side that's a 7% capital loss instantly on each £150.
As such, the best plan would be to put the £150 aside as cash each month and then every 6 months convert it to stock.
Over 15+ years this will give you the best results in theory by allowing a relatively regular buying in to both growth and income stocks while minimising costs.
What about share purchase schemes with investment trusts, that was a cheap way of making small regular buys.However, dealing costs will screw you. Even at £10 per side that's a 7% capital loss instantly on each £150.
As such, the best plan would be to put the £150 aside as cash each month and then every 6 months convert it to stock.
Over 15+ years this will give you the best results in theory by allowing a relatively regular buying in to both growth and income stocks while minimising costs.
Twas a while ago when I last saw these, but I'm sure Foreign & Colonial, Aberdeen and possibly Shire had this method of purchase. (Fill out form, send to registered office etc)
jeff m2 said:
DonkeyApple said:
The logic would be a basket of stocks, so the FTSE ETF would be best.
However, dealing costs will screw you. Even at £10 per side that's a 7% capital loss instantly on each £150.
As such, the best plan would be to put the £150 aside as cash each month and then every 6 months convert it to stock.
Over 15+ years this will give you the best results in theory by allowing a relatively regular buying in to both growth and income stocks while minimising costs.
What about share purchase schemes with investment trusts, that was a cheap way of making small regular buys.However, dealing costs will screw you. Even at £10 per side that's a 7% capital loss instantly on each £150.
As such, the best plan would be to put the £150 aside as cash each month and then every 6 months convert it to stock.
Over 15+ years this will give you the best results in theory by allowing a relatively regular buying in to both growth and income stocks while minimising costs.
Twas a while ago when I last saw these, but I'm sure Foreign & Colonial, Aberdeen and possibly Shire had this method of purchase. (Fill out form, send to registered office etc)
It's well worth contrasting them however. The market spread of the iShare is 0.5p and its correlation to the index is perfect for mod to long term holdings. Execution can be done for around £5 per side which on a monthly basis is more costly than maybe entry spreads into a fund but you have no need of monthly stake building with this type of portfolio, half yearly or even annual is actually sufficient as the time horizon is long.
There could be wrapper fees to contrast as well.
CRB14 said:
Stocks and Shares ISA and I'd probably go for a well performing fund. I I have the Invesco Perp. High Income Accumulator which has performed very well for me. If you buy a fund through a fund supermarket you can get them for 0% fee and can actually earn a rebate too.
That would be a rebate on the fees you've paid that are wrapped into the spread then. 
There is always a fee. If it is not totally transparent then it will be very high, hence the need to hide it.
A rebate is also a public announcement of excess charges.
Currently cash rates are low and have been for years that's likely to continue for years to come though we have a new BoE guv in place so might make changes?
As for shares the FTSE is at a real high currently - so logically you'd say its a bad time to buy - but is it? Who knows. I'd say most likely stocks will do better than cash as frankly if you hold cash your losing money Year on Year due to inflation.
Personally I've lost a fortune on shares - but those were single chosen stocks ill not do that again badly burnt instead unit trusts or open ended investment trusts
As for shares the FTSE is at a real high currently - so logically you'd say its a bad time to buy - but is it? Who knows. I'd say most likely stocks will do better than cash as frankly if you hold cash your losing money Year on Year due to inflation.
Personally I've lost a fortune on shares - but those were single chosen stocks ill not do that again badly burnt instead unit trusts or open ended investment trusts
ringram said:
Save cash into a stocks and shares isa
Convert into stocks if and when appropriate.
What he said.Convert into stocks if and when appropriate.
http://www.hl.co.uk/investment-services/isa
DonkeyApple said:
That would be a rebate on the fees you've paid that are wrapped into the spread then.
There is always a fee. If it is not totally transparent then it will be very high, hence the need to hide it.
A rebate is also a public announcement of excess charges.
Maybe but I'm nearly 20% up in 6 months excluding the income payout so I'm not really bothered. It's working far better than any savings account I could find. There is always a fee. If it is not totally transparent then it will be very high, hence the need to hide it.
A rebate is also a public announcement of excess charges.
Edit; before someone comes along with a smart answer I'm fully aware that profit isn't realized until I've sold.
Welshbeef said:
Currently cash rates are low and have been for years that's likely to continue for years to come though we have a new BoE guv in place so might make changes?
As for shares the FTSE is at a real high currently - so logically you'd say its a bad time to buy - but is it? Who knows. I'd say most likely stocks will do better than cash as frankly if you hold cash your losing money Year on Year due to inflation.
Personally I've lost a fortune on shares - but those were single chosen stocks ill not do that again badly burnt instead unit trusts or open ended investment trusts
I think we have all done that - part of the learning processAs for shares the FTSE is at a real high currently - so logically you'd say its a bad time to buy - but is it? Who knows. I'd say most likely stocks will do better than cash as frankly if you hold cash your losing money Year on Year due to inflation.
Personally I've lost a fortune on shares - but those were single chosen stocks ill not do that again badly burnt instead unit trusts or open ended investment trusts
I read quite a lot, it would appear many think that most of the developed economies are currently fully valued. Making them more of a hold than a buy. I am now "feeding" Asia and Emerging Markets which had massive redemptions over the past couple years. On the basis they may catch up, even if they don't it will still re balance my investments.
I have quite a few Bonds, mostly Mixed Emerging Market, these are starting to have much larger daily movement than I am comfortable with, up close to 20% over 2 years. What to do with this money is a problem, although I could just hold for the 5% yield. Which should remain $ constant.
If I was going to invest in UK, which I don't I would avoid the FTSE and look for a fund with a wider net, mid caps or consumer staples maybe.
all looks complicated now 
I like the (hl?) link above, but then, what - you have to choose your fund or something?
can <embarrased> anyone choose me a suitable option from what they've got? ie regular ftse basket of some description, with very low managment fees & intitial cost? This is to stick a lump sum into.
I like the (hl?) link above, but then, what - you have to choose your fund or something?
can <embarrased> anyone choose me a suitable option from what they've got? ie regular ftse basket of some description, with very low managment fees & intitial cost? This is to stick a lump sum into.CoolHands said:
all looks complicated now
I like the (hl?) link above, but then, what - you have to choose your fund or something? can <embarrased> anyone choose me a suitable option from what they've got? ie regular ftse basket of some description, with very low managment fees & intitial cost? This is to stick a lump sum into.
Invesco Perpetual High Income Accumulation Fund has been a 'benchmark' fund over the past few decades. Very low fee's. All the details here.I like the (hl?) link above, but then, what - you have to choose your fund or something?
can <embarrased> anyone choose me a suitable option from what they've got? ie regular ftse basket of some description, with very low managment fees & intitial cost? This is to stick a lump sum into.http://www.hl.co.uk/funds/fund-discounts,-prices--...
You're going in on a rising market, many 'experts' expect the FTSE to hit 7000 this year, but be ready to cash out if it all starts dropping, look at the charts to see what happened to this fund (and many others) around the 2008-2009 crash.
Edited by megaphone on Thursday 23 May 08:17
megaphone said:
Invesco Perpetual High Income Accumulation Fund has been a 'benchmark' fund over the past few decades. Very low fee's. All the details here.
http://www.hl.co.uk/funds/fund-discounts,-prices--...
You're going in on a rising market, many 'experts' expect the FTSE to hit 7000 this year, but be ready to cash out if it all starts dropping, look at the charts to see what happened to this fund (and many others) around the 2008-2009 crash.
As my post above - this fund over the past 6 months has done very well for me. The manager Neil Woodford seems to know what he's doing and other than watching it creep up consistently this requires very little management. Do make sure you re-invest the income payouts though so you can compound the interest. http://www.hl.co.uk/funds/fund-discounts,-prices--...
You're going in on a rising market, many 'experts' expect the FTSE to hit 7000 this year, but be ready to cash out if it all starts dropping, look at the charts to see what happened to this fund (and many others) around the 2008-2009 crash.
Edited by megaphone on Thursday 23 May 08:17
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