Stocks & Shares ISA - experiences?

[FreeLitres]

Hi all,

I've got some money in cash ISAs but I am looking to diversify future savings into Stocks/Shares. I'm keen to get tax free gains so I don't have to bother with tax returns as a 40% payer. Does anyone here have any experiences of S&S ISAs?

I'm particularly interested in;
How you chose your investments and how easy the process was to put the ISA wrapper around them.
Roughly how much money have you won/lost on your best/worst years
How much admin/monitoring you have to do after it's all set up

Thanks

[telford_mike]

It depends entirely what you buy. The tax wrapper (ISA) doesn't really make any difference.

Examples:

1. You go to a bank e.g. Virgin Money and buy one of their managed S&S ISAs. Absolutely nothing for you to do. Wait 5 years and collect (hopefully) a nice return. For this they will charge you about 1% a year.

2. Open an account with one of the Supermarkets e.g. Charles Stanley or (if you are really wealthy) Hargreaves Lansdown. Stick your £15k in the account. You can now buy and sell funds or individual shares to your hearts content. Every trade will cost you a small fee, and there will be an annual charge too, but it might still work out cheaper than example 1. Of course if you choose poorly you could lose the lot. You could always buy a few managed funds however, and take a similar approach to buying direct from a bank - just sit back and hope the markets improve.

Either way it's a better option (IMHO) than a cash ISA at 1.5%, assuming you can leave your money alone for 5 years or so.

[Grandad7184]

for the shares side may be worth asking in this thread

http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[trowelhead]

[quote=FreeLitres]Hi all,

I'm particularly interested in;
How you chose your investments and how easy the process was to put the ISA wrapper around them.

In order to hold a S&S ISA - you'll need a platform / broker.

Some charge a one off fee per month / year / trade. Others charge as a % of your assets / balance held with them.

Rule of thumb is that if you have a small amount, % of total amount works out cheaper. As you amass larger balances, a platform that charges based on yearly fee / fee per trade is cheaper.

I personally use Barclays Stockbrokers - but you can compare platforms here:

http://monevator.com/compare-uk-cheapest-online-br...


How i chose what to invest in?

Personally, i'm a passive investor. I invest into low cost index funds.

The reason why is twofold. 1) It's easy 2) Passive investing into index trackers (funds that buy into a whole slice of a market thus mirroring it's performance) have been proven to perform better than actively managed funds (people trying to beat the market) 90% of the time:

http://www.businessinsider.com/index-funds-beat-ac...


I've chosen to invest in a low cost fund that holds a mix of equities and bonds globally - to give exposure to a balanced portfolio of global assets.

I only use funds with a very low admin charge per year.

To find out why this is vital, check out this tool:
https://www.vanguard.co.uk/uk/portal/investor-reso...

I'm personally using one of the Vanguard Lifestrategy funds:
http://monevator.com/vanguard-lifestrategy/

Another popular strategy is to hold a UK index tracker (either FTSE 100 / 250 / All Share - again a pretty easy and passive option.



Roughly how much money have you won/lost on your best/worst years

Quoting from Morley Fool:

"Since 1869, the UK stock market has returned an average of around 9% a year.

However, returns over shorter periods have been much more variable. For example, average annual 20-year returns during this period have varied from as low as 3% to as high as 20%. Even over 50-year periods, returns have varied from around 5% to 14%."

So if you are investing into a tracker mirroring UK equities - these are the historical returns. One can assume these returns as a fair ball park to expect in the future.

How much admin/monitoring you have to do after it's all set up


If you are passive investing into a low cost tracker fund - almost no admin or monitoring is required.

Oh and another tip - if investing into funds learn the difference between ACC (accumulation) and INC (income) funds. ACC can be useful if you want to re-invest your dividends to enjoy the benefits of compound interest.

[Ginge R]

I really like Passives, but it's fair to say the jury is still out. Bear in mind that Passives can more outperform Actives on a rising market, than a falling one. But as force multipliers they have to be considered, at least as a fusion with Actives - especially as Fidelity Passives can be had for as little as 0.07%.

Cheapest isn't *always* bestest though.

[Jockman]

I go for the scariest Funds my health can take, always top funds though, and see what happens. I have no more than £2.5k in any single fund at the moment.

Premium Bonds / Cash Isas / Savings Accounts act as a good counterbalance

[FreeLitres]

trowelhead said:

Interesting and detailed post

Wow, thanks for all this info!

Would you say there is a minimum amount to put into a S&S ISA to get things going? Or can I deposit £1000 a month fairly easily? Do I have to allocate each deposit to a particular fund?

[Newc]

The platform providers will be absolutely delighted to arrange a 1k a month regular savings setup for you. You can generally select to invest it in one fund, across a selection of funds, or hold it as cash for you to swoop in every few months and make an investment.

[audidoody]

You can open a S&S ISA account with The Share Centre and do all your own trading online making all your own decisions. No management fees, just the usual stamp duty and commission on transactions (e.g. around £14 for a £1000 trade). The limit is £15k a year so your £1,000 a month is about right.

I've gone for a blue-chip portfolio which relies on dividend for growth rather than share price growth

Edited by audidoody on Tuesday 12th August 22:05

[trowelhead]

FreeLitres said:

Would you say there is a minimum amount to put into a S&S ISA to get things going? Or can I deposit £1000 a month fairly easily? Do I have to allocate each deposit to a particular fund?

As others have said, most platforms/brokers will allow you to set up a monthly direct debit to credit your investment account.

This can be auto allocated to your selected shares / funds or you can choose to hold in cash and invest when you're ready.

[xr287]

I would highly recommend using Hargreaves Lansdown, very investor friendly interface and process. As far as I can tell some of if not the lowest charges around. Best thing is because the initial investment fees on funds are mostly 0% via HL you can very easily spread money around because it is effectively free to trade. You only pay the annual charges for holding but can move in and out of funds as often and as freely as you like if you change your mind about your strategy or want to cash out gains or cut some losses.

They also have the wealth 150 and wealth 150+ list of funds so if you're not that familiar or comfortable with doing your own research you can use these as a sort of smaller pool of "endorsed" funds to choose from.

[trowelhead]

Ginge R said:

Fidelity Passives can be had for as little as 0.07%

Indeed, I currently have a small holding of their UK tracker which has the 0.07% fee.

Compare this to the uk tracker from Virgin that charges a 1% fee per year...

Let's say we made a 10k investment into each of these funds and leave them untouched for 25 years, and assume a return of 8% p/a

Total returns would be £58.484.75. However with the fidelity fund at 0.07% p/a we lose £1355.55 of these returns in fees

However the virgin money account with the 1% fee loses £15214.52 to fees.

Pretty significant and another reason to do the maths on fees charged on active funds over cheap trackers.

Edited by trowelhead on Wednesday 13th August 10:28

Edited by trowelhead on Wednesday 13th August 10:28

[Mattt]

Your figures aren't right, you're saying 0.7% then 0.07%

[Ginge R]

I've put a list of Fidelity costs below but bear in mind you'd probably also have to pay some form of other fees on top (platform etc). Assuming a linear 8% growth pa is a litle tasty - I wish, though (that's what I was told when I took out my first endowment as a wet behind the ears lad ).

[bad company]

I have been buying stocks & shares for some years now. Hargreaves Lansdown are very user friendly but somewhat expensive imo. I prefer Halifax Bank.

I would recommend 'feeling your way in' by buying just a few holdings until you feel more confident. You can also elect to reinvest your dividends back into the shares as it looks like you do not need additional income.

[trowelhead]

Mattt said:

Your figures aren't right, you're saying 0.7% then 0.07%

My mistake, edited now. Figures were worked out using correct fee.