Stock and shares ISA

[Cooper2]

Hi,
I want to try my luck with Stock and Shares ISA for the first time. I am planning to put £10k and reassess after a year or 2. A financial planner is going to set up everything for me and charge an initial fee of £300 (3% of the £10k) and an annual fee 1% of the value of the investment thereafter. I will also get charge 0.35% per annum for the platform (Novia).
Do these charges are sensible? Should I look for a different option?
Any feedback would be appreciated.

[bogie]

You can setup yourself in 5 mins online free of charge.Your bank will probably offer a stocks n shares ISA facility

you can then select some low cost index funds from popular providers with the minimum fees possible (well under 1%)

lots of info on Vanguard website, they are some of the most popular low cost funds you can find.

If you are tech savvy enough to access your own online banking, you can set yourself up with an ISA

https://www.vanguardinvestor.co.uk

[2Btoo]

bogie said:

You can setup yourself in 5 mins online free of charge.Your bank will probably offer a stocks n shares ISA facility

you can then select some low cost index funds from popular providers with the minimum fees possible (well under 1%)

lots of info on Vanguard website, they are some of the most popular low cost funds you can find.

If you are tech savvy enough to access your own online banking, you can set yourself up with an ISA

https://www.vanguardinvestor.co.uk

Very much this!

If your 'financial planner' will charge you £300 to do it for you then I'll do it for £280.

[Cooper2]

Thank you for the replies. Looking for a fully managed fund. My comparison was nutmeg that would charge me 1.01% for £10k investment as opposed to 1.35% i would get charged from the 2nd year with the option i posted. What would be your suggestion for a fully managed stock and share ISA platform?

[putonghua73]

Do you mean actively managed? Fundsmith and Lindsell Train are both recommended on PH in terms of actively managed funds. Both are cheaper than what you have been quoted, and both I suspect would achieve better returns.

From your starting point, I would forgo putting any money into a S&S ISA because I hold the opinion that a basic level of financial literacy is required before putting cash into the market. If only to understand the pyschological aspects and to stop the likely scenario that if your portfolio turns 'red', you'll immediately jack it in. Also, 2 years isn't sufficient time. That said, the first paragraph answers your question!

[bogie]

Fundsmith was my best fund last year, I moved into it in my SIPP out of an old work pension last May, 16% up in 12 months. Hope it continues

[Cooper2]

putonghua73 said:

Do you mean actively managed? Fundsmith and Lindsell Train are both recommended on PH in terms of actively managed funds. Both are cheaper than what you have been quoted, and both I suspect would achieve better returns.

From your starting point, I would forgo putting any money into a S&S ISA because I hold the opinion that a basic level of financial literacy is required before putting cash into the market. If only to understand the pyschological aspects and to stop the likely scenario that if your portfolio turns 'red', you'll immediately jack it in. Also, 2 years isn't sufficient time. That said, the first paragraph answers your question!

Yes, actively managed. Will have a look at the suggestions.

[2Btoo]

bogie said:

Fundsmith was my best fund last year, I moved into it in my SIPP out of an old work pension last May, 16% up in 12 months. Hope it continues

I'm opening myself up for a flaming here but I've simply stuck everything into Fundsmith. That was back in 2012 and I've not regretted it.

(However I'm a brainless creature and doubtless the people who actually know what they are talking about will appear to say how big a risk I am taking and how much better I could have done with a different strategy. Me? I like simple.)

[bogie]

2Btoo said:

bogie said:

Fundsmith was my best fund last year, I moved into it in my SIPP out of an old work pension last May, 16% up in 12 months. Hope it continues

I'm opening myself up for a flaming here but I've simply stuck everything into Fundsmith. That was back in 2012 and I've not regretted it.

(However I'm a brainless creature and doubtless the people who actually know what they are talking about will appear to say how big a risk I am taking and how much better I could have done with a different strategy. Me? I like simple.)

Well the return since inception on Fundsmith has been fantastic, one of the reasons I chose it myself last year. Will move some of my old school dividend paying stocks across into it next month (when ive got the dividends!) as the total return on those has been good, but 50% of what Fundsmith has done in recent years.

...its not *that* bad to have all your investment in one fund, as at least the fund is diversified to a certain degree, its different to having it all in a single share. Later on as your investment grows you can always expand into other things. I cant remember touching one of my pensions for over 10 years, just chose a fund and forgot about it .....sometimes the best way.

[Sheepshanks]

2Btoo said:

I'm opening myself up for a flaming here but I've simply stuck everything into Fundsmith. That was back in 2012 and I've not regretted it.

(However I'm a brainless creature and doubtless the people who actually know what they are talking about will appear to say how big a risk I am taking and how much better I could have done with a different strategy. Me? I like simple.)

Wow - I wish I'd done that. Isn't hindsight a wonderful thing! I started a bit later and have steadily added to it.

There is a school of thought that it's done so well it surely can't continue. And it's very exposed to the US, so has benefitted from the weakness of the £ vs $. But my company's income is mainly in $ so that's a good thing for us.


OP: have a look at Intelligent Money on here.

[Cooper2]

Sheepshanks said:

Wow - I wish I'd done that. Isn't hindsight a wonderful thing! I started a bit later and have steadily added to it.

There is a school of thought that it's done so well it surely can't continue. And it's very exposed to the US, so has benefitted from the weakness of the £ vs $. But my company's income is mainly in $ so that's a good thing for us.


OP: have a look at Intelligent Money on here.

I just google intelligent money and if I understood correctly it requires a minimum investment of £100k which is 10 times more than what I got available. My reasoning for an actively managed stock and share isa is due to my lack of knowledge. Doing further research online found an article indicating expected cost from a financial advisor:
Cost - Different advisers have different charging structures. For example, some will charge a percentage of assets under management, others will charge a fixed fee. The very average rule of thumb is that advisers charge about 3% for the upfront advice which tends to take a lot of time and then 0.5% - 1% a year for the ongoing work and management. Advisers now are obliged to cost out their fees very clearly and some may also agree to do ad hoc work for an agreed hourly fee. Depending on where you live, £120 - £200 is the normal range. £150ish an hour is average.
From that I gather that 3% is sort of standard for a financial advisor for the upfront advice.
Trying to understand Fundsmith and see if I could put some money there. How often do you guys advice me to reconsider? As a starter I was thinking to just put £10k as an ISA but could put £5k extra on Fundsmith.

[JulianPH]

Sheepshanks said:

OP: have a look at Intelligent Money on here.

Thanks for the mention!

[JulianPH]

Cooper2 said:

I just google intelligent money and if I understood correctly it requires a minimum investment of £100k which is 10 times more than what I got available. My reasoning for an actively managed stock and share isa is due to my lack of knowledge.

OP - Intelligent Money has no minimum for PHers and no initial charge either. Have a look at the sponsored thread at the top of the Finance section for more info.

[pac1uk]

One of the best things you can do in life is to take control of your finances. Research, learn and make your own decisions.

Personally would not pay a FA to set up a Stock & Shares ISA, as previous posts stated you can do this in 5 minutes. If you are not confident yet, don't put all the £10K in one go. Put a couple of thousand in first.

Trackers have done well for me, low management costs.

Personally investments are long term, not a couple of years.

[bogie]

JulianPH said:

Cooper2 said:

I just google intelligent money and if I understood correctly it requires a minimum investment of £100k which is 10 times more than what I got available. My reasoning for an actively managed stock and share isa is due to my lack of knowledge.

OP - Intelligent Money has no minimum for PHers and no initial charge either. Have a look at the sponsored thread at the top of the Finance section for more info.

Forgot there was no minimum for PH

For the OP, exactly what you want to do you can do with Intelligent money, as above, go read the thread and check out their charges.....

[Cooper2]

bogie said:

Forgot there was no minimum for PH

For the OP, exactly what you want to do you can do with Intelligent money, as above, go read the thread and check out their charges.....

Thanks. I have started reading the thread. 25 pages and currently on page 3.

[anonymous-user]

Cooper2 said:

Hi, I want to try my luck with Stock and Shares ISA for the first time. I am planning to put in 10k and reassess after a year or 2.

Suggestions,

• Forget the financial planner. Look, you've made £300 already! And that £300 will grow. *
• Read around this finance forum a little, including the Intelligent Money thread (whether or not you go that way).
• Keep the costs DOWN. You want your total expenses under 1% p.a. if possible. (3% at the start would blow this out of the water.)
• Get the investment risk UP. Sensibly up, not damn silly. Global equities fund(s) or something like that.

Bear in mind that ISA has great tax advantages and the more money you make the more tax you avoid! So it's the right place for risk investments. Very little point putting "savings" in an ISA these days because many savings are already tax free and it wastes the tax benefits of ISA.


Example: Let's assume you hold these investments for 10 years earning a modest 5% p.a. net return after fees.
That £300 fee at the start - what would it be worth if you'd avoided the fee and had the money invested for 10 years?
Answer: £490
So paying that adviser will actually cost you £490, not £300.

[JulianPH]

Great post Steve.

I've just run the figures through a calculator that assumes 7% annual growth after investment charges and compared returns with the adviser charges added and without the adviser charges:


10 Years

• With adviser charges - £17,264

• Without - £19,671

• Cost of adviser - £2,407

20 Years

• With adviser charges - £30,729

• Without - £38,696

• Cost of adviser - £7,967

30 Years

• With adviser charges - £54,694

• Without - £76,122

• Cost of adviser - £21,428

40 Years

• With adviser charges - £97,349

• Without - £149,744

• Cost of adviser - £52,395

50 Years

• With adviser charges - £173,269

• Without - £294,570

• Cost of adviser - £121,301

Compound growth in its full glory, highlighting the difference between paying a financial adviser or not.

[Cooper2]

JulianPH said:

Great post Steve.

I've just run the figures through a calculator that assumes 7% annual growth after investment charges and compared returns with the adviser charges added and without the adviser charges:


10 Years

• With adviser charges - £17,264

• Without - £19,671

• Cost of adviser - £2,407

20 Years

• With adviser charges - £30,729

• Without - £38,696

• Cost of adviser - £7,967

30 Years

• With adviser charges - £54,694

• Without - £76,122

• Cost of adviser - £21,428

40 Years

• With adviser charges - £97,349

• Without - £149,744

• Cost of adviser - £52,395

50 Years

• With adviser charges - £173,269

• Without - £294,570

• Cost of adviser - £121,301

Compound growth in its full glory, highlighting the difference between paying a financial adviser or not.

Thanks for the information Julian. I have sent an email to [e-mail]
Hoping to get a response by early next week so I can go ahead. Wasn’t aware of the sponsored threat but gave me more confidence and a better direction on what to do.
Thanks!

[JulianPH]

Cooper2 said:

Thanks for the information Julian. I have sent an email to [e-mail]
Hoping to get a response by early next week so I can go ahead. Wasn’t aware of the sponsored threat but gave me more confidence and a better direction on what to do.
Thanks!

Hi Cooper2, send me a PM if you would like a quicker response!