Drip feeding a s&s isa vs a etf
Discussion
I'm considering putting more of my cash into a shares isa or etf as it's earning bugger all in a savings account .
The shares isa will be tax free so are there any advantages to go with the etf instead ?
Rather than dumping a load in a couple of times a year i plan on either dripping it in monthly or weekly .
The shares isa will be tax free so are there any advantages to go with the etf instead ?
Rather than dumping a load in a couple of times a year i plan on either dripping it in monthly or weekly .
putonghua73 said:
I too read the OPs post as inferring an incorrect belief that an ETF cannot be included in a S&S ISA.
An ISA is just a tax-wrapper i.e. tax-free accounts for savings or investments - ETFs can be included in a S&S ISA. The reason it is generally not advisable to use an ETF with smaller (<£1k per contribution) regular contributions is because ETFs are traded like shares i.e. you pay brokerage costs to buy and sell an ETF.
If you invested £1.2k over a year (£100 p/m), you would end up paying 12 lots of buying costs, which could equate to c10% However, I believe that Vanguard (maybe other brokers) offer free dealing on the proviso that you use bulk dealing i.e. bulked transactions twice a day. If you want an intra-day price, you pay £7.50.
Once you identify a fund that you wish to invest in, look at the on-going management fees and any transaction costs for making regular contributions for a mutual fund and for the ETF. You can then decide what is the better option. Note: make sure that you read the factsheets very carefully to understand how each is tracking the underlying asset. They may track in very different ways, that may give different results [variance to the underlying asset] and be more riskier than initially suspected.
So instead of drip feeding i'd be better off dumping it in twice a year and paying less brokerage fees.An ISA is just a tax-wrapper i.e. tax-free accounts for savings or investments - ETFs can be included in a S&S ISA. The reason it is generally not advisable to use an ETF with smaller (<£1k per contribution) regular contributions is because ETFs are traded like shares i.e. you pay brokerage costs to buy and sell an ETF.
If you invested £1.2k over a year (£100 p/m), you would end up paying 12 lots of buying costs, which could equate to c10% However, I believe that Vanguard (maybe other brokers) offer free dealing on the proviso that you use bulk dealing i.e. bulked transactions twice a day. If you want an intra-day price, you pay £7.50.
Once you identify a fund that you wish to invest in, look at the on-going management fees and any transaction costs for making regular contributions for a mutual fund and for the ETF. You can then decide what is the better option. Note: make sure that you read the factsheets very carefully to understand how each is tracking the underlying asset. They may track in very different ways, that may give different results [variance to the underlying asset] and be more riskier than initially suspected.
Does a index tracker have any benefits over a ETF ?
What i'm after is a alternative to a savings account where i can park money for 10 years .
I have no mortgage and paying the max into my work pension so at the moment all spare money sits in cash isa .
I've really only started looking but these etf's seem to perform well :
i shares core s&p 500
vanguard total stock market
vanguard s&p 500
invesco qqq trust
i haven't really being much notice of 1 year results more 5-10 year results.
some of the things i've read are saying the ftse is taking a bashing because of brexit fears so that's worth buying into as the shares are low .
One other thing would it be worth putting 50-100 month in a really risky area / emerging market or maybe peer to peer lending ?
i shares core s&p 500
vanguard total stock market
vanguard s&p 500
invesco qqq trust
i haven't really being much notice of 1 year results more 5-10 year results.
some of the things i've read are saying the ftse is taking a bashing because of brexit fears so that's worth buying into as the shares are low .
One other thing would it be worth putting 50-100 month in a really risky area / emerging market or maybe peer to peer lending ?
JulianPH said:
DodgeeDave said:
egor110 said:
Minimum investment is 100k so not a option.
I don’t think this applies to ph members.PHers can put in the code PH2607 into the "Additional Information" box when applying and this completely removes the minimum investment requirement (and the initial charge).
It's got ongoing charge fee of 0.22% , would the transaction costs be on top of that and is that every time a share is bought/sold
I've also been looking at the legal and general index trust c , via hargreaves lansdown it only has a fee of 0.8%
Lastly would it be worth having a coffee money punt on emerging markets ?
I could quite easily dump £20 week £100 month into a something a bit risky and worse case all i've lost is money i'd of spent on take away coffee , would it be worth it with this amount of money ?
The product i was looking at is i shares pacific excluding japan equity index which has a 0.15% fee
Thanks everyone for your time replying ,
Edited by egor110 on Friday 17th May 17:21
So if it's worth getting a low cost product would a index tracker be better than say the vanguard life strategy fund ?
The vanguard has a 0.22% ongoing charge fee ( if i drip fed in once a month would i incur that fee monthly or is it a yearly fee ) , presumably a index tracker should be a lower fee because nobodies managing it , it's just tracking a market ?
Any thoughts on putting £20 week ( coffee money ) into something more risky , emerging markets ?
It's pretty hard to see any countries that are safe at present :
Usa - highly priced so wrong time to buy , economic slowdown on the cards and high government debt
Europe - flat lining
China - entering a slump and the trade war with America , although it seem's they can weather that as so much they produce stays in China.
So is Asia-Pacific worth looking at , such as Australia , Indonesia , Vietnam ?
The vanguard has a 0.22% ongoing charge fee ( if i drip fed in once a month would i incur that fee monthly or is it a yearly fee ) , presumably a index tracker should be a lower fee because nobodies managing it , it's just tracking a market ?
Any thoughts on putting £20 week ( coffee money ) into something more risky , emerging markets ?
It's pretty hard to see any countries that are safe at present :
Usa - highly priced so wrong time to buy , economic slowdown on the cards and high government debt
Europe - flat lining
China - entering a slump and the trade war with America , although it seem's they can weather that as so much they produce stays in China.
So is Asia-Pacific worth looking at , such as Australia , Indonesia , Vietnam ?
b
hstewie said:
hstewie said: LifeStrategy is a good one stop "lazy" but smart choice I think.
Kind of a "Choose your risk level and go" product.
Don't underestimate the fact that investing is not the same as saving.
If you put £1000 in the bank and go and look a month later you'll still have £1000.
If the concept that you might look and find you have £800 is worrying, you should spend some time thinking about your risk tolerance.
I currently have no mortgage and pay the max into my workplace pension so at present all the spare cash is just sitting in cash isa's doing nothing .Kind of a "Choose your risk level and go" product.
Don't underestimate the fact that investing is not the same as saving.
If you put £1000 in the bank and go and look a month later you'll still have £1000.
If the concept that you might look and find you have £800 is worrying, you should spend some time thinking about your risk tolerance.
I'm fine sticking a lump sum in then drip feeding over 10 years so from what i've read i should smooth out the peaks and troughs.
I'm also fine drip feeding the £20 a week i spend on coffee into something high risk , knowing full well it could go tits up but i wouldn't of had that money in the bank anyway as it would of been spent on coffee .
To sum up i just want more money to work a bit harder , i'd like to just set up a direct debit that drips feed each month then forget about it .
Thanks for the reply's.
Phooey said:
No offence meant OP, but I think you need to avoid trying to be too clever. Risk vs Reward and all that, but unless you already have a good degree of financial knowledge (I certainly don't!) I would avoid getting too technical. I'm sure the above links posted are informative, and nice of DC to offer PH members some free advice, but to me they may as well be in foreign, and are exactly the reason why I've chosen a low-cost fully managed ISA.
How come you picked a fully managed as opposed to passive ?Reading reports today there's no proof the extra fees for the fund manager equal better performance opposed to a tracker which just smooths over the peaks and troughs as long as you leave the money in for a decent amount of time , which seems to be the problem most people have.
Reading various threads on here , time and time again people stick money in then panic after a year or 2 rather than treat it like a pension where you just pay the money in and forget about it.
Edited by egor110 on Friday 17th May 18:28
Derek Chevalier said:
Phooey said:
No offence meant OP, but I think you need to avoid trying to be too clever
AgreedI watched a good documentary called ' how to win the loosers game' over the weekend , pretty much said what you've all been saying .
passive , hold for long term .
So tomorrow i'm going to set up either i.m optimum global growth or vanguard life strategy 80/20.
Vanguard fees are 0.22% and im are 0.87% so on the face of it sticking with the low fees mantra vanguard seem's obvious choice .
One last question , i was reading a article re investing modest amounts and they we're saying stick with the whole passive plan but push the risk so a lot more shares than bonds , the argument was you have the chance of building your money quicker but if you lose it you've still only lost a modest amount and once you've built it up then bring the risk down with a more balance shares to bonds.
Also say the ftse dropped into the 6000's again , if i dumped a load of cash into say my im optimum growth would that money then buy me more shares due to the low ftse or do i.m only reinvest like bi annually ?
Thanks for all your help .
passive , hold for long term .
So tomorrow i'm going to set up either i.m optimum global growth or vanguard life strategy 80/20.
Vanguard fees are 0.22% and im are 0.87% so on the face of it sticking with the low fees mantra vanguard seem's obvious choice .
One last question , i was reading a article re investing modest amounts and they we're saying stick with the whole passive plan but push the risk so a lot more shares than bonds , the argument was you have the chance of building your money quicker but if you lose it you've still only lost a modest amount and once you've built it up then bring the risk down with a more balance shares to bonds.
Also say the ftse dropped into the 6000's again , if i dumped a load of cash into say my im optimum growth would that money then buy me more shares due to the low ftse or do i.m only reinvest like bi annually ?
Thanks for all your help .
Derek Chevalier said:
egor110 said:
I watched a good documentary called ' how to win the loosers game' over the weekend , pretty much said what you've all been saying .
The legend speakshttps://youtu.be/SwkjqGd8NC4?t=768
You can invest bi polar style so you chase the highs and lows trying to buy cheap and sell for more making profits or the other alternative is the passive index tracker way so you smooth off all the peaks and troughs.
As this is pistonheads you end up with a nice linear torque curve
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