Halifax stocks and shares ISA - worth doing?

[Ari]

I'm self employed, debt free, earn a reasonable but not huge amount these days and have a modest (five figure) amount in an ISA earning a paltry 1% which is my 'emergency fund'.

I'd really like to start putting some money into something that could be a little more rewarding. Maybe a regular £100/month and let it build, with any money earned going back in to it, and not touching it for twenty years in the hope that it will build into a decent nest egg.

I bank with the Halifax and notice that they offer Stocks & Shares ISAs.

http://www.halifax.co.uk/investments/our-investmen...

There seem to be three 'managed growth funds'.

I know nothing about investing but figure anything is better than nothing (but equally would welcome advice on the most efficient ways to go about it).

Any thoughts on these?

Have also been considering a simple FSTE100 tracker and dribbling money into that.

All thoughts and advice would be much appreciated.

[Ozzie Osmond]

IMO in these days of very low interest rates there's no point "wasting" the excellent tax benefits of an ISA by leaving it simply as a cash ISA savings account.

• Interest received is tiny so income tax relief obtained is even tinier
• The value of the original investment doesn't change so there's no benefit from Capital gains tax relief.
• Due to inflation you are likely to be losing money in a cash ISA these days.

Which leads me to believe it's worth doing a stocks & shares ISA instead, in the hope of accumulating both,

• Tax free income, AND
• Tax free capital gains
• Which hopefully will, over time, give a return well ahead of inflation.

[greygoose]

Have a look at a few websites to see the performance of the funds and what the charges are. If you just want a tracker then the charges should be low. Putting money in every month is the best way to even out the costs and balance out the peaks and troughs of the market.

[Ari]

Ozzie Osmond said:

IMO in these days of very low interest rates there's no point "wasting" the excellent tax benefits of an ISA by leaving it simply as a cash ISA savings account.

• Interest received is tiny so income tax relief obtained is even tinier
• The value of the original investment doesn't change so there's no benefit from Capital gains tax relief.
• Due to inflation you are likely to be losing money in a cash ISA these days.

Which leads me to believe it's worth doing a stocks & shares ISA instead, in the hope of accumulating both,

• Tax free income, AND
• Tax free capital gains
• Which hopefully will, over time, give a return well ahead of inflation.

Thank you. Pretty much my thoughts (although as well, not instead), hence the post.

Question is, how and where?

[Ari]

greygoose said:

Have a look at a few websites to see the performance of the funds and what the charges are. If you just want a tracker then the charges should be low. Putting money in every month is the best way to even out the costs and balance out the peaks and troughs of the market.

The Halifax ones all say they are too new to have any performance history.

Tempted to just get a FSTE100 tracker. Not the most exciting I know, but presumably pretty safe and should be reliable.

But again, which one?

Completely new to this.

[gregf40]

Ari said:

The Halifax ones all say they are too new to have any performance history.

Tempted to just get a FSTE100 tracker. Not the most exciting I know, but presumably pretty safe and should be reliable.

But again, which one?

Completely new to this.

Buy shares in "ISF" (iShares FTSE100) - it's a FTSE 100 tracker fund.

I actually use Halifax's share dealing service and I cannot fault them. I would happily recommend them actually.

[Ozzie Osmond]

Ari said:

Question is, how and where?

Where? Big retail providers with low costs and a good choice of funds include Fidelity and Hargreaves Lansdown.

How? I'd go for any of the well-regarded equity income funds, or Legal and General offer some cost-effective trackers. Personally I consider FTSE100 a bit narrow as it's heavily dominated by the top ten companies (the biggest companies are very, very big) and limited sectors (like energy, banks and pharmaceuticals)

Summary?

• Get some stocks and shares on board with a sensible spread of risk,
• Invest monthly to smooth early market fluctuations,
• Hold tight for the ride!

[Craikeybaby]

I'm a couple of months ahead of you, I went with Fidelity (via Cavendish) unfortunately the fund I went for has decreased in value just after I joined, although it is on its way back up now and I am in it for the long term.

[Ian350]

Some years ago I just registered online with Fidelity and bought/sold my own funds over the internet. It was very easy to do. I would recommend Fidelity.

[nyt]

There's no need to only open one share type ISA. Open several and spread your risk.

Look very closely at charges. A seemingly small difference like 0.5pc can make a big difference to the fund's growth.

Some vendors like https://www.chelseafs.co.uk rebate initial commission. Check if they offer the funds that you want.

Both Fundsmith and Woodford offer low charges and have done moderately well.

It's not a great time to be investing at the moment IMHO, as the Greece situation is making things very volatile.

[gregf40]

nyt said:

It's not a great time to be investing at the moment IMHO, as the Greece situation is making things very volatile.

Be greedy when others are fearful.

[Ari]

nyt said:

It's not a great time to be investing at the moment IMHO, as the Greece situation is making things very volatile.

That thought had crossed my mind too.

Just so frustrating earning the square root of feck all and knowing that you're going backwards in real terms.

Hence the thought to draw a line under what I have, keep that safe (if unproductive) in a savings ISA and try and find another route to growth.

[Ari]

gregf40 said:

Be greedy when others are fearful.

Don't disagree with that, but the fear (if there is any) doesn't seem to have translated into downward pressure on share prices yet.

It feels to me that there is a lot of sheeplike behaviour about these things. Whilst everyone else is holding on, no one wants to stick their neck out and bail. Once a few do though, the rest follow for fear of being the one left standing when the music stops.

Not that I profess to know much about it really, hence asking for advice.

[Countdown]

nyt said:

There's no need to only open one share type ISA. Open several and spread your risk.

My understanding was that you could only have ONE Stocks & Shares ISA in any one year. Has that changed?

[thekingisdead]

Countdown said:

nyt said:

There's no need to only open one share type ISA. Open several and spread your risk.

My understanding was that you could only have ONE Stocks & Shares ISA in any one year. Has that changed?

The ISA is merely the wrapper in which you buy your investments, in this case, funds. You can only have 1 'wrapper' per year.

[BoRED S2upid]

Before deciding which fund to go for check what it's done over the last 5 years it's a very simplistic way of doing it but I figure if a fund has done 10% a year every year then it has a chance of continuing to do so. It's working so far with the 2 / 3 funds I picked.

[Ari]

Is 10% the sort of rate you can reasonably expect from one of these!?

[davepoth]

Ari said:

Is 10% the sort of rate you can reasonably expect from one of these!?

No. You can get 10% but you don't always. In many ways it's like betting on horses. The odds are better but you can always lose.

[mikeiow]

BoRED S2upid said:

Before deciding which fund to go for check what it's done over the last 5 years it's a very simplistic way of doing it but I figure if a fund has done 10% a year every year then it has a chance of continuing to do so. It's working so far with the 2 / 3 funds I picked.

Would you mind sharing which funds those are?

[Ozzie Osmond]

For instance, have a look at Artemis Income Fund.

http://www.artemis.co.uk/investor/products/artemis...

By the way, 10% is IMO just sexy talk based on short term performance. But with a bit of luck you should see 7% or so p.a. over the longer term. As they say, past performance is no guarantee of future returns. But unless you are very unlucky it should easily whip the building society.