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Where to start with S&S?

Investment discussion for beginners. Why you should invest your money, get help getting started
Charlottesquare
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Re: Where to start with S&S?

#118872

Postby Charlottesquare » February 18th, 2018, 12:22 am

AleisterCrowley wrote:

If Carillion, for example, was easy to spot as a dog, the price would have collapsed. The fact that the it didn't until various skeletons started dropping out of the cupboard suggests otherwise


Agreed, most people only spot them when they start to howl.
Last edited by tjh290633 on February 19th, 2018, 5:51 pm, edited 1 time in total.
Reason: Corrected attribution - TJH

AleisterCrowley
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Re: Where to start with S&S?

#119059

Postby AleisterCrowley » February 19th, 2018, 2:55 pm

For avoidance of doubt, I wrote that not Alaric. The nested quotes can be fiddly to edit, with misattribution a possibility

Cookie
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Re: Where to start with S&S?

#120168

Postby Cookie » February 24th, 2018, 6:25 pm

Coming back to my original post.....

I have been trying to understand the differences and benefits of ETFs compared to funds? I have read a couple of articles and I am still confused, it seems ETFs might cover more market areas then some Index Fund Trackers, but ETFs might incur higher trading costs on some platforms than funds.

I am also looking at brokers
iweb for me seems to generally the cheapest at £25 to open and then £5 a trade
I have also looked at some other slightly less mainstream options:
- Degiro - around £2 trading costs for shares
- Trading 212 - similar costs to Degiro, but 10x free trades per month of up to £10k each trade (which would be enough for me)
- Plus 500 - no trading fees, seems to some how make money from the spread and deposit/withdrawal fees

How d any of these sound or have you used any?

GeoffF100
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Re: Where to start with S&S?

#120178

Postby GeoffF100 » February 24th, 2018, 7:07 pm

Open ended funds (unit trusts and OEICs) attract a percentage platform fee with some brokers and other platforms. ETFs and Investment Trusts usually do not. If you pay a platform fee, you usually do not pay a trading commission for open ended funds, but you usually do for ETFs and Investment Trusts. You also pay stamp duty when you buy Investment Trusts. Open ended funds are the most idiot proof option.

iWeb is a safe option owned by Llloyds Bank. Degiro's cheap rates apply only if you let them lend out your shares. Plus 500 is CFDs only. I do not know about Trading 212. I could not easily find a full list of fees and terms and conditions on their website.

tjh290633
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Re: Where to start with S&S?

#120197

Postby tjh290633 » February 24th, 2018, 8:49 pm

Cookie, the fundamental difference is that OEICs and UTs are priced once per day, usually at noon, and you never know the exact price at which you buy or sell.

ETFs, on the other hand, are traded on the stock exchange, and you always know the current price, whether buying or selling.

TJH

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Re: Where to start with S&S?

#121169

Postby LooseCannon101 » February 28th, 2018, 8:54 pm

Dabbling in the stockmarket is not a good idea as most people buy when the market is high and sell when it is low.

Buying a highly diversified world equity fund e.g. Foreign and Colonial, Alliance or Witan investment trusts or a Vanguard index tracker, preferably using a monthly saving scheme and/or dividend re-investment, is in my opinion, a much wiser option. Pound-cost averaging actually does work, and holding the fund for the long-term means that no difficult decisions e.g. when to sell, need be made.

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Re: Where to start with S&S?

#126042

Postby Cookie » March 19th, 2018, 3:54 pm

I am encountering TRANSACTION FEES from some brokers in the quote of the cost, which is not included with other brokers - is this a charge for a fund/ETF specific to that platform?

I am looking to buy GBP versions of ETFs, but I am still quoted a FX fee - how does that work?

Alaric
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Re: Where to start with S&S?

#126052

Postby Alaric » March 19th, 2018, 4:24 pm

Cookie wrote:I am encountering TRANSACTION FEES from some brokers in the quote of the cost, which is not included with other brokers - is this a charge for a fund/ETF specific to that platform?


Brokers will vary in their treatment of funds. ETFs would usually have the same commissions as shares, that would be in the £ 5 to £ 20 range on both purchase and sale and higher for telephone dealing. OIECs may be treated the same by the Broker (interactive investor for example) but many will still follow the old method whereby there was no Broker fee on purchase, but there would be a periodic levy as a percentage of value whilst the funds were held. This used to be paid by the Fund management group back to the Broker using a higher management charge. That was outlawed so it's now collected directly. It would usually be termed a platform fee.

If you named the Brokers, those who use them could comment on their charging methods.

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Re: Where to start with S&S?

#126124

Postby Cookie » March 19th, 2018, 7:40 pm

Alaric wrote:
Cookie wrote:I am encountering TRANSACTION FEES from some brokers in the quote of the cost, which is not included with other brokers - is this a charge for a fund/ETF specific to that platform?


Brokers will vary in their treatment of funds. ETFs would usually have the same commissions as shares, that would be in the £ 5 to £ 20 range on both purchase and sale and higher for telephone dealing. OIECs may be treated the same by the Broker (interactive investor for example) but many will still follow the old method whereby there was no Broker fee on purchase, but there would be a periodic levy as a percentage of value whilst the funds were held. This used to be paid by the Fund management group back to the Broker using a higher management charge. That was outlawed so it's now collected directly. It would usually be termed a platform fee.

If you named the Brokers, those who use them could comment on their charging methods.


Yes I realize there is a broker dealing charge and also a fund/ETF running cost

But there appears to be a TRANSACTION CHARGE as well as a FX charge

I had to go through them all again, so its taken me a while

1) Transaction Costs/fees

- Shown on Youinvest and H&L.
- H&L define these as "The explicit cost the manager incurs whilst dealing......".
- Adds 0.1-0.2% to effectively the OCF - not too much of a problem, but should be in OCF
- Examples:
HSBC AMERICAN INDEX CLASS C - ACCUMULATION
(http://www.hl.co.uk/funds/fund-discount ... tion/costs)
FIDELITY INDEX US CLASS P - ACCUMULATION
(http://www.hl.co.uk/funds/fund-discount ... tion/costs)
SWDA (http://www.hl.co.uk/shares/shares-searc ... -acc/costs)

2) FX charge

- Shown on Youinvest when go to deal and review charges
- 1% - enough to consider holding funds instead
- Examples:
CSP1, VUSA, HMWO

But not on IUSA, SWDA

Alaric
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Re: Where to start with S&S?

#126130

Postby Alaric » March 19th, 2018, 7:50 pm

Cookie wrote:
1) Transaction Costs/fees

- Shown on Youinvest and H&L.
- H&L define these as "The explicit cost the manager incurs whilst dealing......".
- Adds 0.1-0.2% to effectively the OCF - not too much of a problem, but should be in OCF


That's something different. You won't be charged explicitly for it, but it will affect the performance of the funds. It varies by how actively the manager runs the fund or is required to by requirements to match an index, but every time an asset is bought or sold, the fund suffers some expenses. It used not to be shown as an explicit item, but recent initiatives by the FCA have increased disclosure.

Some "actively" managed funds are very much "buy and hold", others are often trading frantically.

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Re: Where to start with S&S?

#126146

Postby GeoffF100 » March 19th, 2018, 8:38 pm

Transaction charges were never included in the OCF, because fund managers wanted to keep them secret and were allowed to do so by the rules. Mifid II requires disclosure of these costs, separately from the OCF. According to Vanguard, the transaction costs calculated by the standard formula understate the true costs, but they use that formula nonetheless, "to enable their numbers to be compared with those from other fund managers", or words to that effect. If the transaction costs, as calculated by the standard formula are less than 0.01%, they can be stated as zero.

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Re: Where to start with S&S?

#128396

Postby Cookie » March 27th, 2018, 5:23 pm

In terms of Passive Investing in a tracker, I have looked at a World tracker vs S&P 500 tracker

- The S&P 500 appears to have significantly outperformed the world trackers from about 2010
- World trackers consist of at least 50% US based companies
- World tracker top 10 holdings are all US based companies
- Any drop in the US market is likely to be mirrored in other world markets, so the extra 50% diversity doesn't seem worthwhile
- World trackers hold such small amounts of other markets (10% of emerging markets), that any upside is not really going to make a significant difference
- World trackers start from about 0.13% OCF (several are higher) were as S&P 500 trackers are half that at 0.07% OCF

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Re: Where to start with S&S?

#128872

Postby Cookie » March 29th, 2018, 4:45 pm

I am considering using www.x-o.co.uk for a SIPP, as the Annual Fee and Transfer Fees are refunded by Jarvis and x-o dealing fees are one of the lowest. The SIPP administrator is Gaudi and the x-o platform supplied by Jarvis

Can anyone help me in analyzing the financial health of both Jarvis and Gaudi?
I am not great at interpreting accounts, so any great accountants or anyone capable in this area, would be appreciated

I am not so concerned with Jarvis, but any information would be useful. Being considerably smaller, I would appreciate any analysis of Gaudi

JARVIS INVESTMENT MANAGEMENT LIMITED
https://beta.companieshouse.gov.uk/company/01844601
Jarvis Securities Plc (AIM listed company)
https://beta.companieshouse.gov.uk/company/05107012

Gaudi
https://beta.companieshouse.gov.uk/company/06638918

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Re: Where to start with S&S?

#129118

Postby BobbyD » March 31st, 2018, 3:50 am

Urbandreamer wrote:
I'm currently listening to "MissBehaving" by Thalar who has some VERY interesting things to say about the EMT. In particular he points out that for decades RDS had seperate but linked share classes based in Holand and the US (RDSA and RDSB I think). The earnings were attributed 1 to 1.5 hence one should be valued at 1.5 times the other. Yet for decades there were significant price discrepencies between the two. Ie it was possible to sell one short and use the money to buy the other and in doing so make money!


Amsterdam (RDSA) and London (RDSB)

Doesn't he go on to point out that one of the people to get caught out doing this was LTCM who were forced to ditch their holdings at the same time as other hedge funds which had made the same bet, pushing the price of the variant they had bought down and the variant they had shorted up, which contributed to the spectacular failure of the fund? The trade obviously wasn't risk free in real world conditions, even if you couldn't see where the risk lay...

That said Thaler's opinion of EMH is probably best demonstrated by his behavioural investing fund https://www.fullerthaler.com/strategies

tjh290633 wrote:What about those who do beat the odds? Taken over the long term there are plenty who have beaten their chosen benchmark. Some benchmarks do better than others.


It would be statistically freaky, given all the people trying, if nobody ever outperformed the market, even over the long term...

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Re: Where to start with S&S?

#310503

Postby JohnW » May 21st, 2020, 8:08 am

hiriskpaul wrote:
monabri wrote:
Degsy67 wrote:Getting back to the original “where do I start?” question, I’m surprised nobody so far has suggested that you invest a few hours in reading Tim Hale’s “Smarter Investing: Simpler Decisions for Better Result (3rd Edition)”.

Degsy


Edit - it is interesting what he says in section 17.5 International equities. A point of view I strongly disagree with and one that would have meant considerable underperformance since this version of the book was published if the advice had been followed. Anyone know if his position has been changed in later versions of the book?

Yes, and I think it hadn’t changed. He argued that being diversified globally would reduce single market risk, surely that’s right, and that the returns (overall global) should be similar in a world of global business and trading.

He continues to say that the smaller your local market is, the more you are reducing risk by investing globally. There are hazards that may hit only one national market badly (think: Japan in recent decades) which can be largely avoided were they to hit your small local market; not so if they hit the USA market, to the same extent. But UK is only 5% of global. And small markets are often dominated by few sectors reducing diversification, he writes.
You do of course take on currency exchange rate change risk, but this can be hedged, and even beneficial (thinking: sterling trade weighted index going down over 30+ years https://www.poundsterlinglive.com/bank- ... BP-history). And then there’s confiscation risk by foreign countries as in war.


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