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investment trading platforms


MrXxxx

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Transfered this over here from the other thread as being new to this I am getting a bit confused as to the companies different offerings and how they differ, and didn't want to hijack the other thread. Note this is a UK perspective.

So my understanding is as follows, they all offer three basic accounts:

1. SIPP, ISA, TRADING.

2. Fees compose of two basic charges, a) Subscription (fixed or %, sometimes capped), b) Trading (buy/sell)....I appreciate there can be other costs fund manager etc.

3. All three accounts in 1 above allow you to invest in Shares, ETFs, Investment trusts, and Unit trusts.

4. The four main players in the UK that offer all of the above are Hargreaves Lansdown, Interactive Investors, AJ Bell and iWeb.

So looking at one of these HL, the subscription fees are:

SIPP=0.45% of holdings, capped at £200 per annum.

ISA=0.45% of holdings, capped at £45 per annum.

Trading=0.45% of holdings, no cap until £2mil.

 

Now to my confusion/questions:

1. I hear/see the term `Share account` or `Fund & Share account`, is this the same thing as a trading account (to buy/sell products)?

2. Do you need a Trading account (as well s. ISA/SIPP) to have either a ISA or SIPP account?...otherwise how would you buy/sell holdings in ISA?

3. AND using the values above how are your yearly subscriptions calculated as individual account sums OR complete holdings?...two examples a) I.e say you had £20k in ISA and £5k in Trading account the total fee would be £67.50 (ISA times 0.45%=£90 BUT capped at £45 and Ta times 0.45=£22.50) OR

b) £5k in ISA and £15k in Trading account the total fee would be £90 (ISA times 0.45=£22.50 and Ta times 0.45%=£67.50).

4. When you sell in ISA account how does the money maintain its tax-free status before you buy your next share?

5. Finally, someone mentioned monthly Stock builder` accounts with no yearly subscriptions and a £2 monthly trade where the/a single share is purchased automatically on a fixed date...where is the provider making their money apart from the £2 fee, in a wider spread and/or using your holdings for swaps?

Apologies for the long post but I like to understand things fully before I invest as in all DYOR scenarios...and maybe there are other novice investors (or potential investors) out there just as confused/`green`.

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Bobthebuilder

Hi |M|r X,

I will answer a couple.

2. A trading account, stocks and shares ISA and SIPP all work pretty much the same but have different tax/ pension relief status. for example a SSISA is capital gains tax free where a trading account is not. A SIPP is a pension and you will not be able to access it untill 55 or later depending on your age now.A SIPP gives tax relief on the way in for example you put in £80 and HMRC top it up to £100. DYOR.

4. The money in your SSISA remains tax free in the ISA wether in cash, stock, funds etc regardless as long as you dont transfer it out, so when you sell a fund say the cash just remains cash in the ISA (crap even %0 for cash in a SSISA).(and SIPP for that matter).

5. Stock building accounts are ideal for small amounts and people starting out, if you say buy 5 stocks a month for £50 each = £250 a month with fees of £10. If you choose to sell some stock it would cost you £12 ish per trade so they are good for building up stock but you would do better for regular trading elsewhere.

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1 hour ago, MrXxxx said:

 I am getting a bit confused as to the companies different offerings and how they differ, and didn't want to hijack the other thread. Note this is a UK perspective.

Lots of questions, but to clear up a couple of basics...

Any account in which you can trade is a "trading account" of sorts, though generally they use the term to mean a trading account which doesn't have any special features... i.e. they're not ISAs or SIPPS.

 ISAs and SIPPSs are a kind of trading account with a "tax wrapper" around them, which confer certain tax benefits, a big one being you pay no Capital Gains Tax on your buying and selling in the account, and no tax on dividends either.

Different companies offer different charging schemes, trading commissions, and different ranges of products you can trade within them. Generally those that have a monthly or annual "subscription" will waive this if you make a certain number of trades per month.

When you sell something in your ISA ( or SIPP ), the cash generated stays within the account, ready to buy something else.

I generally recommend my newbie friends to start with an ISA from IG.com.  They offer a decent range of shares from various international markets, and there are no monthly or annual "subscription" charges in their ISA, making it a good choice for people who are looking to invest long term and don't plan to trade very often.  Commissions are around £8 per trade.

Other providers offer different benefits. HL offers the greatest range of funds of that's your thing.  Interactive Investor tends to cover the widest range of international markets.. useful if you want to buy Canadian miners for example ( which IG don't offer ).

Some providers offer better charting ( like IG ),  and there are some which offer much lower commissions. Don't worry about saving a couple of pounds on commissions unless you plan on trading very actively, or at very small scale.

 

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Bobthebuilder
37 minutes ago, MvR said:

I generally recommend my newbie friends to start with an ISA from IG.com.  They offer a decent range of shares from various international markets, and there are no monthly or annual "subscription" charges in their ISA, making it a good choice for people who are looking to invest long term and don't plan to trade very often.  Commissions are around £8 per trade.

That sounds very good.

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Quote

Anyone have experience of a HSBC Invest Direct share trading account?...I don't plan on a lot of trading (more buy and hold), so a HL account with low trading fees is not necessary, and the yearly cost of the HSBC account is only £42, plus £10.50 per trade.

Just to confirm that I have an Investdirect plus account with HSBC. I acquired it about 15 + years ago when Sun Life Canada demutualised and I picked up a load of shares which I later did bed to ISA with. I've since sold those shares in SLF to buy UK insurers with higher dividend returns.

As you say £42 a year currently (was free until about 2 years ago!) and £10.50 a trade unless you do more trades in a month then it reduces to £6.95 I think. Only managed that once!xD You actually end up with four accounts, a stocks and shares ISA, a cash ISA (where your dividends are paid), a trading account (non ISA), and a cash account (non ISA). So I've ended up also utilizing the trading account in an effort to use up my £2K tax free divi allowance!

However you only get access to the UK and US markets, so it is a bit restrictive in that sense. DB stated that HL don't charge you any flat fees on their SSISA, but they do. This is from the HL website.

Quote

Shares

Including UK and overseas shares, investment trusts, exchange-traded funds, VCTs, gilts and bonds.

0.45%
capped at £45 per year

However I think probably HL is the way to go as I think you have more markets to buy from and therefore greater choice.

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1 hour ago, Bobthebuilder said:
1 hour ago, MvR said:

I generally recommend my newbie friends to start with an ISA from IG.com.  They offer a decent range of shares from various international markets, and there are no monthly or annual "subscription" charges in their ISA, making it a good choice for people who are looking to invest long term and don't plan to trade very often.  Commissions are around £8 per trade.

That sounds very good.

Maybe not......

Quote
Share dealing ISA: commission starts from just £5 on UK shares for active traders3 (normally £8), and our FX conversion fee is only 0.5%. We charge a custody fee of £24 per quarter if you hold investments in your share dealing ISA at the end of the quarter. You may be exempt from this fee depending on your trading activity. For full details, see our share dealing charges.

Unless you are planning on doing lots of trading!

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AJ Bell looks like the best option. To some extent it's swings and roundabouts though, these companies can all bump up fees any time they like.....

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reformed nice guy

If it helps, I use Hargreaves Landsdowne for one ISA account that is mostly shares, and Iweb for another ISA that is mostly funds.

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44 minutes ago, NogintheNog said:

Maybe not......

Unless you are planning on doing lots of trading!

Damn... that's changed in the last couple of years. it used to be free.

EDIT.. I've just checked.  they' only require 3 trades per quarter, or for you to hold a minimum of £15k across all your accounts with IG, to waive the fee..

Just goes to show though.. terms can change over time.

 

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Bobthebuilder
1 hour ago, NogintheNog said:

So I've ended up also utilizing the trading account in an effort to use up my £2K tax free divi allowance!

Good idea.

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:-) :-) :-)...so I think I have now `got it`having read all the sites this afternoon, but feel free to make further comments both for my benefit and that of others.

So, in a `nutshell` the charging system is based on the asset type:

a) Two groups, Funds (including unit trusts, OEICs) and Shares (shares, Investment trusts, ETFs, gilts/bonds)

AND

b) A trading fee (buy/sell)...or not, in relation to a) above and/or c) below, AND the provider (see AJ Bell vs HL example below)

AND

c) Yearly custody charge (% based [with/without cap depending on a) above]) OR fixed monthly/yearly. 

So lets look at example of AJ Bell vs HL that both have a % based custody charge (c above):

AJB:

Custody charge (c) - same for both Trading a/c and ISA a/c where 0.25% pa charged on holdings BUT Shares (a. above) capped at £30 pa.

Trading fee (b) - same for both Trading a/c and ISA a/c for both types of assets (a. above), Funds=£1.50, Shares=£9.95.

Now compare to HL,

HL:

Custody charge (c) - different for two a/c. Trading and ISA a/c`s same for Funds=0.45% of holdings without cap, BUT for `Shares` Trading a/c is free YET ISA a/c charges 0.45% of holdings capped at £45 pa.

Trading fee - same for both Trading a/c and ISA a/c`s BUT different for two asset types (a. above), Funds=free, Shares=£11.95.

 

So basically AJB best for when you have both account types with both asset types, and HL best for `Shares only` Trading a/c. This said, `what they give with one hand they take with the other`....and then you have other providers offering yearly subscriptions plans with `free` trading allowances (I.e.Interactive investors) or one off fixed fee with higher trading charges (iWeb), but lets not `go there`

Apologies for the long post but writing it out helped clarify it in my own mind, and possibly is of help to other novices.

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4 hours ago, MvR said:

EDIT.. I've just checked.  they' only require 3 trades per quarter, or for you to hold a minimum of £15k across all your accounts with IG, to waive the fee

But the latter has to be in their managed Smart account that is restricted to one provider (iShares).

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1 minute ago, MrXxxx said:

But the latter has to be in their managed Smart account that is restricted to one provider (iShares).

I see.. I guess it pays to read the small print!

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I note HL are doing their introduction offer again; basically transfer in your ISA and get `free` money placed into your Trading a/c that can be used for charges etc, only condition is that you have to stay with them for a year...anybody used this offer and was it hassle free?

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22 hours ago, MrXxxx said:

I note HL are doing their introduction offer again; basically transfer in your ISA and get `free` money placed into your Trading a/c that can be used for charges etc, only condition is that you have to stay with them for a year...anybody used this offer and was it hassle free?

I did it with pensions. They’re very good at chasing up the likes of Standard Life who are completely useless. They sent me a letter apologising for one of the pensions taking so long due to Standard Life being uncooperative. Although I made the mistake of not putting the money into the pension account (would have got a tax rebate) and thus would have saved a bit more fees wise.

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