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Advice from IWeb international investors please?

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Melanie
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Advice from IWeb international investors please?

#124565

Postby Melanie » March 13th, 2018, 3:50 pm

Hi,

I've recently set up an IWeb Stocks & Shares ISA (first time investor) and was thinking of possibly buying some shares from outside the UK.

There is a section on their charges which states: .........

"Foreign currency conversions are required to facilitate the settlement of international transactions. We adjust the exchange rate by 1.5% and keep the difference as our fee when buying and selling international securities"

...........Without wishing to show my lack of understanding on this too much (!), can someone who has traded internationally with IWeb please give me a worked-through example of charges incurred?

Many thanks in advance,

Mel

GeoffF100
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Re: Advice from IWeb international investors please?

#124584

Postby GeoffF100 » March 13th, 2018, 4:58 pm

iWeb is not really suitable for buying foreign shares, because the foreign exchange fees are too high, and you cannot hold foreign currency. (You cannot hold foreign currency in an ISA anyway.) Here is an example of what happens when you buy and immediately sell a holding of US shares with iWeb's charges:

(1). Convert £10,000 to dollars, at a cost of £150, which leaves you with the dollar equivalent of £9,850.

(2). Buy the US shares, at a cost of £5 and a spread of £10, which leaves you with a US share holding worth £9,835.

(3). Sell the US shares, at a cost of £5 and a spread of £10, which leaves you with the dollar equivalent of £9,820.

(3). Convert the dollar equivalent of £9,820 to sterling at a cost of £147.30, which leaves you with £9,672.70.

You have lost £327.30 in a few minutes. (The spread may not be £10 in both cases, that is just an example, which may not be far off the mark.)

PeterGray
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Re: Advice from IWeb international investors please?

#124590

Postby PeterGray » March 13th, 2018, 5:22 pm

I don't know of any ISAs that give you decent exchange rates.

There are some small differences, Selftade, last time I checked was 1.25%, but 1.25-1.5% seems to be the norm.

You can do MUCH better if you use someone like Interactive Brokers where you can exchange at money market rates, a tiny fraction of 1%, but they do not do ISAs.

I don't know if UK execution only brokers really face massive costs changing currencies, or if they just run an effective cartel - I suspect the latter!

Peter

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Re: Advice from IWeb international investors please?

#124621

Postby GeoffF100 » March 13th, 2018, 7:10 pm

IG Index charges 0.3% for foreign exchange conversion, and they can also hold multiple currencies (but that is not allowed in an ISA):

https://www.ig.com/uk/investments/share ... costs-fees

People seem to be happy with them. iWeb is cheaper for UK trading and funds, and is owned by Lloyds Bank, whereas IG is an independent company, so iWeb is probably the safer home for your investments.

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Re: Advice from IWeb international investors please?

#124670

Postby paulnumbers » March 13th, 2018, 10:36 pm

Another option is Degiro who charge 0.1%, or HSBC investdirect who don't have any FX charge for US shares.

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Re: Advice from IWeb international investors please?

#124671

Postby paulnumbers » March 13th, 2018, 10:39 pm

I don't know if UK execution only brokers really face massive costs changing currencies, or if they just run an effective cartel - I suspect the latter!


More money to be made by overcharging than money lost from the few clients who will desert a service with high FX fee's.

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Re: Advice from IWeb international investors please?

#124686

Postby IanSmithISA » March 14th, 2018, 7:48 am

Good morning,

GeoffF100 wrote:....
https://www.ig.com/uk/investments/share ... costs-fees

People seem to be happy with them. iWeb is cheaper for UK trading and funds, and is owned by Lloyds Bank, whereas IG is an independent company, so iWeb is probably the safer home for your investments.


I know that it is slightly irrational by I am a little uncomfortable about IG, I appreciate that as a regulated firm all should be fine. :)

This is in their fees section; If you have placed at least one spread bet or CFD trade on any market in the previous calendar month, you will automatically qualify for our lowest commission rate for UK shares.

Which reinforces my prejudice that their heart is in betting rather than share trading, I run a mile from CFDs and Spread betting as I believe that I understand them pretty well and know that I don't have the resources to make a success of such products.

Spread betting on Bitcoin, I imagine that this would be quite an emotional ride! :x

Whilst all platforms may fail, in my mind IG seems more susceptible than iWeb to the possibility, for example when the Swiss Franc was devalued in 2015 they lost a chunk.

If IG or any platform were to get into trouble I would expect that eventually shares would be transferred to a new platform, but there doesn't seem to be much information based on a real world example, only what should be happening and would happen.

Bye

Ian

Melanie
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Re: Advice from IWeb international investors please?

#125225

Postby Melanie » March 15th, 2018, 8:32 pm

Thanks all for your input.

Haven't bought any international as yet, but will probably only buy £1k max per trade for now and I intend to leave them in for a number of years before selling. If I decide to buy larger amounts in the future, I'll look elsewhere for better rates now that I know how it works.

Mel :)

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Re: Advice from IWeb international investors please?

#125281

Postby BobbyD » March 16th, 2018, 8:24 am

Melanie wrote:Thanks all for your input.

Haven't bought any international as yet, but will probably only buy £1k max per trade for now and I intend to leave them in for a number of years before selling. If I decide to buy larger amounts in the future, I'll look elsewhere for better rates now that I know how it works.

Mel :)


Significantly better rates are unusual, but achievable. However bear in mind that IG are introducing a custody fee of £24 a quarter. Dealing charges can be written off against the fee, but it is quite possible IG would end up being more expensive. High FX charges are an annoyance, but overall cost of ownership is the important thing to keep an eye on.

IanSmithISA wrote:If IG or any platform were to get into trouble I would expect that eventually shares would be transferred to a new platform, but there doesn't seem to be much information based on a real world example, only what should be happening and would happen.


https://www.fscs.org.uk/what-we-cover/q ... #question9

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Re: Advice from IWeb international investors please?

#125296

Postby Breelander » March 16th, 2018, 9:18 am

IanSmithISA wrote:If IG or any platform were to get into trouble I would expect that eventually shares would be transferred to a new platform, but there doesn't seem to be much information based on a real world example, only what should be happening and would happen.


Not many, but there were a few. See here, and follow my web.archive.org link to an archived TMF thread.

Breelander wrote:To my knowledge there were two examples. One was the broker Fysh Horton Finney who went into administration, the protection seemed to work as intended there. The other was Pacific Continental Securities where... well... things didn't go so well...
viewtopic.php?f=26&t=6286&p=67025#p67025


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