The costs of investing

[Avantegarde]

I received my annual statement this week from my online share broker the Share Centre. Thanks to the MIFID regulations, investors are now shown a cash and % figure for all the costs of investing, such as account fees, trading fees, stamp duty and the fees levied by the investment managers of the various investment trusts and tracker funds in my two portfolios. I was startled to see just how high the cost of investing is. I knew it would be, but seeing the figures is, well, startling.

Share account: Value £28,000. Share Centre charges £446. Investment manager charges £451. Total £898.
S&S ISA account: Value £138,000. Share Centre charges £1,107. Investment manager charges £1,413. Total £2,520.

The Share Centre charges, which include stamp duty, have been inflated by the act that each year I move £20,000 from the share account to the ISA account in a bed-and-ISA switch, an annual process which has now largely run its course. Plus there have been some other sales and purchases which have also run up dealing costs and stamp duty. I'm not suggesting all this should be free. But it is a salutary lesson about the cost of investing as total dividends received have been only a few hundred pounds higher at £3,750.

[Itsallaguess]

Share account: Value £28,000. Share Centre charges £446. Investment manager charges £451. Total £898.
S&S ISA account: Value £138,000. Share Centre charges £1,107. Investment manager charges £1,413. Total £2,520.

Those charges seem incredibly expensive, although without seeing the stamp-duty breakdown then perhaps we might not have the full picture available..

Have you checked to see if there's any cheaper brokers available that deliver to your needs?

There's a comparison table here that might help - https://monevator.com/compare-uk-cheapest-online-brokers/

Cheers,

Itsallaguess

[kempiejon]

An upvote for a buy and hold HYP then (zero ongoing costs apart from purchases at £2.50 a time) . Or a Vanguard tracker at a tenth (Or less) of a % per year.

Halifax / BoS make no ongoing charges for a non ISA share account and (from memory) £12.50 per quarter admin fee for an ISA.

Halifax want £12.50 per year for holding and ISA. I think iweb are free but want £5 for a trade.
Following some discussion with me a few people I know have opted for regular buy and hold in a vanguard world tracker for less than a % annually

[Dod101]

Yes but as we all know, charges are only half of the story, and if someone wants an active portfolio there is not a lot of point in saying a tracker is cheaper. It ought to be.

Mostly these days charges become less significant if one has a higher value portfolio. Furthermore. like many ITs, charges should at least in part be allocated to capital and so taking them as a percentage of the portfolio is probably a better measure. I do not think I have ever had one of these statements. Might be interesting to get one.

Meanwhile the OP really ought to do some shopping around.

Dod

[Avantegarde]

Just to clarify, the charges relate to the 15 months from 9th January 2018 to 5th March 2019. The vast bulk of the Share Centre charges are due to its standard 1% dealing charge which is applied to deals worth more than £750. So most of my charges are due to the frequency of dealing, which should drop dramatically now most of my investments have been transferred to the umbrella of the S&S ISA.

[mc2fool]

The vast bulk of the Share Centre charges are due to its standard 1% dealing charge which is applied to deals worth more than £750. So most of my charges are due to the frequency of dealing, which should drop dramatically now most of my investments have been transferred to the umbrella of the S&S ISA.

Ummmm....then you could have saved yourself a bundle by paying their £24/quarter "Dealing option fee" which caps dealing charges to £7.50 a transaction. https://www.share.com/investment-accounts/self-select-stocks-and-shares-isa

[EthicsGradient]

If there are investment trusts involved, it might be worth noting that the new rules on how to calculate their 'ongoing charges' seem to include interest on money the trust borrows - see viewtopic.php?f=54&t=16528 on this Lemon Fool board from March 1st. Whether that is showing up in the 'investment manager' charges you have, I don't know

[Avantegarde]

The vast bulk of the Share Centre charges are due to its standard 1% dealing charge which is applied to deals worth more than £750. So most of my charges are due to the frequency of dealing, which should drop dramatically now most of my investments have been transferred to the umbrella of the S&S ISA.

Ummmm....then you could have saved yourself a bundle by paying their £24/quarter "Dealing option fee" which caps dealing charges to £7.50 a transaction. https://www.share.com/investment-accounts/self-select-stocks-and-shares-isa

Yes, I agree, but I was not expecting to indulge in quite as much reshuffling as I have in fact carried out, alongside the inevitable cost of moving £20,000 worth of shares from my share account to my ISA account each year. A lesson learned, I hope.

[mc2fool]

The vast bulk of the Share Centre charges are due to its standard 1% dealing charge which is applied to deals worth more than £750. So most of my charges are due to the frequency of dealing, which should drop dramatically now most of my investments have been transferred to the umbrella of the S&S ISA.

Ummmm....then you could have saved yourself a bundle by paying their £24/quarter "Dealing option fee" which caps dealing charges to £7.50 a transaction. https://www.share.com/investment-accounts/self-select-stocks-and-shares-isa

Yes, I agree, but I was not expecting to indulge in quite as much reshuffling as I have in fact carried out, alongside the inevitable cost of moving £20,000 worth of shares from my share account to my ISA account each year. A lesson learned, I hope.

Do they allow you to turn on and off the "Dealing Option" on a quarterly basis, or is it a once-only-and-forever decision at sign up?

If the former it'd obviously be beneficial to pay the 2*£24 for the quarter when you bed'n'ISA the next £20K.

[Avantegarde]

Ummmm....then you could have saved yourself a bundle by paying their £24/quarter "Dealing option fee" which caps dealing charges to £7.50 a transaction. https://www.share.com/investment-accounts/self-select-stocks-and-shares-isa

Yes, I agree, but I was not expecting to indulge in quite as much reshuffling as I have in fact carried out, alongside the inevitable cost of moving £20,000 worth of shares from my share account to my ISA account each year. A lesson learned, I hope.

Do they allow you to turn on and off the "Dealing Option" on a quarterly basis, or is it a once-only-and-forever decision at sign up?

If the former it'd obviously be beneficial to pay the 2*£24 for the quarter when you bed'n'ISA the next £20K.

Yes, I can if I wish turn on the cheaper option of paying a quarterly fee (with capped charges), and then turn it off again. Looking back, the 2018-19 year was especially busy in my S&S ISA as I performed a grand reshuffle (easily the biggest in the past six years) as I sold some underperforming ITs and bought some replacement tracker funds. That is not something I plan to do on that scale every year. But if I do I shall certainly remember to think about the dealing costs, instead of overlooking the issue.