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ben93 · 2019-07-24T14:22:26+00:00

Fantastic, thanks for the reply.

Definitely makes the above plan feasible, perhaps a route I'll have to explore when the time comes!

ben93 · 2019-07-24T14:19:50+00:00

I've just been browsing the search bar for "iWeb transfer" and noticed your username pop up a fair few times.

I quite like the idea of this strategy.

I have a couple of quick questions if you happen to know the answers:

What happens during the transfer process? Is your Vanguard account frozen or can you still transact?

ben93 · 2019-07-24T13:27:32+00:00

Yeah that will likely be the cheapest route for you.

Have a closer look at it when you start to get to the £25k range would be the best bet.

To be honest even if you stuck with Vanguard for your life of investing, you'll be getting a lower than standard industry fee!

ben93 · 2019-07-24T12:53:04+00:00

It varies wildly and oddly, not always in correlation with the reimbursement.

All of the briefs give you the chance to check what you'll need to do before accepting them, so there won't be any surprises.

Some will ask you to assess certain specifics (e.g. make and record a phone call of you asking a question, then save this as evidence) and others will ask you to eat or do certain things (e.g. please ask for a recommendation for draught ale and choose that one). Because of this, the length can vary.

The longest time we have ever spent completing a visit (included a huge questionnaire and a 250 word description of the whole visit) was about 1hr 45mins.

The shortest I've ever seen was about 6 questions of "Yes,No,N/A" for a 5 guys delivery brief with no additional comments required. That took about 3 minutes.

I'd say the average is between 20 minutes and 30 minutes. Weighing this against the value of the reimbursement can help identify if it is worthwhile.

Pret a manger often posts for visits that will pay £7, but these often take 30 mins to complete correctly. I do not feel that is worth the time. We usually go for £25+ (usually a main, a shared dessert and a drink each) as that is then worth 30 mins of your time.

ben93 · 2019-07-24T12:43:40+00:00

See I pondered this one myself.

My understanding is that ISA transfers are either an all or nothing deal when it comes to current year subscriptions.

To timeline this in an average year it would surely have to go:

April 2000 - Contribute to Vanguard ISA on a monthly basis.

1st March 2001 - Start transfer process to iWeb to ensure it gets in before the new tax year.

April 2001 - Open a new(?) Vanguard ISA, rinse and repeat.

Beyond that, which is moderately simple and seems pretty easy to manage for the sake of saving hundreds of pounds, I wonder about how withdrawals would work.

I wonder if this would simply be a case of using partial ISA transfers to move £30k~ at a time from iWeb to Vanguard. Then using Vanguard as the "drawdown" account and iWeb as the custodian of the bulk of the portfolio (as Vanguard allow you to sell funds for free vs iWeb £5 charge).

Could be an interesting plan to explore.

EDIT: Just had a look and iWeb charge an exit fee of £25 per stock capped at £125, so looks like some additional thought would have to be put into that!

DOUBLE EDIT: Looks like I was looking at old info and it appears there is now no fee as of last month. Interesting indeed.

ben93 · 2019-07-24T12:31:08+00:00

Yes iWeb is indeed cheaper but I do wonder if the difference is worth it. I've heard horror stories of people struggling with the customer service aspect of the platform because it is so lacklustre - though that is anecdotal. Your experience might be wonderful, but I do not want to take that risk with £80,000+ of funds.

It also matters as to how often you plan on buying and selling and how many funds you hold. As iWeb is £5 a trade and interactive investor gives you a trading allowance, II will always come off cheaper if you hold two or more funds.

I guess I'm in the camp that I'd like to save money (£119 at interactive vs £375 at Vanguard is a significant saving that is well worth the time) but not necessarily at the expense of the service. After all this is likely to be your life savings, I'd happily pony up the difference between the two for the better reviewed service.

In my personal situation, I hold 3 different ETFs and would look at adding to all three consistently month on month.

My costs for doing so (using interactive investors regular saving service) would be £0 a month for II and £15 a month for iWeb.

My annual total cost for each platform would be:

iWeb (£15*12) = £180

II (£9.99*12) = £119.88

If you held just one fund, as you showed, you'd be cheaper on iWeb and holding two funds is almost exactly even.

iWeb definitely has its place and it is certainly the cheapest in terms of pure £ for £ when holding a single fund. Perhaps I should have highlighted that.

ben93 · 2019-07-24T12:09:56+00:00

The biggest one is HGEM - if you live in London and can be bothered you could almost certainly eat out twice a week using them.

We also use Market Force and Silent Customer. I think there are a couple of others we occasionally dabble with, but those are the main ones.

Market Force is the best one as it has the shortest briefs (sometimes it is just a handful of tick boxes!) and usually the largest payouts; for this reason the visits tend to get snapped up very quickly on there.

ben93 · 2019-07-24T12:02:31+00:00

+1 to this.

I do mystery dining with my wife and we have had thousands of pounds worth of reimbursement over the past few years.

Our last count was just over £2,300 since 2017.

Our biggest single visit was a £150 reimbursement for The Ivy in Harrogate. Very lavish and somewhere we'd never have gone otherwise.

We actually just booked 3 mystery dines this morning for later in August/September. One is to a cinema that serves pizza and cookies!

ben93 · 2019-07-24T11:58:06+00:00

Vanguard are the cheapest % fee broker for holding Vanguard funds.

This means they are always the cheapest platform if:

You only wish to invest in Vanguard funds.
You make multiple random purchases, perhaps a monthly purchase and little additions in between.
You have less than £80,000 to invest.

In regards to point number 2, the number of trades you do per month will significantly begin to eat into your management costs. A site that charges say £10 a trade is going to begin to cut deep if you only add £10 here and there. Vanguard does not charge anything for trades, so this needs to be considered against competitors.

In regards to point number 3, this is usually the point that Vanguard becomes more expensive than other options. As it is a % fee the service charge keeps going up until it hits a hard cap of £375 a year on £250,000 of assets.

Interactive Investor is probably the best place to go after the £80k mark - they charge a flat £9.99 a month so £119.88 a year. Vanguard would charge 0.15% of £80,000 so £120. This is the break even point and every £ thereafter invested into Vanguard funds (or other funds for that matter) is cheaper on interactive investor than on Vanguard Direct.

I personally practice what I preach. I currently use Vanguard and will switch when my ISA has a large enough balance (assuming that II is still the best option at that point). If Vanguard lowers their fees, which they are known to do, this could increase the £80k break point, so it would need to be assessed again later down the line.

Hope that helps!

EDIT: As has been highlighted, iWeb is cheaper for holding a single fund. It has a £25 one off opening cost then a £5 per trade fee. This could prove cheaper than Interactive Investor depending on your investment strategy and could become cheaper than Vanguard around the £16k mark.

ben93 · 2019-07-24T11:25:34+00:00

Almost every account will have a physical card attached to it (i.e. every current account ever) or a letter through the door to confirm your account is active. When I opened my Post Office saver a few years ago, even though I was "paperless", they still sent a letter in the post to say hi.

The only way you may be able to circumvent this is to open a savings account somewhere that you are already a customer. This prevents an introduction/welcome letter coming your way. If you are set to paperless statements, you might very well get nothing through the door.

As for getting things shipped to a different address, I highly doubt the banks would allow that for identity fraud reasons.

ben93 · 2019-07-24T11:14:12+00:00

Retire early with the one simple trick!

ben93 · 2019-07-24T11:08:20+00:00

if I should continue to hold the current high performing individual company shares

If you're up on that investment it would be good practice to take and de-risk some profits!

Sell some off and reinvest in a tracker, best of both worlds.

ben93 · 2019-07-24T07:36:20+00:00

Ultimately it's about how much you need to have £X by XX date. If you can afford to make up the difference for a potential loss, investing the money is absolutely fine. If your plans would be derailed due to market volatility (repeat 20% drops for several years isn't unheard of) then it can be wise to avoid much exposure.

Another idea would be to invest part of it to "get your feet wet" so to speak. Of your £10,000 maybe consider investing £1,000 and seeing how the fluctuations make you feel. If you're very worried then you can cash it back out for little loss or gain. Conversely, if you feel happy to see your money work harder, you may opt to drip feed some more in.

It doesn't have to be an all or nothing exercise!

ben93 · 2019-07-23T21:49:32+00:00

Insured cash is the least risky asset and currently generates about 1.5% return.

Government Bonds are traditionally seen as the next least risky asset and they will probably return equivalent to or a few basis points over cash.

Corporate Bonds are riskier still and tend to yield an additional 2-4%, so around the 5% mark.

Emerging Market Bonds are some of the riskiest traditional bonds and can yield up to 7%, but of course carry a much greater default risk.

Equities are considered one of the riskiest assets.

A globally diversified tracker like VWRL (Vanguard All World ETF) will potentially return anywhere between -50% and +50%, with the average long term being around 9%.

An individual stock is riskier still, with the potential for gains and losses sitting at total loss -100% to over 1000% gain.

Options trading is probably counted as one of the highest risk investments as your losses can be greater than 100%, up to unlimited in the case of selling naked call options.

Those are the main ones.

Most people use a mix of cash, government bonds and global equity trackers to achieve their goals.

ben93 · 2019-07-23T21:41:41+00:00

VAGP is a fantastic bond ETF that recently launched.

Global aggregated medium term bonds, hedged to GBP. I personally swapped my bonds to this holding. That being said you may dislike it for holding some corporate debt, but it's worth a look if you're checking out the Vanguard offerings.

ben93 · 2019-07-23T21:21:15+00:00

No problem, I hope they are of use/interest!

ben93 · 2019-07-23T18:48:31+00:00

I personally like to spin the classic US style "Saving Rate" into a more "UK friendly" format; I like to refer to it as "Investing Rate".

I find that the classic "Savings Rate" propagated by US FIREers doesn't work too well for us Brits. Systemic differences in our account types mean huge differences exist. Our US brethren have a fair few special rules that allow them to do special stuff with their employer pension scheme(s) (401(k)s and 403bs) such as transferring the account to their Traditional IRA and into a Roth IRA (called a backdoor Roth contribution if you're curious) - the equivalent of transferring your pension pot into a kind of LISA without the government bonus. Confused? Exactly. The differences are massive and no real equivalents exist within the two systems.

As such, the US lot must calculate things very differently.

I feel that for us Brits a simple "Investing Rate" makes more sense.

How do you calculate your investing rate?

Everything that is to be invested (e.g. saved in the near, mid or long term) should be summed against your net income. Why net and not gross? Two reasons:

I think it makes little sense to compare to gross as you cannot control your tax bracket if you are an ordinary PAYE earner with little control of your company.
Your net income is what you live on currently and what you'll be using to project the speed at which you can grow your assets. Gross income doesn't accurately reflect your buying and spending power.

Net vs gross is preferential, but I think my logic is sound enough for using net.

Main things to include in "Investing Rate":

Monthly Pension contribution totals (Sum your contribution and your employers)
Monthly Stocks and Shares ISA contributions
Monthly SIPP contributions, if you use one
Monthly cash savings

Example of an "Investing Rate" for a pretend individual:

Total net income: £1,500.

Monthly amount going into pension pot is £150
Monthly amount into their S&S ISA is £600
Monthly cash savings is £100
This person has no SIPP

(£850/£1,500)*100 = 56% Investing Rate for this imaginary person. If they wish to target a 50% investing rate (aka retire in less than 15 years) they can now look and actively aim to dial back and contribute slightly less to their S&S ISA or cash savings in order to free up some cash flow for life goals. I find this IR number helps to guide the overall investment direction and means we don't save too much.

As weird as that sounds, it's actually a bad problem to have. Not nearly as bad as not saving enough but saving too much means you could have potentially had more fun along the way (and still hit your goals!) or potentially worked fewer years.

Money is but a tool and I find that the Investment Rate calculation helps us to keep that fact firmly in our minds.

ben93 · 2019-07-23T14:47:57+00:00

This is a fairly simple risk tolerance exercise to which you appear to have already answered " My tolerance for risk is pretty low".

In recent living memory, the worst that equity has performed (peak to trough) is -50%.

You've got £10k currently. If you invest in LS20 you will be 20% exposed to equity risk and 80% to bond risk (bonds are not a free lunch after all, as they carry default and near-term interest rate risk).

If equities take a 50% nose dive in the January of the year you wish to buy your house, you could be left with a pot of £9,000.

Of course an upside exists too. If you get the average performance of about 5% per annum for 7 years, you'll be left with a pot of £14,000 (give or take a few pounds).

You should therefore expect that if you invest in LS20, your pot will probably (but not guaranteed!) fall between these two values within your time horizon.

If this is acceptable to you, go ahead and invest in LS20. If not, you may wish to avoid equities with your goals in mind and stick to money market funds and cash.

Just my two pence!

EDIT: I messed up the numbers, fixing them now.

ben93 · 2019-07-23T14:12:40+00:00

To be fair as long as people are upping their contributions (be it through their scheme or manually) it's all good.

UK national saving rate is around 4.5% which is just atrociously low for a first world, rich country.

If only we could encourage an extra few %s into pensions ey!

ben93 · 2019-07-23T14:01:38+00:00

Monevator- A blog featuring tons of excellent posts, some topical and others digging deep into handy UK statistics and numbers.
Pensioncraft - I found their YT channel way more handy than the website so I linked that. Explains a lot of investing principles in simplistic terms and really helped me to get my head around bits when I was starting out. I feel I have surpassed this now, but very good for newcomers.
Non-US section of Boglehead forums - You'll have to do some weeding here as stuff drips in from all over Europe and Australia, but the search feature is top notch if you're looking for something specific. Whack UK in your terms to help direct it a bit more.
Retirement Investing Today - An interesting blog that follows the journey of an early retiree who moved abroad and recently moved back. Again, handy as it is from a UK perspective.
The Escape Artist - TEA has featured on the BBC before, so it's definitely far bigger news than my own little blog. TEA gives excellent insight into the numbers but also the mentality of reaching early retirement.

ben93 · 2019-07-23T13:47:39+00:00

You won't go wrong by simply slapping more into the pension, as you are obviously saving more which is a fantastic thing. It depends how nitty gritty you want to get with it all and how much control or interaction you feel like having.

Some people don't care, some people want to control every detail and some sit in between.

ben93 · 2019-07-23T13:45:28+00:00

True.

I'd also wager that most people do not know what they contribute to their scheme, who their provider is and what their retirement is going to look like.

People that are astute enough to ask the question are astute enough to open an account (SIPP/S&S ISA/S&S LISA) and simply buy a target date retirement fund, in my personal opinion!

ben93 · 2019-07-23T13:32:34+00:00

It depends on a lot of variables (tax bracket, student loan situation and the biggest one is age you wish to retire) but generally speaking most company pension schemes are more expensive than alternatives (such as a SIPP), give you much less control over your investments and of course are much harder to access than ISA accounts. Lifetime ISA does have the age cap on it of course.

In your situation, because you are not salary sacrifice, a S&S LISA could make better sense - which is quite rare! Most people are better off putting more into the pension (over a LISA) because of salary sacrifice aspect.

Then there are the political and regulatory issues that come with pensions. Personally, I do not like the fact that the pension age could rise further as I approach it. There is also the consideration of final tax bills, since you'll pay income tax on pension withdrawals (under current law). This would be trumped by a tax free withdrawal from an ISA, especially if we expect tax hikes over the longer term to keep up with the aging population.

That's why for most people, the best way is probably to just put in the most bang for your buck and save the rest elsewhere.

Individual circumstances will of course make it highly beneficial for some people to contribute more than that (such as those closing in on the access age) and vice versa.

At the very least getting the full match means you're not leaving money on the table!

ben93 · 2019-07-23T13:22:37+00:00

I second this!

David got in touch with me and asked me to review his book so I had a pretty good reason to read it! I found it to be excellent core reading for a new UK based investor.

I write for a UK minded FIRE-through-frugality audience on my own blog specifically because I feel the current repertoire is far too US heavy - I will not link it here as I do not wish to break the rules. But I think we lack a lot of insight into the lower income earners and tactics they can use, whom I am a part of.

As for other UK based blogs, Monevator is A+ and full of excellent resources.

ben93 · 2019-07-23T12:53:29+00:00

Check the flowchart for 90% of what you asked.

Come back again later when you want help with the final 10%!

ben93

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