Investment CLINIC
I USE a fund supermarket to invest in funds, but I’m thinking about investing in some shares, too. Can I do this through the same website?
YOU may be in luck — it depends which one you use.
Most fund supermarkets (online sites that let you buy and sell unit trusts) are set up for share trading, too. These include Inter- active Investor, Charles Stanley and Hargreaves Lansdown.
However, a few, such as Cavendish Online, only cater for investors using funds. If you’re with this type of operator, you’ll have to open an account at one of the others.
But your letter raises a much broader — and potentially very costly — issue.
If your fund supermarket does allow you to hold different types of asset, the one thing you absolutely should do is check what are its various charges.
When you invest in funds, it doesn’t usually cost anything to buy and sell your holdings. Instead, you just pay a percentage of your total assets each year as a service charge.
At Hargreaves Lansdown, for example, it’s 0.45 pc a year, and at Charles Stanley it’s 0.25 pc. When you invest in shares or, for that matter, i nvestment trusts and exchange traded funds (ETFs), your broker will charge you every time you trade.
So, i f you move your money around quite a bit, the fees could easily rack up if you pick the wrong fund supermarket.
Interactive Investor is a good option for many people investing in shares. It charges £20 a quarter to have an account and £10 each time you buy and sell a share.
But you get two free trades every three months, which effectively wipes out the annual charge if you trade eight times.
If you do more than ten trades in a month, the charge drops to £5.
Charles Stanley charges a flat rate of £ 10 per trade. Hargreaves Lansdown charges £11.95 for the first ten trades each month, then drops to £8.95 per trade. Bestinvest has a flat rate of £7.50 per trade.
Of course, if you already use one broker for your funds, you might want to stick with the same one — even if it is slightly more expensive — for the ease of having all your investments in one place.
And the other thing to check when you’re investing in shares is that you’re not buying into something that is already covered by the funds you hold.
For example, many UK-focused funds will invest in big FTSE-100 stalwarts such as BT, GlaxoSmithKline and BP, so i t would be pointless to buy shares in these companies, too.