Hello, it’s newbie question time

#1

Hello,

New around here. Also very new to investing.

I have previously been using Moneybox to start my investment life. I’ve been using them around a year or so, just saving spare change.

At first I had a little bit in a stocks and shares ISA, then I grabbed a LISA when they came out with them too and that has quite a bit more in it. Hopefully perhaps Freetrade will introduce a LISA.

I realise currently Freetrade only helps me with the S&S ISA.

Please bear with me with these very basic questions.

I stopped adding money to my moneybox S&SISA because the fees seemed really high for the amount that I was adding in. I came across Freetrade and have opened an S&S, but notice the monthly fee will be £3 (after the free period) but that I’m not going to be charged as many fees on the investments per month, right?
It’s difficult/confusing to compare all the fees and know what’s better…

I’m thinking I would like to put aside £50 a month into the S&SISA with Freetrade, and am still reading up about how to diversify. I understand it’s best to be passive for long term gains in multiple ETFs. I’ve seen a post on here about examples for new investors which seems pretty solid to begin with. Then once I have a good balance in ETFs I will pick specific stock I like the looks of in areas I know a bit about; Apple, Netflix, Tesla, and some further diversification likely necessary in other markets.

Would it be reasonable to transfer my current S&S with moneybox into this new one with Freetrade? I prefer to simplify, but am I likely to lose money on transfer fees of what is a very small amount in attempting to do that, even if it is possible?

Another question is does Freetrade yet have any ethical based ETFs? I tried searching for some online and corresponding into the app discover but couldn’t seem to find any matches. I would like to try ethically investing in line with my personal values.

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(Emma) #2

Hey joe :wave:

The ISA will be £3 a month and the only other fee would be if you wanted an instant trade instead of the basic free one at 4pm. That would be £1. There’s 0.5% government stamp duty on individual stocks, but not on ETFs or American stocks

There is currently no transfer in ability from over providers but they’re working on that. Freetrade won’t charge you transfer fees but you’ll need to look and see if Moneybox have a charge. There have been requests for a Freetrade LISA but it’s not on the roadmap.

There’s no ethically based at the moment but once the new investment platform is built they will be able to add loads more new stocks a lot quicker, and that’s expected in the next few months as well. That will also mean fractional shares will be available which will help you buy those expensive American stocks

Not sure if you’ve seen this blog on diversification but it’s worth a read

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#3

Thanks a lot for the response. It begs the question, then, that if I invest in certain stocks now, if ethical/new stocks became available then I assume I would be best to buy new stocks and keep the old ones in place, further diversifying the portfolio?

Im ok having two S&S ISAs with two providers as long as I only pay into one within any tax year right?

So looks right now it’ll be continue holding Moneybox (or withdraw) and Freetrade simultaneously.

Cheers,

Joe

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(Emma) #4

Yes, that’s right

It would definitely help with diversification if you pick what you invest in now based on the fact ethical options will be available in a few months.

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#5

What’s the existing total value of your investments?

Moneybox’s standard charge seems to be £1/month + 0.45% of total, while Freetrade’s ISA accont charge is £3/month. 0.45% of £445 is £2, plus the £1 is £3. So if you have more than £445 already invested, Freetrade will be cheaper.

At these small amounts invested, you also don’t actually need an ISA, since you won’t pay any taxes for quite some time due to your personal allowances.

Which means you don’t need to wait for Freetrade to implement ISA transfers. You can just close your Moneybox account, take the cash out (losing ISA wrapper status), and put it in Freetrade’s free basic account.

Then you’re not paying anything in fees until it’s worth paying for an ISA.

5 Likes
(Jeff puckering) #6

You don’t have to answer that :joy: but everything @sendu says is spot on regarding your options.

Sorry for butting in @sendu its just I’m a fairly new investor too (started learning on this forum about 6 months ago) and was a bit embarrassed at my small portfolio amounts at first, and a question like this on one of my first posts might have made me nervous.

@joe For info if it helps as an example, I am well under the limit for needing an ISA and am using freetrades free general investing account with the intention of moving to an ISA when I have probably 15k+

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#7

@sendu and @Jeff

Thank you both for this amazing advice. I’ll check on withdrawals with moneybox, and the ISA amounts that makes sense.

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#8

So it looks like the personal allowance on dividends is £2000? Or does investments count as savings?

What if you go above £2k?

I appreciate your patience in advance… :sweat_smile:

#9

Dividends are payments sent out by the companies you have invested in. I’ve no idea what you have invested in using Moneybox, but let’s assume it’s some kind of broad fund comprising many different companies.
In that case, we might guess at a dividend rate of around 2%. This means if your current total investment value is £445, you will receive about £9 in dividends per year. Obviously it’s a long time before you exceed your dividend allowance. When you’re in danger of exceeding it, you’d want to move your investment to an ISA.
Your other consideration is capital gains. If you input £400 cash and your investment is now worth £445, and you choose to sell all £445, it means you gained £45. Your capital gains allowance per year is £12,000. If your gains are above that, you’d pay tax on the excess. So again, when you become in danger of your gains going over £12k, you’d want to switch to an ISA. For now just keep an eye on it every year, keeping in mind that you’re considering your cash inputs right from the very first year of investment vs current value, to work out your gains.

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(Jeff puckering) #10

Don’t worry have a fish around on this forum with the search bar there is tonnes of information. This is an article from one of the freetrade team @Toby that should answer some of your questions (and may lead to more, in which case ask!)

It’s weird that I mentioned here that it was 6 months ago that I joined the forum as I have literally just gotten my 1 year badge! Clearly I have been on here longer than I thought!

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(Zain) #11

Moneybox’s standard charge seems to be £1/month + 0.45% of total, while Freetrade’s ISA accont charge is £3/month. 0.45% of £445 is £2, plus the £1 is £3. So if you have more than £445 already invested, Freetrade will be cheaper.

It’s 0.45% per year, charged monthly. So if your portfolio is £455 and stays static throughout the year, you’d pay £1 a month, plus 16p a month.

The breakeven point is around £5300, compared to FreeTrade, but that ignores the fund fees (0.12% - 0.30%) which matters, but is a far cry from the 8% in your calculations!

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#12

This looks like a good starting point for me as starting a steady ship in investing £50 per month?

1 Like
#13

As an aside to the OPs question, can anyone recommend some good apps, news sources or forums to keep tabs on what people think the must-buy stocks are?

I have a decent enough understanding of the market and it’s mechanics and do my own research, but historically I invested in passives, and want to dabble a bit more with active stock selection.

(Alex) #14

I quite like CityFalcon for following company news/markets. You could also try Motley Fool, Bloomberg, webull. There are quite a lot around and a few posts on here covering useful ones

(Vladislav Kozub) #15

There is no such thing I’m afraid, otherwise everyone would have been buying them.

The only single best solution is to buy a fraction of the entire market, which has always gone up historically. You can research ETFs like this yourself to find the best suited ones, but VWRL, for example, contains 2,900 holdings of all sorts. IWDG contains 1,641 different securities. Both are available via Freetrade and maybe could arguably with a grain of salt be considered relatively safe investments.

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#16

Can you only buy when the market is officially open?

So you can’t say put in a purchase request that is initiated by the app as soon as the market does open?

As I keep getting unable to purchase

#17

Another newbie question.

If you bought £100 in stocks of let’s say FTSE 100.

In the space of a couple months you dropped 20% of your value. You then have another £100 ready to invest, but you’ve just seen that you’ve lost £20 value.

Would a smart investor buy into that same stock at the lesser value, and simply wait and watch for the value to increase?

I can see the value in doing that, but surely there’s a limit of how low you would buy (or to know when to buy as you see it decrease in value) as you have the awareness that this is likely a dip and that it will return closer to the value you expect it to rise back to.
This would be the knowledge I lack entirely, if anyone could point me to some basics of watching stock value, understanding the common value of the stock and having the wisdom of knowing when the stock is likely just dipping, and when it’s likely over valued currently…

I know this is likely a “if we all knew then we’d all be millionaires…” kind of question but I’d like to learn what I can to know when’s a good time to buy a stock and when isn’t and perhaps holding off for a while

(Emma) #18

You can queue a basic trade when the market is closed but you can’t do an instant trade or queue one

Buying when it drops is a good move generally

Sudden drops can be due to political factors, a bad earnings report etc so there’s no magic solution to time the dip, but to understand the value of a stock you could read this

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#19

It depends on if you’re talking about stock of an individual company or a broad fund holding many companies. I think you’re talking about the latter since you mentioned FTSE 100.

If your fund is broad enough (eg. every stock in the world, instead of just the top 100 in the UK), you would probably gleefully buy more and more the further the stock market fell. I don’t think you’d worry about doing much analysis. This is because the whole reason you or anyone else invests in the stock market is that you have a belief that, over the long term, the stock market will rise in value. And sudden crashes are followed by sudden recoveries. And the ideal is to “buy low, sell high”. So buying stocks at an average cheap price will mean you can sell them later at an average high price.

If your fund is less broad, or you’re dealing with a single stock, then you have to look at the financials. Is the FTSE 100 down because of an irrational market panic, or because the UK government declared stock trading illegal? Is the company’s stock down because a large holder sold all their shares, or because they’re drowning in debt, have no way of generating enough profit to recover, and are on their way to bankruptcy?

In a nutshell you ask yourself “at these prices, what kind of future return can I expect?”. One simple rule of thumb is 1/PE (price to earnings ratio). You can find the PE of a single company, or consider the average of a whole country. The lower the price, the lower the PE, the more money you’ll make in the future, since the earnings are still there.

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#20

Thank you both for above, lots to think about and learn there. Will continue to read and learn.

Really stupid question time:
If you’ve bought just 1 share of a stock, at say £14, and the stock value/price nose dives to £0 (or below) - is that share lost/gone? Or do you still own the share that has no value (or minus value)? Or is this even possible…

Thanks again in advance, just trying to learn :sweat_smile: