Friday May 9, 06:00 PM
Deal of the Week: Regular share investment plans
By Steve Lodge
What's the deal? TD Waterhouse and Selftrade, two of the biggest online stockbrokers, have launched regular investment plans for those wanting to build up share and fund holdings on a monthly basis at low cost. Both charge £1.50
dealing commission per purchase for shares, investment trusts and exchange traded funds, although Selftrade's Regular Investment Service is free until October. Both are available for Isas. TD Waterhouse's Regular Investment Account covers FTSE 350 companies, investment trusts and ETFs. Its monthly minimum is £25 per stock. Selftrade's scheme allows investment into FTSE 100 shares, ETFs and investment trusts. Its monthly minimum is £50 per stock. The services also allow no-cost investment into unit trusts and open-ended investment companies. Is regular investing for me? Brokers say such schemes are designed for more passive "buy and hold" investing. But this could also include building up the core of a more actively- managed portfolio. Stephen Barber, head of research at Selftrade, says regular investing suits those looking for long-term growth rather than value investors. More generally, an investor doesn't risk committing all their cash before a big price drop. When prices are falling, regular investors benefit by being able to pick up more shares for their money. Overall, their holdings build up at a lower than average price due to what is called "pound cost averaging". What's the catch? Investors are dealing "blind": while with both services they can cancel (or increase) their regular investments up until the day before purchase, precise investment timing is set by the brokers and prices are only confirmed after trades have been executed. While individual charges are low, for smaller amounts they can still seem hefty - £18 a year for a £25-a-month (£300 a year) investment with TD Waterhouse, for example. Stamp duty of 0.5 per cent is also payable on share and investment trust purchases. What are the alternatives? Halifax Share Dealing has attracted nearly 100,000 investors to its monthly ShareBuilder plan. This covers the wider FTSE All-Share (news) as well as Aim stocks, charges £1.50 per purchase, and is free until July. Many investment trusts have regular savings schemes, some of which are free (except for stamp duty). Unit (NYSE: UNT - news) trusts also normally make no extra charges for regular investments. How do I find out more? Go to www.tdwaterhouse.co.uk, www.selftrade.co.uk or www.halifax.co.uk/sharedealing. For investment trust savings schemes, go to fund managers.
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