With the new ISA allowances coming up, I’m planning to move my LISA money (currently in cash with moneybox) into a stocks and shares LISA due to no longer planning to buy a house in the next 5 years’ time and with that comes sorting my portfolio.
My proposed new portfolio would be to hold a Developed world index ETF such as LSE:LCWL in my LISA with AJ Bell. Fees will be capped at £42 PA for the account with 0.12% fee for the ETF. This will form the bedrock of my portfolio with 60%
Lyxor core MSCI world DR LCWl -60%
The rest of my holdings will be held in my ISA with T212 and are pencilled in as follows.
Growth
Vanguard S&P 500 VUSA -16%
Apple -4%
Microsoft -4%
Amazon 3%
Alphabet class C 3%
Div
Realty income 2%
Lloyds banking group 2%
Barclays 2%
Natwest group 2%
Investec 2%
To help keep the portfolio in check, I’ll buy LCWL in my T212 account to help average down if needed to fix the allocations due to the trading fees on AJ Bell.
The plan with the portfolio is the core is world index but I can lean into the US Stocks with VUSA and as well as the top 4 stock picks. This would add up make up 90% of my portfolio.
I could buy a S&P 500 ETF with my LISA money and fully lean on the US market, but I feel that might be too much volatility with house deposit money. Would also owning AAPL, MSFT AMZN and GOOG on their own be too much of doubling up as I already own the stocks in both ETFS?
I guess the underline question is that if I’m going with a developed world index, should I just go full in with the index. Or keep the current planned splits and have a tilt to US stocks.
The last 10% is in banking and a REIT. NGL I like banking stock; I like O that’s it really.
Thank you for reading and any feedback in advance.
EDIT: added that the LISA will be moving to another LISA just as stocks and not cash
You’ll pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason (also known as making an unauthorised withdrawal). This recovers the government bonus you received on your original savings.
Keep your funds in the LISA.
Also why are you wanting to double up on some stocks and the USA - purely based on past performance or do you have a strong conviction in them.
The Money that’s inside the LISA will stay inside a LISA, moving it from cash to a Stocks and shares LISA with a different provider so no fee is applied.
For the US stocks, past performance, all the main ETF and funds that track stocks have AAPL, MSFT, AMZN and GOOG so just a case of following the money.
For the income stuff, I simply like the aspect of divs coming in, why it’s limited to 10% of my portfoilo
It seems a pretty solid plan but here’s my 2p worth with min/maxing in mind:
The £9.95 commissions can quickly add up, so it’s best to invest your annual allowance in one lump sum if you can. If you’re buying monthly, you could be paying nearly 3% in commission fees on £4,000. I think they offer a £1.50 regular investing service but even then that’s 0.45% on each £333.33 contribution.
You could buy a fund instead. The Fidelity Index World Fund tracks the same index for the same ongoing cost. While the fees are uncapped for funds, you pay £1.50 a trade, there’s no bid-ask spread and they’re fractional so you can put 100% of your money to work. The £42 cap doesn’t really come into play until you have about £16,000 in your account anyway.
Personally, I’d open a Lisa with HL and take commissions out of the equation by buying funds then switching in a few years when it becomes cheaper elsewhere.
I’d rejig the Isa to make it simpler. You don’t need more global large cap stocks on top of the MSCI World. Instead, I’d suggest going with a few ETFs or ITs to cover things you’re missing such as emerging markets, small-caps and unquoted companies. You don’t need much else but you could add one or two to give your portfolio a tilt to income, growth, value etc.
I plan on using the lump sum in 2 chucks ish max so would be £20 for fees. I can then always just buy the ETF on t212 to avarage down if I buy before a dip.
did look at the funds but with the uncap fees issue as I’ll be over the £16800 mark in the new tax year which will help reduce the annual fees charged by AJ Bell
3)HL don’t allow for transfers of LISA. the main issue is I want to get my cash LISA doing more work than the 0.4% its getting right now
I could ditch the 4 stocks and just get more VUSA in lieu of the stocks, does reduce the FX fees and means I’m only tracking a few items
Yes there is. Most funds operate a single pricing policy, so each day they will price on a bid/mid/ask price depending on the net direction of investor flows. The underlying assets of the fund trade on a bid/ask so there is anti dilution to consider.
Probably this. You could get an all world fund for 0.13% so with platform fees is 0.58% overall for your LISA and no trading fees for funds.
I have put in bold the two points I will just comment on.
1a. The US market is arguably one of the least volatile, what other market are you going to be safer with? Now I am not saying it will be the best performing, but it is unlikely to lose you 10-20% over a 5 year horizon like you say you have.
1b. Your portfolio is already leaning massively to the US. Your ETF is almost 70% made up of US stocks. S&P500 of course is 100% US and then you have most of your other holdings US companies.
2 In terms of management sense it would be easier to just use the ETF for whole thing, only time to use individual companies is if you think they are going to perform differently than the market (such as better, or just more stable).
All fair points.
1A can’t disagree with any part of that
1B I guess the root of the issue is should I just go into US and go for it or am in effect leaving out from US a little to spread my bets when I can just buy a cheap ACC S&P 500 ETF such as IShares CSP1
2I’ll be honest and say I do like the idea of picking stocks but might reduce it down to say max of 15% for my whole portfolio. would be 85% ETF either world fund or just S&P 500 and then a few stocks to help scratch the stock picker itch
I do not want to give advice as who knows what will happen, but I would see an ALL world as the safest bet than a S&P 500 one. Example if using say vanguard funds I would see VWRL as the core, then depending on if you want more US or more Emerging markets you can add VUSA or VFEM. But many people are purely in US stocks and so its just preference on what you want.
Am on the waiting list for Dodl and Is one of the other options, the issue is without knowing for sure if they will do LISA transfers at launch then kind of a wait and see.
Cool sound like you have a good plan. If you want dividends - are you happy with your exposure to the banking/investments sector. You could diversify with some other sectors?
I get the small divdends from VUSA as well. I quite like banking secture due to how much they underpin everything. Might end up reducing the % down a bit more if I opt to just focus on ETFs