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I want to move £40k from my iWeb cash ISA into a Vanguard Lifestrategy fund. Will the fees be less?

07 April 2021

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Question by Angela

I recently opened an account for £100 with iWeb and invested £20k in a stocks and shares ISA. I now want to move £40k from my cash ISA into a Vanguard Lifestrategy fund. Will the fees be less by investing directly with Vanguard which is already low cost or will I save further by investing with iWeb?

Answered by Tim Blowers

Angela, the benefit of iWeb is the initial fee rather than an ongoing charge. Over one year it would be equivalent to 0.5% of your £20,000 stocks and shares ISA contribution and if you hold it for the long term it can offer great value. That said iWeb do charge when you purchase a fund or shares, at £5 a time. So if you’re planning to make further contributions, buy a few funds/shares or change them this can add up.

On top of the Vanguard or iWeb fees, if you are buying a fund there would also be annual charges, however these aren’t paid directly but as part of holding the funds.

Vanguard operate quite differently and you can only buy Vanguard funds, there’s no initial charge this time but an annual fee of 0.15% of the value of your investments. For example, if the value of your ISA is £20,000, it would cost £30 in the platform fees. If you’re adding another £40,000 from your cash ISA, it would be £90. It does mean you can chop and change the funds (although Vanguard only) and add in money, without having to worry about a £5 dealing fee.

The cash ISA might not be getting much in terms of interest but make sure you keep some back in case you need some cash for emergencies. If you’ve got a big spend planned in the short term, then investing the money you need for this isn’t a good idea.

So what does this mean for your question, well it depends on what and how you are planning to invest into. If it’s a few funds and regular tops ups then Vanguard might work out cheaper but if you are planning to just buy one or two and hold them or want more options for investing, then iWeb might be the one. The calculator on the Boring Money website is great for comparing the cost for both these two (and lots of others) so I would suggest having a go at this.

Important Information

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

Capital at risk. The value of investments and the income from them can fall as well as rise and the investor may not receive back the original amount invested.

Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice before making decisions. HMRC Tax Year 2020/21.

Answered by

Tim Blowers

Financial Planner

Tim has always wanted to help people and his psychology background has allowed him to combine a love of numbers and understanding behaviours in financial planning, with various degrees and qualifications to prove it. Tim is a born and bred Bristolian and other than a couple of stints further north as part of University degrees, has lived in various parts of his fantastic hometown his whole life.