Hurry up because we've all only got until the 6th April 2006 to allocate either £4,000 or a maximum of £7,000 to stockmarket ISA accounts. All ISA gains are tax-free so if you want to invest in the stockmarket then these must be your first vehicles of choice.
Fidelity Comes Up With A Real Winner
The fund manager Fidelity has come up with a great offer for all ISA investors because until April it's waiving the front end load. A 'load' is such an unfair charge, in effect the investor 'pays' for the privilege of investing his funds. For example, if you wanted to invest £10,000 in an investment fund with a 5% load £500 would be immediately paid to the fund manager!
Fidelity's ISA Deal - More Details
- You can choose to invest all your money (£4,000 or £7,000) in one of 5 funds or a 1/5th of the money in each of the 5 funds the so called 5-in-1 option
- The 5 funds are -
- Edinburgh
- Asia Values
- Special Values
- Japan Vales, and
- European Values
- To recap, an investor could either invest all of his money in say the Asia Values fund or split between all 5, he cannot invest in just two or three funds etc
- Minimum initial investment is £1,000 plus at least £100 a month if using the 5-in-1 option or min £50 a month if investing in just the single fund
- The initial load (sometime called a 'front-end load' or to confuse even further just a 'load') is usually 3%-3.5% but this is waived till 6th April 2006
- Stamp duty of 0.5% is charged and annual management fees of around 1%
Summary
Nothing is more annoying in the world of investing than these ludicrous 'load' charges. Sure, it would be fine to charge them if the majority of funds offered by fund managers actually outperformed the indexes they're tracking, but over 80% don't. So hats off to Fidelity to waiving them on this ISA deal.
Canny investors though know where to drastically reduce load fees and that's by using Fund Supermarkets to buy all sorts of investment funds. You can find out more details by reading this article on the monthly LearnMoney.co.uk newsletter. You're advised to sign up to the newsletter as well because it carries a lot of good information and tips on investing and the stockmarket in general - Sign Up Here.
See Also
