Shares Magazine – August 15, 2019

(Axel Boer) #1

MONEY MATTERS


34 | SHARES | 08 August 2019


Helping you with personal finance issues

Answering questions about how to manage money in your dealing account

How do you pay


investment fees if you


have no cash on hand?


W


e’ve previously
covered how much
cash you should
have in your portfolio, but how
to do you manage the cash in
your investment account? What
happens if you owe fees and
have no money, or if you want to
buy and sell investments? We’ll
answer some of the common
questions asked.

WHAT HAPPENS IF I OWE
MONEY AND HAVE NO CASH
IN MY ACCOUNT?
There’s no minimum cash
balance on your account, so you
don’t have to have any money
in cash. That said, each quarter
you’ll be charged custody
charges, which are the fees for
having a platform. This money
will come out of the available
cash in your account. If you don’t
have any cash, or don’t have
enough cash in your account
then some of your investments
will be sold to pay these fees.
If the platform has to sell your
investments it will sell some units
of your largest holding, and you
might face a higher than usual
dealing fee for that transaction.
This means that it’s best make
sure you have enough cash in the
account to meet these costs. As
they are collected quarterly you
should check before the end of
the quarter whether you have a
pot of cash available.

If you typically have more
money in your Dealing Account
than your ISA or SIPP you can
elect for your charges to be
taken from the dealing account
instead, you’ll just need to
contact your platform. This only
applies to the custody charges
and not the fees for buying
and selling investments, which
will need to come from the
relevant account.
While it’s good to have some
money in cash (and you aren’t

charged a custody fee on this
money) the cash won’t earn
much interest, so you need to
make sure you’re not just leaving
money in cash for long periods
of time unless that’s a strategic
move you’ve planned for.

IF I SELL ONE FUND AND
BUY ANOTHER, WHY DOES
MONEY COME OUT OF MY
CASH ACCOUNT?
If you sell and buy an investment
at the same time you will need
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