Ok then - How do I choose a S&S ISA!

stphnstevey · 1 April 2007 at 2:54PM

Going to dip my toe (and see if it burns!)

Where do you start!

dunstonh · 1 April 2007 at 4:00PM

ascertain your risk profile and decide how you want to invest (shares, ITs, OEICs/UT/SICAVs etc) and the pick the spread that you want to invest in.

stphnstevey · 1 April 2007 at 8:09PM

I noticed that Martin doesn't have a very comprehensive guide on this. But it's an area that alot of people must be eager to find out. I hope people might post and follow how I get on in a hope to give guidance to others.

Risk on 1 to 5, 5 being highest, rate a 4

I consider myself a savy investor, I have done the FPC part 1, I use cash ISAs and reguler savers to maximise interest, part-time matched bet'ter, partime landlord.

However as for how I want to invest in shares, I don't know the differences between the types of investments you have described! Can you summarise or link me to somewhere I can research?

dunstonh · 1 April 2007 at 9:00PM

I noticed that Martin doesn't have a very comprehensive guide on this. But it's an area that alot of people must be eager to find out. I hope people might post and follow how I get on in a hope to give guidance to others.

Investments are regulated. Savings accounts are not. When you start recommending investment funds or investment strategies you get into a whole new level of authorisation. Plus it also becomes more varied. What is right for one person could be completely wrong for another just because one person earns £15,000 a year and the other £20,000.

Risk on 1 to 5, 5 being highest, rate a 4

Lets put that in loss terms. In a given year, how much of a loss (in percentage terms) would you accept before pulling out?

I consider myself a savy investor, I have done the FPC part 1, I use cash ISAs and reguler savers to maximise interest, part-time matched bet'ter, partime landlord.

LOL. FPC has no investment content. That comes in FPC2 and covered more deeply in FPC3. Like the driving test, the real knowledge comes after you have been doing it for a few years.

However as for how I want to invest in shares, I don't know the differences between the types of investments you have described! Can you summarise or link me to somewhere I can research?

http://www.incademy.com is a good place to get the basic information.

stphnstevey · 2 April 2007 at 5:59PM

Ok, fair enough reason why Martin is limited help when it comes to Stocks and Shares ISA's

Should I approach a financial adviser then?
a) This goes against the grain a little as I have come from the school of 'be your own financial adviser' and want to learn myself
b) The problem I might have is I am not seen as a 'big fish' and minimal investment in the Stockmarket is not very profitable for an FA in commision or fee

But how else does the average joe pick an shares other than lining them up on a dartboard and having a throw!

stphnstevey · 4 April 2007 at 7:32PM

No takers for discussion then!

SeanW · 4 April 2007 at 8:25PM

You will not get any recommendations, you are right that you might be best doing it yourself for a small sum.

You can learn about what dunstonh's list is from his URL.

You know what shares are I assume.

The others he lists are collective investments. That is, Investment Trusts, Unit Trusts, OEICs that invest in many different investments (such as different shares, bonds, cash etc...) according to their strategy or aims. That is, a European Fund will usually be allowed to invest in Europe, and differing funds will be managed differently when it comes to asset selection.

Risk varies, a fund investing solely in an emerging country is probably more risk than a fund investing globally. Similarly a fund investing in global equities is probably more risk than a fund investing in UK Bonds. But the lower risk option, such as UK Bonds, is never going to be a big performer compared to equities.

It's also more risk to stick £4000 in a UK fund, than it is to spread globally with different funds and managers. And you can imagine the risk with investing all £4000 in a single company's shares.

Investment Trust's are dealt with like shares, on the stock exchange, some providers offer cheaper dealing fees for their own ITs or saving plans. UTs and OEICs are best bought from a fund supermarket or discount broker.

After you have saved enough cash elsewhere you might need if you was to stop earning and you can invest for at least 5 years, somebody who is risk averse may choose bond funds with some UK commercial property and UK equity, somebody who can tolerate risk might go for more Global equity with specialist sectors/regions, with some low/medium in there to spread the risk.

If you chose the fund route, I'd recommend buying through https://www.h-l.co.uk who are cheaper, they remove most if not all of the Initial charge, and some of the annual charge. Min stated online is £1000, although they will take less into a fund over the telephone or post (I have done £500).

If you chose Investment Trusts, look to see if the investment company has their own savings scheme, it will often be cheaper than broker's dealing costs.

For shares, I believe many recommend SelfTrade, there was an offer where if they recommend you, they get £50 and so do you after you have invested some. I don't know anything about the different ISA share brokers though.

cheerfulcat · 4 April 2007 at 8:42PM

stphnstevey wrote: »

But how else does the average joe pick an shares other than lining them up on a dartboard and having a throw!

Some investors use fundamental analysis, which attempts to put a value on a company and thus the shares, some use technical analysis ( charts ), some look at momentum ( whether the share price is moving strongly in one or other direction ), most use a mixture. Random selection doesn't come into it.

A good place to start your research is with big companies you are familiar with, like BT or Tesco ( these are not recommendations!!!) or any other shop/service provider you come into contact with regularly. It is easier to see how they are doing, and knowing exactly what they do helps when looking more closely into the company.

Picking a collective fund is different. Find an area which interests you first, then find a fund or investment trust which seems to fit your ideas. Look out for performance fees ( bad thing ). With investment trusts, look for ITs trading at a discount ( good thing ).

Newbie investors are probably best going with largish, well known funds with familiar names doing the fund management.

Alternatively, you could choose a sector or asset class you like and get a tracker fund or ETF - these are not actively managed and are cheap to buy.

Incademy and the Motley Fool have more than enough information to get you started.

stphnstevey · 5 April 2007 at 4:21PM

Thanks

I want to invest through an ISA to minimise tax as I am a higher rate tax payer.

I've started looking at the Hargreaves Lansdown Vantage ISA. I believe that some of the startup/management fees are refunded, which sounds good, but I have to look into this more. I believe it is a fund supermarket as well, but again I am not sure if I understand why this is good yet!

I am also interested in property funds and hope I could do this through this ISA.

dunstonh · 5 April 2007 at 5:29PM

fund supermarkets (of which HL is one) offer around 1000 funds from all the major fund houses. Without a fund supermarket you would be forced to buy your funds in that tax year from one fund house. i.e. if you went to Invesco Perpetual, you would only be able to choose Inv Perp funds.

Use a fund supermarket and you can mix and match.

I am also interested in property funds and hope I could do this through this ISA.

Since december 2005 that has been allowed. Remember that property funds range from low risk to high risk. So, just because it has property in the name, dont assume its low risk.

stphnstevey · 5 April 2007 at 6:48PM

Thanks

Although a fund that actually invests in bricks and morter might be termed lower risk, does that necessarily translate to lower returns?

Ok then - How do I choose a S&S ISA!

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