how complicated are stocks and shares isa's?

hpsauce_2

I have cash isa's but have decided to try a stocks and shares isa.

I have never had anything to do with stocks or shares before and so am alittle nervous as have no real understanding of the market.

I am reasonably savvy with the rest of my money (savings, cash isa's and over paying mortgage) so am interested to know whether I would be best going to a IFA or trying to do it myself?

Can anyone point me to a good information source on how stocks and shares isa's work.
I know banks do set ones but are their other ways of doing them?

Thanks for any assistance

Helen

adecor

Personally, I wouldn't recommend a stocks & shares ISA in the current climate as it is a huge gamble. Firstly, you have to decide how much risk you want to take as there are so many options available. As you have no idea about them an IFA is probably your best option. It's normally best to choose one that charges an hourly rate as they are not relying on commission gained from anything you buy - you can always ask them about this (referred to as initial commission).
This site explains some of the terminology regarding shares quite well http://www.howtobooks.co.uk/family/stock-shares/
This explains the ins & outs of ISA's well http://www.investmentuk.org/FactSheets/ISAs/HowIsasWork.asp

cheerfulcat

hpsauce wrote: »

Can anyone point me to a good information source on how stocks and shares isa's work.
I know banks do set ones but are their other ways of doing them?

Thanks for any assistance

Helen

Hello, Helen,

The ISA is just a " wrapper " which shelters the contents from certain taxes. You can buy ready-made ones from banks or fund supermarkets, or you can pay for the ISA account with a stock broker ( a self-select ISA ) and buy shares and bonds within it. There is an introduction ( slightly dated now ) to ISAs here.

dunstonh

Personally, I wouldn't recommend a stocks & shares ISA in the current climate as it is a huge gamble.

Why?

Firstly, you have to decide how much risk you want to take as there are so many options available.

Correct. There are huge numbers of options.

As you have no idea about them an IFA is probably your best option. It's normally best to choose one that charges an hourly rate as they are not relying on commission gained from anything you buy

On small transactions, paying by the hour will cost more than the commission. I'm fee based most of the time and prefer that method but there are times that commission is more sensible.

I know banks do set ones but are their other ways of doing them?

The banks offer generally low quality funds and are usually the most expensive way to buy.

purch

I have never had anything to do with stocks or shares before and so am alittle nervous as have no real understanding of the market

The most important thing to remember (as stated above) is that Stocks and Shares do not necessarily mean Equity, and do not automatically mean high or even medium risk.

Your best bet is to speak to a suitably qualified Independant FA (i.e. not one sitting in the foyer of a Bank, B.S. or Insurance Office)

it is a huge gamble

It is not.

cloud_dog

I think now might be a very good time to start investing. Having said that no one kows where the bottom might be and how long it might take to get there. In fact I have just started monthly investing (something I haven't done now for a large number of years) in 7 funds as I want to take advantage of the lower prices but am not sure if markets will go lower, so I am not comfortable committing my monies in one go.

Regarding the OP questions, I would suggest starting to learn about investing, the markets, and investment options. Motely Fool has a good website:

http://www.fool.com/investing/basics/index.aspx

(and there are others, try googling 'investment learn', etc, etc).

Additionally, what you should do is register with a finacial site (I use https://www.iii.co.uk) and set up a dummy portfolio (you can have more than one if you wish). This way you can try out you investment ideas and see how they perform without using valuable money during the learning process.

Never be in too much of a rush to commit money, there will always be another opportunity.

cloud_dog

hpsauce_2

Thanks for the advice guys.

I assumed now wouldn't be to bad a time to invest a bit as the market is so low, although I do understand it could still be on it's way down for a while I am assuning it will be a long term investment eg 10+ years so hope it might be a bit better by then, espeically as it will probably take me a while to sort it all out.

I will have a read and thanks for that dummy investing site that will help although think I will probably try a IFA to get some ideas if not a bit more.

So you think fee paying is better than commission would be a best bet with the IFA? Can anyone give me a ball park idea how much a IFA charges an hour as I feel I could be there a while.

dunstonh

So you think fee paying is better than commission would be a best bet with the IFA?

Commission is usually best with small transactions. Fee is best with larger. Remember that with investments like unit trusts/oeics, commission is a fee. In other words, if the commission is 3% then 3% is deducted from your investment.

Can anyone give me a ball park idea how much a IFA charges an hour as I feel I could be there a while.

On commission basis, the typical maximum is 3%. The typical average is 1.8%. On fee basis, you find the fee is more than that. However, you can ask. Remember that IFAs run as individual businesses so you will get some that price themselves greedy or are priced to deal with certain segments of the market as well as those that are competitive. The more money you invest, the more the discount you can usually negotiate.

nickj_2

it maybe an ideal time to invest - although you may have to wait until you see any returns -
i have 7 trackers ranging from uk - usa to health and tech isa that i save a monthly amount , it's cheap to run and has produced good results over the last 10 yrs , however now it is at an all time low , but i look at it that i'm getting more for my cash - you will need nerves of steel for the forseeable future , but buying stocks and shares is all about timing - buy low , sell high ,
i wouldn't invest in shares if you will need the money soon

hpsauce_2

Thanks again for the advice

I am looking at this as long term and will be using my isa stocks and shares allowance so only starting off small with money I don't feel I will need.

pmorrison_2

cloud_dog wrote: »

Additionally, what you should do is register with a finacial site (I use www.iii.co.uk) and set up a dummy portfolio (you can have more than one if you wish). This way you can try out you investment ideas and see how they perform without using valuable money during the learning process.

Hi,

Ive just set up an account with iii, Im looking to invest at some point but like the idea of the dummy portfolio but cant find how to do this, could you give me details of what I need to do?

Cheers,

pmorrison