Time to start investing? £50pm

cheerfulcat

Lokolo wrote: »

You need at least £1k to invest elsewhere as a one off with HL for example, thats 10 years before you go elsewhere...

There are no minima for shares, though, including ITs. Whether it's worth it after fees is another question of course.

fimonkey

The Growth Vs income is an interesting debate which i hadn't considered. I presumed 'Growth' was like yearly compound interest apid onto the balance (so you earn interest on interest), whereas Income would be a monthly interest not paid on the balance (so the balance always remains the same which, when factoring in inflation, therefore reduces.

Have I got this idea very wrong? If I saved this £50pm rather than invested it would be into a high interest account that pays interest onto the balance.

sabretoothtigger

Some bank accounts will let you pay the interest elsewhere. You could always add the income pay out onto your next payment which would make it the same as the growth option generally.
The idea is the income option is more involving, theres a better chance you will not blindly hold onto a fund past its best performance.
As we've seen recently even the strongest funds can suffer in a changing market and so automatic reinvestment doesnt seem best to me

cheerfulcat

fimonkey wrote: »

The Growth Vs income is an interesting debate which i hadn't considered. I presumed 'Growth' was like yearly compound interest apid onto the balance (so you earn interest on interest), whereas Income would be a monthly interest not paid on the balance (so the balance always remains the same which, when factoring in inflation, therefore reduces.

Have I got this idea very wrong? If I saved this £50pm rather than invested it would be into a high interest account that pays interest onto the balance.

Growth funds invest in companies/markets which the manager sees as having potential to grow.Equity income funds typically hold large companies which pay dividends. Neither growth nor income is guaranteed but the income from an income oriented fund is more dependable than the growth in a growth-type fund.

Even if you don't need the income, it can be re-invested.

competitionscafe

IF you can only afford £50 pm and are investing long term then you could do worse than drip feed it via monthly savings into one of the big general international investment trusts or UK investment trusts (investment trusts have lower charges, many will accept £50 per month and over the longer term inv trust discounts may narrow from current levels which would increase returns) As your money would be going into one fund it would make sense to avoid any specialist funds (eggs all in one basket scenario). Links below for information but for monthly savings plans on investment trusts you go direct via the fund providers own scheme. Some will charge extra for the ISA wrapper but I don't see any advantage in having them in an ISA as capital gains tax is unlikely to be an issue on a £50 monthly investment.

http://ww2.bestinvest.co.uk/investmenttrusts/fmpro?-db=webprices.fp5&-lay=it_info&-format=invtrustperflist.htm&webpublish=Y&-op=gt&starlen=2&calc_fundtype=it&-sortfield=invname&-max=200&-find

You can search by sector here (eg: global growth, uk growth and income etc):
http://ww2.bestinvest.co.uk/investmenttrusts/fmpro?-db=webprices.fp5&-format=index.htm&-lay=perf_info&-findany

I drip feed £50 pm into 2 international trusts (Alliance Trust and SVM Global) which gives me a broad spread of investments in terms of countries and asset classes but I think that most good inv trusts like Caledonia, British Empire, RIT, Midas Income & Growth, Edinburgh, and others all have monthly savings schemes too. As pointed out above the advantage of some of the big IT's is that you can get a good global 'portfolio' in one investment.

The_Fiddler_2

fimonkey wrote: »

Hi Fiddler.... I'm confused, can I 'save' £50pm with H&L? How is it then converted to an investment? (I thought minimum investment was £100pm with H&L).

Sorry, my bad - when I said save I really meant invest as in invest £50 in Fund A in January, £50 in Fund B in February, £50 in fund C in March and perhaps another £50 in Fund A in April etc.

fimonkey

competitionscafe wrote: »

Some will charge extra for the ISA wrapper but I don't see any advantage in having them in an ISA as capital gains tax is unlikely to be an issue on a £50 monthly investment.

.

With an IT, do you get growth or income?.. I thought you paid 20% tax (if a BR taxpayer) on every additional earning (so whatever it 'grew' by, or whatever dividend was paid) hence that's why I wanted it in an S&S ISA. Have I confused myself?

Thanks everyone for the heaps of info provided, I'm off to have a good read of those websites now.

cheerfulcat

fimonkey, whether you get growth or income depends on which IT you invest in. As to tax - there is a 10% income tax liability on dividends, but the dividends come with a " tax credit " of 10% so the tax is treated as already paid by a basic rate tax payer. Growth is taxed at 18%, but everyone has an annual capital gains allowance ( £9200 for the current tax year ) which is the amount you can make before having to pay capital gains tax.

fimonkey

I like the bestinvest site, but where can I find out what exactly the terms mean please? .. For instance, take this for example, which I picked at Random from the Bestinvest site. (MY QUESTIONS IN CAPS)

RIT Capital Partners.
Launched: June, 1988

Capital Structure : 156.2m shares. US$150m loan bears a fixed rate of interest of 3.93% pa. Also a €150m loan at a variable interest rate (to August 2012) of Euro LIBOR + 0.70% pa. Also in August '05 entered into an interest rate swap for a notional principal of €150m also maturing in 2012. Under the swap, company receives interest on a variable basis and pays interest fixed at a rate of 3.032%pa. Could also draw on a £25m unsecured loan facility.

IS THIS SAYING THE COMPANY HAS LOTS OF LOANS, OR THAT THEY GIVE OUT LOANS? aNYWAY, BEING IN THE LOAN BUSINESS AT THIS TIME IS RISKY YES/NO?

Gearing: -19%
Yield (net): .4%

WHAT'S GEARING AND YIELD (NET)?

Dividends paid: Jul.
Management fee: .5%
Total expense ratio: 1.38%

WHAT'S TOTAL EXPENSE RATIO?

Performance Fee : Performance-related fees may also be payable, including long-term incentive payments to members of the board.

IF I INVEST NI THIS FUND, WOULD I HAVE ANY CONTROL OVER THE PERFORMANCE G=FEE? ARE THEY OFTEN PAID AND IF SO HOW MUCH?

Mkt Cap: £1856.32m.

Share Price: 1084p.

THANKS ALL, AM REALLY LEARNING HEAPS FROM YOU ALL, MUCH APPRECIATED :-)

sabretoothtigger

Total expense ratio: 1.38%

Your cost of buying into the fund and selling I think. The fee is their cut per year but seems they have much bigger costs

The most common use of the term 'gearing' is to describe the level of a company's debt compared with its equity capital, and usually it is expressed as a percentage. So a company with gearing of 60 per cent has levels of debt which are 60 per cent of its equity capital.
The significance of the gearing ratio is that it shows at a glance how encumbered a company is with debt. Depending on the industry, a gearing ratio of 15% would be considered prudent whilst anything over 100% would be considered risky or 'highly geared'.
'Gearing' is also used in a related sense to refer to borrowings by an investment trust which boosts the return on capital and income via additional investment. When the trust is performing well shareholders enjoy an enhanced or 'geared profit'. However if the trust performs poorly then the loss is similarly exaggerated.
Finally, 'gearing' is also used to refer to the ratio between a company's share price and its warrant price.

Yield is what money you get back as a percent of your capital investment