Time to get started on an investment ISA.

tomstickland

OK, in the first instance I want an easy to start process which still gives me a better return than the 5% ish from savings, with no gaurantees etc. So some sort of run of the mill tracker with minimal charges via an online broker is what I'm going to do. Meanwhile I can start running a virtual self investment portfolio for a few months to see how it goes.

EdInvestor

Hello Al

Shares are the last thing you should invest in if you cannot afford to lose a proportion of your savings.

I'm sorry to hear you lost money investing in individual shares.This happened to quite a few people during the dotcom boom, when they bought into highly risky tech stocks.

Needless to say that's NOT what I'm suggesting

Of course you're right that all equity investing carries risk.But as you're aware the vast majority of people in the UK have endowments, With profits or managed fund pensions, ISAs invested in a tracker or managed fund - and all this money is all invested in shares.

And what's more they are all invested in more or less the SAME shares; the ones I listed above, plus another 30 or so of the biggest companies on the FTSE.The banks and life companies are charging investors in many cases quite a lot of money to perform the simple task of buying these shares on your behalf.

I have no objection to the skilled practitioners in the financial services industry who offer value for money to their investors: I am happy to pay quite high charges to benefit from such skills which provie added value.

But I don't see why I or anyone else thould pay large amounts of money ( up to 30% of a pension fund over a long period) to have money invested in the same clutch of FTSE100 shares listed above when it is dead easy to do it youself and pay nothing.

dunstonh

up to 30% of a pension fund over a long period

Nobody pays 30% in charges. You again mix up effect of charges if they had not been taken with actual charges.

it is dead easy to do it youself and pay nothing.

Pay nothing? How do you do it without paying anything?

Although I see where you are coming from with your blue chips vs FTSE100 tracker comments, the issue is that with funds, you shouldnt just be going into one fund. You should be choosing a selection. That selection will result in diversification that just isnt possible with small amounts with shares. If you are going to pick a FTSE100 tracker, you may as well just pick the top 5 companies in the FTSE100 and buy individual shares. Its just not diverse enough to make sensible investing by itself nowadays.

cheerfulcat

tomstickland wrote:

OK, in the first instance I want an easy to start process which still gives me a better return than the 5% ish from savings, with no gaurantees etc. So some sort of run of the mill tracker with minimal charges via an online broker is what I'm going to do. Meanwhile I can start running a virtual self investment portfolio for a few months to see how it goes.

I think that a *regular* investment into a tracker is an excellent way to gain stock market exposure while learning.

The next step is to do a *lot* of reading. There have been some suggestions earlier in the thread - mine would include Alvin Hall's Winning with Shares, the Motley Fool UK Investment Guide ( and the accompanying workbook ), Which? Way to Save and Invest, anything by Peter Lynch, Warren Buffet, Benjamin Graham...also have a look at the Motley Fool's Books on Investing board, particularly this post -

http://boards.fool.co.uk/Message.asp?mid=9711756

Incademy provides a set of basic courses on investment ( free, of course! )

http://www.incademy.com/pages/home.htm?ginPtrCode=10002

There's nothing wrong with paper trading except that you will not learn anything until you put some real money at risk...

al_yrpal

Ed,
I have lost money, and I have made money. I bet if your honest, you have too. My investing experience goes way back into the 1970's, well beyond the dotcom disaster. We were not talking about pensions, endowments or anything like that. We are talking about first steps in investments with some savings in place. Shares investments are totally unsuitable for that without some knowledge and guidance.

Read the post again:-

I've started to read up on buying a fund via a internet broker. All great stuff, but I've realised that there's a lot of research to be done. So, in the interest of getting on with it, then I'm going to go for a big name tracker fund and get paying monthly amounts into it.
Can you recoommend and further internet sites so I can read up on this. I've looked at Motley Fool so far, plus Martins article on the main MSE site.

EdInvestor

Pay nothing? How do you do it without paying anything?

Pick a broker with no annual fee, pay in a lump sum and if, after buying the shares ( where you will pay dealing costs) you then don't trade, you won't pay anything further aftr that. OK, possibly a small amount once a year to reinvest accumulated dividends, and even that can often be avoided via DRIPS.

Trading too much is where most people go wrong with shares: they can't keep their finger off the mouse. That's the way to lose money, as you spend all your profits on dealing costs.

To make money, buy the shares, allow the dividends to mount up in your cash account, once a year reinvest this cash in another share, that's all.

Simple

There are 100 shares in the Footsie ( and many of them are familiar companies you know well like Tesco, or Boots, or M&S or Scottish and Newcastle or Shell.)

There are 4000 funds, and they all invest in loads of shares each which you should look at it you want to put your money in them.

Which is easier?

Funds do have their place I agree, particularly for overseas investment: it's almost impossible for an individual to research and buy individual Japanese shares successfully for instance ( though people do invest directly in the Dow.) Commidities is another area.And there are some very skilled fund managers whose funds are worth buying into.

But many of the 4000 funds are just dross, investing expensively in UK shares that are easy to buy yourself.

Owning shares and watching their progress is fun actually Whereas buying funds doesn't have quite the same immediacy, if you know what I mean

dunstonh

Owning shares and watching their progress is fun actually Whereas buying funds doesn't have quite the same immediacy, if you know what I mean

I see them as identical. Both have a daily price which will fluctuate. Not only that, I find the researching of funds most enjoyable. Individual shares wouldnt do it for me.

EdInvestor

dunstonh wrote:

If you are going to pick a FTSE100 tracker, you may as well just pick the top 5 companies in the FTSE100 and buy individual shares. Its just not diverse enough to make sensible investing by itself nowadays.

This isn't a bad plan for someone starting out with say 500 quid saved up, but with one caveat: if you picked the top five you would end up with one oil co, 1 pharamaceutical, 1 telecom but 2 banks.

I would drop one of the banks and replace it with a company that makes cigs, or drinks, or a retail share.

That would add diversity and reduce risk, the main proplem with trackers for a beginner.

100 quid in each share via Halifax Sharebuilder, then just observe what happens. You will learn a lot about how different shares behave compared with the market as a whole.You will discover about how dividends work,thought there are other FTSE100 shares you could choose to maximise that aspect - none of the top 5 are top divi payers.

You will also see if you are bothered by the "volatility" aspect - some people do get worried that share prices go up and down. If it keeps you awake at night, then perhaps you should find different assets to invest in, such as commercial property funds rather than shares.Or just stick to cash.

It's all horses for courses in the end.

tomstickland

OK, when MSE was down tonight then I got cracking on some research. I went to Hargreaves Lansdown and read up on funds. The thing that struck we was how easy it is to open an investment ISA. The next thought was that putting money into any decent fund is better than not doing it - over the last two years then growth figures are all waaay above the 5% from savings, plus the negative years of the early 2000s are over now. So I need to get in there quickly.

Funds that appealed to me were European based. I read quite a lot of annual reports.
Things that stick in my mind were the Artemis European Growth fund - very interesting report on that one. Someone else had an "aggresive fund" whic sounded good.

My feelings are that I want a medium risk fund and also want to put money into a more ambitious fund where there is more risk.

Ultimately, all I can do is read as much as possible and then make a decision based on how I feel about it all.

deemy2006

Too much to read

But I suggest Investment trusts, So you can invest in say Japan, India, South Korea, Metals and other sectors including oils.