Help with first investment!

spanner200

Hi,

I am looking to dip a very tentative toe into the investment waters, with a view of making regular £200 DD into an investment of some sort. I thought maybe an index tracker for part of this monthly DD (say £100?) may be a ideal, together with some other fund.

Can anyone suggest something else or should I plow the whole thing into an index tracker?- I was considering Fidelity and M&G as they appear to have very low TERs.

I had also thought about ETF's through Squaregain but I dont think you can make monthly DD via this method of investment- or am I missing something? The other alternative was to invest in another tracker, so that I begin to develope a more diversified portfolio, say FTSE All share combined with S&P 500 or Japan Index tracker? Can anyone make any suggestions?

If I do decide to go for an index tracker, how do I decided which fund is generally better at tracking an index, as I understand that tracking error can be an issue.

Many thanks for all your patience! I want to get this sorted asap before the 6th april deadline!

cloud_dog

Spanner, I'm affraid no one is going to give you specifics on which fund to go with. There are useful sites such as https://www.trustnet.co.uk where you can compare funds against each other over varying periods of time.

One other suggestion might be to consider splitting your investment amount down into four, £50 each, that way could get exposure to more areas, and probably more importantly investment strategies.

This next bit is my opinion only and I know some others may not agree 100% with it but....................... focussing on charges is reasonably important and if you are looking at trackers then its importance becomes even higher. I tend to focus on good fund managers, i.e. consistent performers (go to https://www.bestinvest.co.ok click on "Performance" and then "Managers" and you can see/compare). Also please be aware that a tracker (or ETF index based fund) will track an index down with no leeway for selling out into cash for a period of time).

cloud_dog

al_yrpal

Multiple Funds spreads the risk, you can split your risk inside a single INVESCO ISA. Or a multi manager fund like the Jupiter Merlin range gives an excellent spread too, but the manager is deciding the split.

spanner200

thanks for that cloud_dog- I guess I never considered managed funds because I was under the impression that you needed to make one lump sum first before you are eligible to make monthly DD, also the charges seem so much higher! I'll look into the website you suggested, various emils I have been getting from MoneyWeekly suggests investing in gold, and uranium- but frankly I don't yet know where to begin! I think I'll probably invest in a tracker for now to get in before april 6th then do a bit more research!
Many thanks again : )

P.S. when looking at index tracker performance should I be looking at yield?

Troubleatmill_2

"In fact studies have shown that over the long term index trackers have generated a better return than 75% of managed funds. The main reason is the lower charges that you pay on trackers. They are also a lot simpler and less time-consuming."

http://www.fool.co.uk/lrninvnov/startinvesting.htm?ref=lrninvnov

Cheers
Troubleatmill

savingforoz

Spanner200, ref the charges on managed funds - you can get these much cheaper through a discount funds supermarket. Check out https://www.fundchoice.co.uk and Hargreaves Lansdown's website (https://www.hargreaveslansdown.co.uk). I've just bought a fund via HL and the 4.5% initial charge was reduced to zero.
If it's a cheap tracker you're after, the cheapest seems to be Fidelity's FTSE All Share tracker. Initial charge 0%, annual charges 0.3%, and it's hightly rated.https://www.fidelity.co.uk

Troubleatmill_2

removed post - double posted

spanner200

thanks savingforoz, apart from the inital charges is there anything else i should consider when choosing index trackers from these various funds?

cloud_dog

Spanner, wrt yeild yes you need to include it. I think on the trustnet website it gives you a "Total Return" figure (although please check the info to make sure divi's, etc are included).

Wrt trackers, as stated I'm not a big fan of them, as they do not provide any flexibility and will track an index down. Having said that I agree that a lot of managed funds do not beat their respective index(es) - choices we have to make.

Similarly whilst I consider charges they are not the holy grail for me. If fa fund charges 4% Ann Man charge but, on average consistently retuens good growth then I am happy to let them have their cake (of my money), obivously if performance is not maintained then I move. Another reason why I tend to follow managers rather than funds, and or 'hot' funds.

cloud_dog

cheerfulcat

Hi, spanner,

I want to get this sorted asap before the 6th april deadline!

If you use a broker for your ISA there's no need to hurry; just open the ISA and deposit the money; you don't need to choose an investment right away.

I think that for someone who does not want to research and monitor their investments, regular payments into a tracker are the way to go. Yes, trackers will follow an index down but this just means that your monthly contribution will buy more shares/units. In any case, most managed funds are simply closet trackers, so investors in them are paying extra for exactly the same performance.

I do think that a selection of trackers, spread over various areas, is better than just the one.

baldbloke_2

I have been looking at Legal & General's tracker funds which seem to offer a simple & wide-ranging way in to Tracker Funds with low and lowish charges. I placed my first ever year's equities ISA with the Halifax this year - simply because I bank with them - but now I am trying to be a little more savvy. It seems a really big decision but probably isn't! L&G or Fidelity's own funds seem to be the home for my 2006-7 £4k and then watch how the Halifax funds do over the coming months. I feel much happier about spreading each year's investment ISA around different providers than I do about the mini-cash ISAs - I've no idea why!.
Any info on any downside to the L&G funds would be appreciated before I jump in!