Investment Trust ISA?

cheerfulcat

fish10, I would like to suggest that you start with the Motley Fool introduction to investment ( here as well ); it is very clear & easy to understand. The incademy courses are also very good.

dancingfairy

Yes investing in the stockmarket is a risk but there are things you can do to minimise it. Investing in a unit trust or another thing managed by a manger and where you pool investment funds with other people can be a good way to start. The stock market should give you more return than saving. However it generally goes up over time and you need to see it as a long term investment rather than a year or 2 as you may not be able to get a good price at short notice - if the stockmarket is going through a bad phase. Lots of things are risky in life (ie crossing the road, going on a date etc) but the stock market should involve a medium amount of risk if you stick to big companies / managed funds and do your research.

A good place to start is to work out how long you wish to invest your money for - is it for a specific date ie wedding/ house move or is a long time investment for more money.

Read up on unit trusts and investment trusts in a financial guide from a library / bookshop so you understand the differnt types of products available then research a product that has a good history (although does not necessarily guarantee they will again do well) .

fish10

Thanks cheerfulcat. The suggestions were just what I needed. I'm getting a much clearer idea of my options and what I'd like to take up. Still reading!
fish10

EdInvestor

fish10 wrote:

I was classed as a moderately conservative investor (3 on the scale) yet it suggested 17%cash, 26% low risk bonds, 21% medium risk big cap shares and a whopping 36% higher risk mid to small cap shares and foreign shares.

I imagine this is related to your age. The younger you are, the more risk you can take to get the returns you need. The underlying thinking here is that even if markets fall, they will rise again over time,so the risk is considerably reduced where there is a long time-scale involved.History suggests this assumption is generally correct, though it is always sensible to diversify equity investments across sectors and not put all your money into, say, tech stocks, or oil shares.]

How many years until you are likely to die (let's say at 85)?

cheerfulcat

EdInvestor wrote:

How many years until you are likely to die (let's say at 85)?

Blimey, Ed, you're a ray of sunshine this morning! " How old are you " might have been a less depressing question...

EdInvestor

Just trying to make the point about how long the time scale is, CC .

Fish10 might think he's no chicken, but in investment terms he may well still be a babe-in-arms.

fish10

Well, now I've done a crash reading course in investing I feel slightly embarrassed by my initial question and wish I were 20 years younger! Sadly, Ed, I'm definitely in the middle-aged bracket, but I guess that still gives me a good amount of time for investing. (This is sounding rather depressing.)

I'm pretty sure that the answer to my initial question (investment ISA?)is "Yes" and using a unit trust Fund of Funds as dunholme suggested.
Fool.co.uk really push trackers, don't they, saying they outperform 75% of managed funds and they also seem pretty keen on drip-feeding funds. What does anyone think about these ideas? The latter, particularly, leaves me wondering if I should I leave my lump sum (about£100+K) in high interest savings a/c's, to avoid investing large sums at a bad time.
I know, I've still not got much of a clue!
fish10

cheerfulcat

Hi, fish,

Gosh, that was quick! As to trackers; I think that for someone just starting out investing, who just wants stockmarket exposure, without hassle, trackers are very hard to beat. Most managed funds do not outperform trackers, constrained as they are by their benchmarks ( never mind the fees ). But I have to say that I would not put a large lump sum into a tracker ( and remember that the basic TMF advice is for people investing small regular sums ).

Equally, I would not put a large lump sum into a fund of funds. The extra layer of fees is going to have a pretty detrimental effect on returns; in any case, you would still be putting all of your eggs in one basket.

Have you decided yet what you want from this money? Do you want an income from it? Do you want to increase your capital? Or do you just want to preserve the value of what you have? It is important to address this question; without the answer to it you can't really make a sensible decision as to where to invest.

fish10

Thanks again cheerfulcat,
I wasn't thinking of putting the whole amount into one single fund/tracker! I was thinking about £2-4K in different investments and drip-feeding elsewhere, but I'm going to see if I can get a recommendation for an IFA, now that I at least understand some of the language. I found
another thread where Edinvestor and dunstonh give some very good advice on what to look out for in a search for an IFA.
As for what I want from this money, I certainly want to preserve it's value at the very least; a little extra income and increased capital would be good. As I said earlier in the thread, the kids have £10,000 each to invest for Uni. fees, so perhaps the most important thing after that will be having enough money for us to retire in comfort, in 15/20 years time.
All advice welcome and much appreciated
fish10

homersimpson_3

Assuming you mean unit trust/oeics, on 4k, a Fund of Funds could be good sense. Manager of Manager funds can be less diversified and have higher charges than a decent fund of funds. If you want to target a specifc investment area you also have a number of blend funds now which can giver a decent spread of funds in a particular area.

why can Manager of Manager funds less diversified and have higher charges than a decent fund of funds.

Equally, I would not put a large lump sum into a fund of funds. The extra layer of fees is going to have a pretty detrimental effect on returns; in any case, you would still be putting all of your eggs in one basket.

why do funds of funds have an extra layer of fees?

With more than the ISA allowance available to invest, make sure you have as one of your requirements that any investment outside of the ISA can be moved into the ISA each tax year at no cost and without you being taken out of the market. Not all providers do that.

how will this be achieved? will independent financial advisor do it for you? can it be done by a novice? is it just a matter of filiing out a form? which form?