Stocks and Shares v Self Trade ISA - Natwest

jamesd

Simple starting place first. 40% up or down is a FTSE All Share Index tracker fund and that's medium to medium high risk. If you want to add higher risk things to that, start by using no more than 5% of each thing. Lower risk include commercial property, corporate bonds and gilts (but high quality/low yield corporate bonds and even more so gilts may be in a bubble at the moment, so not a great buying time). Gold, tech and oil can be some of those things.

Funds offer you lots of diversification at a very low price, compared to trading fees on direct share dealing. No problem to add shares, but it's hard for it to be cost-effective when you're trading in only a few hundred Pounds worth at a time.

Look at what's cheap and the moment and find out why. Will that change? If it will, then you have a decent thing to consider buying. If it's expensive, can the price still rise and is there a good reason for it to rise rather than fall?

That sort of thinking says that shares in general are fairly cheap in developed markets (low prices) and that emerging markets could still go up on since they are effectively a leveraged play on economic recovery in the west. Oil and natural resources could go higher on the back of a recovery. Gold? That's betting on a financial meltdown, not necessarily bad to have some to add some movement contrary to what the rest is doing. Apple? Nice enough except high price and what happens when a bus hits Steve Jobs? Think of BP and it's oil well for the consequences of that sort of uncommon but severe event, but it'd probably be harder for Apple to recover.

Whatever you go for, watch it regularly. Daily is nice for a year, but at least monthly so you can see what normal variation looks like. That'll reduce the chance of you becoming a panic seller and might even get you to the point where you're willing to buy when few others want to - a prime chance to buy low.

cheerfulcat

Psychological wrote: »

So given comments above that gold, tech and oil are all very high risk areas for me to invest in. What would people consider medium / low risk that would likely beat current interest rates in a savings account that could make up the majority of my investment. If I leave 10% in risky tech, gold or oil - where should I put the rest?

With the level of investment you're considering, it will be difficult if not impossible to diversify using individual shares. Realistically, you'd need a portfolio of 20 - 30 stocks to avoid any one of them blowing a large hole in your savings.

What about using the lump sum for your high-risk holdings, and the monthly contributions for a couple of investment trusts? The Edinburgh IT is one which I am happy to hold; it is fairly conservatively managed and has a yield of 5% currently.

Another IT worth a look is RIT Capital Partners. It will never shoot the lights out but it has a very well diversified portfolio and aims for capital preservation.

Psychological_2

Tullow Oil up 2.7% overnight... should have gone with my instincts there.

Thanks you all for the wonderful help, Edinburgh IT looks great, might use that for some safety for 50% of my capital, 40% in medium risk and 10% high risk.

Think I've found my balance - thanks again all.

asadreddini

25years old, job of 5 years, take home roughly £50k?

What job are you in to be earning that much at 25??