Unit Trusts

mattygm

Hi all

Have recently sold some shares i owned for a little profit and am now looking to re-invest and have been looking at Unit Trusts but here seem to be so many different ones i just dont know where to start and what would be a good first buy, is anyone able to advise of a good starting point and trust to buy?

Kind regards

Matt

Loughton_Monkey

mattygm wrote: »

Hi all

Have recently sold some shares i owned for a little profit and am now looking to re-invest and have been looking at Unit Trusts but here seem to be so many different ones i just dont know where to start and what would be a good first buy, is anyone able to advise of a good starting point and trust to buy?

Kind regards

Matt

Sorry, but there's no real answer to that. Selecting a specific fund is usually the very last stage in making this type of investment. So if you want suggestions, then it's probably best to let someone know where you are 'coming from'.

For example:

What sort of money are you talking about? £50 or a few £'000's? Are you a tax payer? Want to make regular payments as well? Have you got a Stocks Shares ISA? For how long are you wanting to invest? Are you prepared to take risk for potentially higher reward or do you want 'safe'? Do you have other savings? Do you have (or need) a pension? Do you literally mean "Unit Trust" or are you including the very similar but more modern OEIC type of fund?

Lokolo

Step 1

https://www.fidelity.co.uk/investor/guidance-planning/plan-portfolio/myplan-portfolio-quickstart.page?
Do this as a guide to which areas you should invest in (equities, bonds etc.)

Step 2

http://tools.morningstar.co.uk/uk/fundscreener/default.aspx?LanguageId=en-GB
Use a fund screener to pick funds.

Step 3

Buy the funds from a discount broker such as HL.

mattygm

Hi Guys

Thanks for the info. Louhgton Monkey answers to your questions below;

What sort of money are you talking about? £1500 available to invest after selling current shares in Xstrata.

Are you a tax payer? Yes

Want to make regular payments as well? Yes, can manage say upto £100 per month

Have you got a Stocks Shares ISA? Yes, Currently hold RBS and british Airways still

For how long are you wanting to invest? Been investing in shares for about 2 years now but not had anything to do with Unit Trusts or OEIC.

Are you prepared to take risk for potentially higher reward or do you want 'safe'? Not wanting to go 'Safe' Safe but also dont want to go too risky

Do you have other savings? ISA savings.

Do you have (or need) a pension? Have a pension through work in the NHS

Do you literally mean "Unit Trust" or are you including the very similar but more modern OEIC type of fund? Do not really know the difference between the two as have only just started looking into this kind of investment.

Lokolo - Many thanks for the links.

Regards

Matt

LongTermLurker

mattygm wrote: »

Hi Guys

Thanks for the info. Louhgton Monkey answers to your questions below;

What sort of money are you talking about? £1500 available to invest after selling current shares in Xstrata.

Are you a tax payer? Yes

Want to make regular payments as well? Yes, can manage say upto £100 per month
When you get to step 3, HL's minimums are £1000/fund lump sum or £50 per month per fund. Bearing in mind the benefit of diversification (owning more than one fund), if it was me I'd use the £1500 to bolster my monthly investments for a while. This will have the benefits of allowing you to buy more funds and make use of pound cost averaging. So in total, you could maybe invest £225/month for a year, or maybe better to do £350 for 6 months - after that time you would have 7 funds. You'd then need to choose 2 funds and top them up for say 6 months before changing your instruction to top up 2 different funds.

Have you got a Stocks Shares ISA? Yes, Currently hold RBS and british Airways still

I think LM meant have you subscribed to one this year? If not, that's the way you should hold your funds. If you've used your cash ISA limit you can invest up to £5100 by 5 April, plenty of space with the numbers you've got.

For how long are you wanting to invest? Been investing in shares for about 2 years now but not had anything to do with Unit Trusts or OEIC.

Think of all investments as long term - you shouldn't need to sell them in an emergency - that's what your cash reserve is for. If you're not desparate you have more incentive to ride out storms. Think minimum 5 years or better still until retirement/daughters wedding/divorce settlement

Are you prepared to take risk for potentially higher reward or do you want 'safe'? Not wanting to go 'Safe' Safe but also dont want to go too risky

You could get quite a good balance with 7 funds: UK Equity Income, Europe, couple of Emerging Markets, Natural resources, maybe some High Yield and Investment Grade bonds, though they're not cheap at the moment. I'm not especially saying do those, just pointing to a balance of risk.

Do you have other savings? ISA savings.

Do you have (or need) a pension? Have a pension through work in the NHS

Do you literally mean "Unit Trust" or are you including the very similar but more modern OEIC type of fund? Do not really know the difference between the two as have only just started looking into this kind of investment.

Very similar - UTs are governed under Trust Law and OEICs under Company Law. UT's generally have a Buy price and a Sell price - you sell for less than you'd buy; OEICs tend to have a single price. To all intents and purposes they're both collective funds and achieve the same goal.

Lokolo - Many thanks for the links.

He's still a perv!

Regards

Matt

see above.......

Loughton_Monkey

I can't add a lot to Longtermlurker.

Make sure you have 'sufficient' [you decide] amount of savings that are 'safe' and easily available in the event of rainy day or emergency etc. Very poor interest in savings accounts these days, but read all the posts for best deals.

Then after that, have a good look at someone like Hargreaves Lansdown, and aim to build up a long term portfolio there.

Good luck

mattygm

Cheers guys for all the advice. much appreciated.

Yes have subscribed to a Stocks and Shares ISA this year aswell.

I currently do all my trading through Natwest Stockbrokers - what do i need to look for when selecting my first purchase?

Cheers
Matt

LongTermLurker

Well you need to make your own mind up, but the concensus of opinion across the board (me included) is that you won't get much better than Hargreaves Lansdown. Here's a bit of a lesson. All figures below vary, but are good examples.

When you buy funds, the fund manager (eg Jupiter) slaps on a 5% initial charge so you give them £1000 and they invest £950 - instant loss. Then, every year, you'll pay an Annual Management Charge (AMC) of, say, 1.25% of the entire fund, including growth.

HL rebate, or discount, the initial fee on most funds so you buy the same fund with them and they invest the full £1000, so you don't start out at -5%. They also rebate some of the AMC (ISAs and raw funds only - not in their SIPP) so instead of paying 1.25%pa you may only pay 1.15% - not a massive drop, but something. Service is almostly unanimously seen as very good; those who don't agree have very specific complaints and issues.

If you haven't filled your ISA allowance this year you could transfer it from NW to HL, either keeping the investments you currently hold (transfer as stock) or just move the money over and buy new from HL (transfer as cash). If you're happy with what you've got then transfer as stock and build on it. I doubt Natwest offer any rebates/discount.

You need to find the right risk/reward balance for you - if you have a reasonably realistic attitude to risk and can afford to see some losses while expecting future gains then I think the rough list I gave above wouldn't be a bad starting point - others may disagree, but I do believe Emerging Markets (Far East, India, South America, etc) are good long term bets. Just beware of the difference between Emerging Markets and Frontier Markets - sub-saharan Africa is not in the same league as India and China.