Hargreaves and Lansdown Stocks&Shares ISA

Lokolo

somethingcorporate wrote: »

You do it in the monthly investment tab on the HL website, it's dead easy!

Yes it is easy



This is the page which you will edit. I am only investing in one fund at the moment as you can see.

ChrisEvanson

I'm not an expert by any means but some thoughts I have about comments often heard when it comes to investing:

1. "Investment in the stockmarket should be a long term thing, ideally at least 5 years". I've never really understood this. You could invest in a peak and end up 5 years later in a trough. There would have been better times during those 5 years to take the money and do something else with it. Similarly you could invest in a trough and reach a peak 3 months later, then the Market could fall away again, rise again, fall again etc.

2. Better to spread risk by spreading investment. Depends what your money means to you and what investment goals you have. You could put £1000 into a theoretically high risk investment and come away with £2000 six months later. You could also come away with £500 or nothing! By spreading risk you may well dilute the profits, eg split into 10 x £100 investments you may make £200 with one but lose another. If you put it all in one you could have doubled it or lost the lot. Do you want risky but possibly high returns or a safe haven?

3. Don't invest what you can't afford to lose. I sort of get this but can we afford to lose anything?! I guess the point is don't invest the mortgage or gas money, invest "spare" cash. If it is £5000 saved for your honeymoon then think carefully where you invest it, if it is "for a rainy day" you might be able to be a little more risky. If rainy day is covered and it's pure "extra" cash then you might want to be more risky again.

I don't want to diss independent financial advisors, but most are quite cautious and some advice can be very poor with hindsight. Like all investments they can go up as well as down, and IFA recommended ones are no different! I still remember the advice I had to a. Take a personal pension out, b. Get an endowment mortgage and c. To take a mortgage based on the American Libor rate. Got compensated for all three bad bits of advice.

terakris

This is really interesting to know about the monthly investments... as i did wonder if one month i could put £200 into say "fund 1" while not putting anything into "funds 2-4". wasn't sure if when they say "monthly" investments i was kinda tied into investing that minimum every month. If i can chop and change between funds, makes it much easier to balance a small portfolio otherwise i was worried i would have 25% of my money in each of say 4 funds... which doesnt seem balanced for risk if one is more of a "punt" than another to me

LongTermLurker

Andrew2010 wrote: »

Presumably in diverse sectors and territories?

Indeed

But if it's been in say 5 years before a drop then it would have to be substantial drop to result in an overall lost, right?

Not sure what you mean here. My point was that if you have a lump sum, by spreading across multiple purchases you stand to benefit (or lose!) from pound cost averaging - one month £100 buys you 100 units and the next you get 110 units for £100 - of course, some months you may only get 90 units.

LongTermLurker

DavidHayton wrote: »

Seems like an awful lot of work keeping tabs on 20 funds with £50 invested in each one. You might find that HL aren't keen on adminstering this sort of portfolio either.

Would be much easier to stick £1000 in a passive tracker fund e.g., HSBC all-share tracker fund or an ETF. I wouldn't buy ETFs through HL though - their stockbroking fees are not the cheapest. Either way you will be averaging winners and losers but you will be paying lower fees than you would to a portfolio of actively managed funds

David

Andrew2010 wrote: »

Another issue is if having set up £50 minimum for a number of funds, if I wanted to increase and pay money in then what is the minimum? For another fund I have the minimum amount I can pay in is £250. So if I set up 5 or more £50 funds, in order to increase the amount in I might have to put in significantly more.

I think a few ppl are taking Lokolo's figure too literally - £50 is the minimum per fund per month - there's nothing stopping you investing more than that (and having less funds). The method is still valid though.

LongTermLurker

Loughton_Monkey wrote: »

I wouldn't spread it so much.

A small thing to watch: If you decide on any "Income" funds as opposed to "Accumulation" Funds, then you can, I think, end up with a bit of cash which is too small to re-invest in the fund from which it came. Most funds, however, come in an 'income' flavour and an 'accumulation' flavour.

I hit this problem - had a total of about £150 in my income account but no one fund had enough to trigger automatic reinvestment. HL suggested/let me add the whole of the income account to my next Direct Debit and choose how I wanted to invest it. Therefore, I wasn't left waiting and wasn't restricted as to which funds could receive a portion of the £150.

Where available, I would always choose acc funds at the moment.

LongTermLurker

Originally Posted by Loughton Monkey
I wouldn't spread it so much.

A small thing to watch: If you decide on any "Income" funds as opposed to "Accumulation" Funds, then you can, I think, end up with a bit of cash which is too small to re-invest in the fund from which it came. Most funds, however, come in an 'income' flavour and an 'accumulation' flavour.

Andrew2010 wrote: »

I'm not sure how the funds accumulate. They increase in value but how is that re-invested? I've had dividends reinvested but that isn't enough for high growth is it?

When you buy a fund, you buy either an "accumulation unit" version or an "income unit" version. With ACC units, the growth is reflected in the price and so you can consider that any growth is automatically reinvested straight away by the fund manager.

With INC units, you are paid an income, either out to your bank account or held by HL. When your income reaches (I think) £100 per fund, it's automatically reinvested for you by HL. See my post above as to how you can claw back the income for earlier reinvestment though.

Linton

ChrisEvanson wrote: »

I'm not an expert by any means but some thoughts I have about comments often heard when it comes to investing:

1. "Investment in the stockmarket should be a long term thing, ideally at least 5 years". I've never really understood this. You could invest in a peak and end up 5 years later in a trough. There would have been better times during those 5 years to take the money and do something else with it. Similarly you could invest in a trough and reach a peak 3 months later, then the Market could fall away again, rise again, fall again etc.

2. Better to spread risk by spreading investment. Depends what your money means to you and what investment goals you have. You could put £1000 into a theoretically high risk investment and come away with £2000 six months later. You could also come away with £500 or nothing! By spreading risk you may well dilute the profits, eg split into 10 x £100 investments you may make £200 with one but lose another. If you put it all in one you could have doubled it or lost the lot. Do you want risky but possibly high returns or a safe haven?

3. Don't invest what you can't afford to lose. I sort of get this but can we afford to lose anything?! I guess the point is don't invest the mortgage or gas money, invest "spare" cash. If it is £5000 saved for your honeymoon then think carefully where you invest it, if it is "for a rainy day" you might be able to be a little more risky. If rainy day is covered and it's pure "extra" cash then you might want to be more risky again.

I don't want to diss independent financial advisors, but most are quite cautious and some advice can be very poor with hindsight. Like all investments they can go up as well as down, and IFA recommended ones are no different! I still remember the advice I had to a. Take a personal pension out, b. Get an endowment mortgage and c. To take a mortgage based on the American Libor rate. Got compensated for all three bad bits of advice.

A lot to answer. Lets start on (1) which will also provide clues to the others.

There are a very wide range of investments available. Most have a long term tendancy to increase in value but with considerable fluctuations in the meantime.

Each investment will have its own characteristics. For example the FTSE is slightly lower now than it was 10 years ago. In the meantime it has halved, doubled and halved again. Recently it has risen strongly. Other investments, eg natural resources have risen perhaps 10-fold. A final class of investments, gilts and bonds, are similar to fixed rate savings and tend to increase fairly steadily though at a slow rate.

So how to make money? Well, you can make a lucky guess and invest in something that will do extremely well. That works briliantly if you can get it right. Invest in a few wilder things and if only one comes up you still do well.

Another way is to make use of the peaks and troughs. For example, if you have half your money in the FTSE and half in gilts & bonds, at some point the FTSE will rise to significantly disturb the 50-50 split. At that point you transfer some of the FTSE fund into the gilts&bond to re-establish equilibrium.

When the FTSE then drops so that you have significant excess of gilts&bonds you buy back into the FTSE. In this way you are continually selling when the FTSE is high and buying when it is low.

This is why you need the time - so that either the really good investments have had chance to perform, or for sufficient buy/sell cycles have taken place for your overall funds to be certain to be higher than when you started, no matter what the state of the fluctuations.

This is also why you need a range of investments, not just one. Either to improve the chance of getting THE winner or to have differently behaving investments for the % equalisation process to work.

NOTE - my two investment strategies above are extreme and simplistic examples to show the sort of mechanisms that enable the short term random behaviour of the markets to provide long term returns significantly greater than cash savings.

Loughton_Monkey

Andrew2010 wrote: »

I'm not sure how the funds accumulate. They increase in value but how is that re-invested? I've had dividends reinvested but that isn't enough for high growth is it?


Thanks, I was thinking different territories and an FTSE tracker.

It's just a fund choice. Some people like to get an actual income from the half yearly or yearly 'dividend'. The accumulation fund version simply re-invests the divi so it shows up as a higher unit price.

Provided you are with a "Nil up-front" provider, like HL, then as far as I know, if you went for an Income fund, while I went for the Accumulation fund, and I cashed in units to the same value as your dividends, then we would both have identical fund values in the longer term.

FTSE trackers are OK. Very low cost. I always wonder where the dividends go! I'm sure that the combined dividend of FTSE100 companies is probably more than the 0.25% annual charge. I tend not to use them myself since (despite my cynicism of fund managers) virtually all of them will (even after taking into account the 1% or more charge) deliver returns slightly above FTSE as a minimum. This has probably got something to do with dividend income as well.

cheerfulcat

Loughton_Monkey wrote: »

FTSE trackers are OK. Very low cost. I always wonder where the dividends go! I'm sure that the combined dividend of FTSE100 companies is probably more than the 0.25% annual charge.

Dividends are paid out to the investor ( income units ) or reinvested ( accumulation units ).

Yield in the case of the HSBC tracker ( presumably similar on other trackers, depending on where the charges are deducted ) is 2.65%. Historic yield of FTSE 100 according to Digitallook is 2.9%, forecast 3.1%.