Noobs guide to investing?

jimjames

Update - the Best Invest website does have a strange way of displaying fund performance, it isn't very clear and you can't compare easily.

I looked at the same fund on HL and it hopefully makes it a bit easier to understand especially with the graph. You can then compare vs index etc

http://www.h-l.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/j/jo-hambro-uk-opportunities-accumulation/charts

bingobangobongo

Thanks again for the help! So the current price is 1.48, I notice the sell price is listed also, can this be different from the buy price and if so why?

Is that 1.48 the price unit? So if you had £1000, you could buy 1000/1.48 units?

If you had bought £5000 worth 5 years ago - is it worth 5000 x 1.48 now? (£7400) So you would have made less than £500 a year. What would you have made if you were able to put the 5k in a savings accont for 5 years at say 5%.

Just trying to work out how much you can make versus potential risk. Hope this all makes sense I know its all a bit random!

Also can you give any examples of tracker funds and what they are i.e. how they differ to unit trusts?

Thanks again.

jimjames

A tracker fund is still (generally) a unit trust. It just tracks the chosen index eg FTSE 100 and will perform in exactly the same way as the index. If FTSE100 drops by 20% then so will the tracker, if it rises 50% then the tracker will too. The alternative is a managed fund where you are paying a manager to choose which shares are best and to try to outperform the index. All well and good if they can but the vast majority of managers don't beat the index long term ie the manager that beat the index last year might not beat the index this year. With a tracker the shares are all bought automatically to match the index which makes it much cheaper, a managed fund has to pay an expensive fund manager so has higher charges.

As an example the HSBC FTSE tracker has charges of 0.27% whereas many managed funds are over 1.5%. That difference may not seem much but compounded over the long term it can make a significant difference to your returns.

Re your other questions:
1) Yes that is the unit price. The buy & sell prices can be different to take account of charges.
2) Your calculation is correct for number of units. Your calculation for return would assume the price was £1 when bought but the actual return was 41% so it would have been slightly higher price than that. Return would be £5000*41%
3) £500 return per year on £5000 is not bad. Thats 10% but could cover a year when it dropped by 25% and another when it went up by 30%

The HL Glossary may help to answer some other questions
http://www.h-l.co.uk/news/glossary

bingobangobongo

Thanks for the helpful replies.

So if I was to put £5000 in a Unit trust (wrapped in an ISA) - I just pick one fund? e.g. HSBC FTSE tracker, OR Jupiter UK Growth

Or can you pick more than 1 fund and have say £1000 in each - all wrapped in the same ISA?

How do you pull the money out of a unit trust? Can you just transfer it out? How much does it cost you to do so - e.g. here how much would it cost?

http://www.h-l.co.uk/investment-services/isa/savings,-interest-rates--and--charges

as I dont undertand what they mean by 'dealing'..

jimjames

You can pick 1 fund or 5 funds. You could even split across more funds by paying in a direct debit monthly where the minimum is £50 but splitting that low isn't necessarily something I'd suggest.

To sell you can arrange it online and for funds to be paid directly to your bank account. There is no dealing fee for funds (unit trusts) but if you have bought shares then the dealing fee would be deducted from any sale so its not worth only selling £50 of shares if you'll be charged £10 to do so.

bingobangobongo

OK thanks for the calrification, seems I just need to consider:
-what unit trusts to invest in, and how to pick them (risk, sector, manager?)
-how many
-how long I am willing to leave the investment
-do any changes need to made to the unit trusts if they perform badly (remove on, add another).
- the cost of each unit trust, popular ones seem to be discounted?