Getting information

blackrat779

Hi,
I am due to get a lump sum of money in about a year and will be looking at putting it in all sorts of different pots ie cash ISA, savings accounts for short term quick access, premium bonds and so on.
I like the idea of buying and selling shares with some of it but don't know where to start.
A S&S ISA is obviously a good idea but I don't know whether to go for a managed portfolio or to have a go at doing it myself to maximize returns. Is it possible/sensible to trade shares from within an ISA?

You may have guessed that I don't know anything about the subject but would be willing to learn. I have found a place that allows you to practice buying and selling without using real money which seems like a great idea.

OK, so can the whole process be done from home via the internet? Not just the buying and selling but also the research? How do people choose what to buy? Are there places where you can get info on the companies that will help you decide whether to buy or not?

Are there any easy start books for newbies?

Any advice would be welcome

Thanks,
Blackrat

Loughton_Monkey

blackrat779 wrote: »

You may have guessed that I don't know anything about the subject but would be willing to learn. I have found a place that allows you to practice buying and selling without using real money which seems like a great idea.

So you have a year to practice doing it yourself to 'maximise returns'!

If we were that easy, we would all do it.

So if I were you I would plan out (depending on the amount) how much you wish to 'save' and how much you wish to 'invest'. For savings, I would ditch the Premium Bonds, because it is statistically more likely that you will die in the next year than that you will win anything substantial on them. Otherwise wait until nearer the time for best rates.

As for the investment part, then you should consider funds - either in the pension or ISA tax free environment. By all means 'dabble' in a small share, CFD, or Spread Betting account. But only use money you can afford to lose.

Jake'sGran

I have all the types of investment you mention plus funds. These are the ones I watch closely as it is easy to make a change to another fund if something is not doing well.

There is a website called Trustnet which is where I get a lot of information. In particular, they list the most highly rated fund managers in the business. I have some of the funds these people manage and some have done extremely well.

Trustnet do not give information on shares.
If you want to know about individual companies have a look at LSE (London Stock Exchange), The Share Centre, iii and Motley Fool (Just called Fool I think).

Finally, I can tell you that I do everything on my computer.

blackrat779

Thanks to both of you for your replies. I did a reply earlier but it seems to have disappeared!

The two investments I don't understand completely are S&S ISA's and funds.

Is it possible to remove badly performing shares from an ISA and replace them with others? Or is it the case that you put a fund in the ISA which is managed by someone else and you have nothing to do with the trading. Presumably if you were allowed to add and remove shares from an ISA yourself, you would quickly use up your allowance.
My guess is that a medium term managed growth fund within an ISA is better?

Would it be right to say that share dealing is just like betting on horses? You use your skill to choose a horse & rider but at the end of the day a lot of luck is involved. I guess this is why people say you shouldn't use money you can't afford to loose. Is using a managed fund any safer?

Anyway looks like I've got a lot of reading to do and some terminology to learn. At the end of the day whether I chose to buy and sell myself or not at least I should be better able to make an informed choice.

Blackrat

lisyloo

Is it possible to remove badly performing shares from an ISA and replace them with others?

Yes you can buy and sell at will inside the ISA.

Or is it the case that you put a fund in the ISA which is managed by someone else and you have nothing to do with the trading.

Instead of shares you can buy funds which are managed by a fund manager.
You can then buy or sell units in your funds.

I'm not a sophisticated investor so I pay my advisors a fee to manage my funds for me, so there is two levels of management.
Both fund management and the advisors buying/selling the funds.

My guess is that a medium term managed growth fund within an ISA is better?

Depends on what you mean by "better".
Generally there is a relationship between risk and return. So riskier funds/shares can yield higher returns but there is more risk.
There is no "better" or "best" only what is most suitable for your attitude to risk and the return you want to acheive.

Is using a managed fund any safer?

There is usually more spread of risk than investing in single shares.
Investing in single shares is quite risky as if a company performs badly you could make big losses.
If one share in a fund does badly, it won't affect the fund as much as other shares have probably done well to balance it out.

Anyway looks like I've got a lot of reading to do and some terminology to learn.

It's a massive subject.
If it doesn't interest you, don't be ashamed to pay an advisor.
you still need to do research to find a good advisor, but if it's not something you are interested in then are you going to put the effort in long term?
I'm not ashamed to admit it's not an area of finance that's I find interesting and I'd rather have someone else do it.
Of course I review regularly.

psychic_teabag

blackrat779 wrote: »

The two investments I don't understand completely are S&S ISA's and funds.

Is it possible to remove badly performing shares from an ISA and replace them with others? Or is it the case that you put a fund in the ISA which is managed by someone else and you have nothing to do with the trading. Presumably if you were allowed to add and remove shares from an ISA yourself, you would quickly use up your allowance.

You'd deposit some cash into your S&S ISA, and then within the ISA trading account, buy some shares. When you sell shares, the proceeds remain inside the ISA wrapper, so you can use the money to buy some more shares. This doesn't count as a new deposit, and so doesn't count towards your ISA allowance. It would only be if you took the proceeds out of the ISA then put them back in again that your allowance would be consumed.

Similarly with funds, you can buy, sell and switch funds, but the proceeds from sales remains inside the ISA account, so switching between funds doesn't use up your allowance.

It would nice if trading fees and things could be taken from non-ISA funds, to preserve the maximum ISA allowance, but I don't think it works like that.

Loughton_Monkey

blackrat779 wrote: »

The two investments I don't understand completely are S&S ISA's and funds.

These are not different things. A fund is a fund. They are called 'Managed Funds' usually, and you can have the same funds directly, in an ISA, or in a Pension arrangement. Funds are run by Fund Managers like Investco Perpetual, Jupiter, Neptune, Artemis, and about 80 others.

blackrat779 wrote: »

Is it possible to remove badly performing shares from an ISA and replace them with others? Or is it the case that you put a fund in the ISA which is managed by someone else and you have nothing to do with the trading. Presumably if you were allowed to add and remove shares from an ISA yourself, you would quickly use up your allowance.

Probably mixing up your terms, I think. Within your S&S ISA you can have funds, or individual shares, or even "Investment Trusts" which are technically a 'share' but behave a bit more like a 'managed fund'.

If a share, or a fund is 'badly performing', you don't 'remove it from your ISA'. You simply sell it and buy something else!

blackrat779 wrote: »

My guess is that a medium term managed growth fund within an ISA is better?

Better than what? There is no such thing (that I know of) called a 'medium term' fund. Funds are funds. They come in loads of different varietes. Equities or bonds, or fixed interest, or property. UK, or USA or Emerging markets. 'Absolute' or ordinary equity. Natural Resources or Agriculture etc. I've never heard of them coming in Short, Medium or Long Term. You should consider all funds as investments for the medium to longer term (5 absolute min. But 10 years up typically).

blackrat779 wrote: »

Would it be right to say that share dealing is just like betting on horses? You use your skill to choose a horse & rider but at the end of the day a lot of luck is involved. I guess this is why people say you shouldn't use money you can't afford to loose. Is using a managed fund any safer?

Quite different. On a horse race, you know the odds. Then it's black and white. You either win or lose. With shares/funds you don't know the odds at all. You could invest and keep it for 40 years and (theoretically) get back anything between nothing - if they went bust - or only what you paid for them - or 10% total return, or even 500% return. But you can sell any time. You cannot normally sell your betting slip halfway through a race.

Jockeys ride the horse. They are very tiny people and aren't paid a lot. Fund Managers are paid infinitely more, and are grossly obese due to all the free lunches courtesy of the companies in which they invest.

Since a 'fund' contains probably 80 or more individual types of share, they are much less risky than an individual share. The latter can lose 100% if it goes bust. It can easily lose 50% on an 'incident' (like BP). But by having a fund of lots of different shares, it is most unlikely that any more than about 1 or 2 shares will go completely down the pan.

blackrat779 wrote: »

Anyway looks like I've got a lot of reading to do and some terminology to learn. At the end of the day whether I chose to buy and sell myself or not at least I should be better able to make an informed choice.

As a start, look up:

Shares
Investment Trusts
Managed Funds (i.e. Unit Trusts and OEICS)

Then understand different 'wrappers' or investment environments:

Pensions (and Tax Relief)
Stocks & Shares ISA
Direct Investment (and Capital Gains Tax)

blackrat779

Psychic Teabag,
First class explanation. That makes perfect sense and has moved by knowledge on by a big step, thanks very much.
Within a few days I have learned a lot already, maybe my target of about a year will be perfect for getting enough knowledge to invest wisely.

Blackrat

blackrat779

Loughton Monkey,
Thanks for taking the time to discuss the points I was raising. I think my original plan of having a whole mixed bag of investments is a good idea based on what everyone is saying. So perhaps in addition to short term ready access type savings and some medium ones such as a managed fund I could look at a much smaller amount to play around with shares than I had first thought about, keeping the risk limited.

Blackrat