Is it worth investing small amounts?

jimjames

nufc_fan wrote: »

Yes, that is my main concern on a FTSE tracker, if anything happened to one of those big companies then I could loose out.

Would a managed fund be a better idea, I am thinking along the lines of the OP with around £50 pcm to begin with. I have been looking on the Legal and General Website, their options do not seem to have massive fees.

They do not have massive fees but equally there are cheaper options that do exactly the same thing. When the only differentiator is the fees the cheapest one is the one to go for.

Also if you go via HL then you would be able to choose different funds in the future if you wanted. With L&G you can only buy their funds.

property.advert

The OP is still trying to save up for a house deposit. In these circumstances, investing in funds which should be kept for the longer term is terrible advice.

The OP should concentrate on getting the maximum return on the cash saved to complete the property deposit and only revisit savings outside of this once a property has been bought. To do otherwise is simply robbing Peter to pay Paul.

jimjames

property.advert wrote: »

The OP is still trying to save up for a house deposit. In these circumstances, investing in funds which should be kept for the longer term is terrible advice.

The OP should concentrate on getting the maximum return on the cash saved to complete the property deposit and only revisit savings outside of this once a property has been bought. To do otherwise is simply robbing Peter to pay Paul.

If you read the OP details it says that this is in addition to the money that they are saving for the house deposit and they can afford £100 pm in addition to those savings.

An ISA is such a flexible product by allowing you to stop/start/increase/decrease payments at will that it can cope with most changes in circumstances.

The earlier you start long term savings the better as it gives time for them to compound. There is an excellent example that shows that investing £100 pm between ages 20 & 30 will give more return than the same amount invested between 30 and 60 so it is actually better to save earlier.

Witness the magic of compounding in the 2 instances below:
Mary invests $2,000 at the beginning of each year between the ages of 21 and 29, for a total of $18,000 over nine years. Assuming a pre-tax return of 8%, by age 65, she will have $398,805 in savings.
Lynn also invests $2,000 at the beginning of each year with the same pre-tax returns, but starts later at age 30. To get near Mary’s total savings by age 65 ($372,204), Lynn will need to invest nearly four times as much – $70,000 over 35 years.

Svenena

Yes, I'm already maximising the returns on my cash via ISAs and other high interest accounts. But I don't want to neglect the future, as I'm in a situation where I can afford to make the most of compounded returns.

I found post #21 particularly helpful - thanks. I've read so much about knowing your attitude to risk, but didn't really know how to assess this, so the tool you linked to was helpful. It said I should have an adventurous or very adventurous strategy. I'm still going to stick with the two options I've selected for now (FTSE tracker and overseas bonds), but when I'm next able to spare a bit more cash, I'm going to go for something riskier. In the meantime, I'll be doing some more research to see where I'd like that risk to be.

I've opened an ISA on HL, and set up my standing order beginning from next month. How often to people tend to review their funds? I imagine to begin with, I'll want to be checking all the time how they're doing! When I know I really just need to leave it for a while. Will I have the option to switch funds easily? Eg after six months I'll have invested £300 in one fund, can I then leave that there and change to another? I don't suppose I'll want to change that quickly, but just want to know what options I'll have.

property.advert

jimjames wrote: »

If you read the OP details it says that this is in addition to the money that they are saving for the house deposit and they can afford £100 pm in addition to those savings....

But the two are mutually exclusive. If the OP had enough for an house deposit then that would not be a consideration. It is not like paying off a mortgage and saving for retirement which are dual channels for savings but rather these are competing interests where the saving in funds is 100% to the detriment of the saving for a house deposit. One must come first else the OP finds themselves with insufficient funds for a deposit and insufficient funds in savings for retirement whilst house prices advance over time, further disadvantaging the position.

Svenena

property.advert wrote: »

But the two are mutually exclusive. If the OP had enough for an house deposit then that would not be a consideration. It is not like paying off a mortgage and saving for retirement which are dual channels for savings but rather these are competing interests where the saving in funds is 100% to the detriment of the saving for a house deposit. One must come first else the OP finds themselves with insufficient funds for a deposit and insufficient funds in savings for retirement whilst house prices advance over time, further disadvantaging the position.

Yes, investing will be to the detriment of the house deposit in that I have reduced my aim from saving a 40% deposit of £60k to something lower (probably 30%). This would still be a decent deposit for a first time buyer. I'm currently living in a flat with a secure tenancy and rent of £335 pcm, so I'm in no hurry to buy.

DavidHayton

Svenena wrote: »

I've opened an ISA on HL, and set up my standing order beginning from next month. How often to people tend to review their funds?

I have a really good look at the portfolio every six months. This means looking at each fund and asking if it is still right for me. Mostly they are still right for me, but occasionally I may switch money between sectors, or from one fund to another in the same sector. For example, I recently finally gave up on managed funds investing on the US main market, so I sold and switched into HSBC American Index.

Between these six-mothly reviews, I value the portfolio at the end of every month. I compare the growth (or not) with certain major indices (including the FTSE-100). I also look at the overall balance to see if there is any re-balancing needed (almost always there isn't, but when there is, I do it by adjusting what I purchase with next month's standing order).

Svenena wrote: »

Will I have the option to switch funds easily? Eg after six months I'll have invested £300 in one fund, can I then leave that there and change to another?

Yes, it is very easy with HL. They don't encourage holdings of less than £1k in each fund, but they do not seem to mind it when it happens.

David

nufc_fan

After some research I am thinking of going down the HSBC FTSE tracker due to it cheap charges and then expand in a few months if comfortable to some slightly riskier investments perhaps something like aberdeen emerging markets or an energy related fund

Svenena

nufc_fan wrote: »

After some research I am thinking of going down the HSBC FTSE tracker due to it cheap charges and then expand in a few months if comfortable to some slightly riskier investments perhaps something like aberdeen emerging markets or an energy related fund

Which one are you going for? I decided on the all-share. We should compare notes in a few months time to see how it's going!

nufc_fan

I am thinking the all-share as well. I have learnt a lot from this thread, I am sure other have/will as well.