Turning £250K into £1 million

mroller

EdInvestor wrote:

It's probably sensible to keep a largish chunk in cash and invest the rest directly in shares or unit trusts.A basic or lower rate taxpaper won't have any tax to pay on dividend income from shares, so you can get a better deal than cash if you choose higher yielding shares or funds.

I think shares should be left to the professionals, it would be really difficult for an average person (even more qualified ones) to outperform the market. BTW, most people loose at this game.

The op will be better off sticking to UT/Oeics/trackers/ETFs and other collective investment vehicles.

DontDoDebtKids

My advice would be to read, research and study! If you want a list of some books that I've read and found interesting, PM me. Tip: most finance books seem to be cheap second hand on Amazon.

If you get bored by it all then it's probably best to use an IFA.

If you get more interested, then perhaps you should try your hand investing it yourself.

As someone above said, The Motley Fool is a great place to start - have a look at High Yield Portfolio investing - my personal favourite. Also, the Investor's Chronicle magazine is a good read and the FT at the weekend is good too.

NB This is all quite share-orientated investing, but there is of course property (but see comments above for both sides of the opinion on that).

PS I'd agree that paying off the mortgage is a good way to go too.

DDDK

EDIT: As above poster says, another option is to use trackers - something the Motley Fool lot are quite keen on.

roswell

Well im no IFA but with that sort of sum here is what i would do,

Ignore property (bricks and morter) unless you want to move to somewhere else,

As the cashi isa`a are covered but april fast approaching id put money asside for that,

With new born on the way and drop in income put the same as you would earn in that time asside to live off.

take the remaining sum and put 7 000 into a stocks and shares isa so you can "Play" with investing, depending on how you do with the stocks and shares isa then either start investing it yourself or get a IFA involved.

I dont think your target is to high but what time scale do you have to make this million?

PosterBoy77

SteveCat wrote:

I feel some have missed my point regarding my tip to invest in Property. Yes i know sometimes its risky and this is why i said: 'if you do things the right way' Yes if you do things the right way you limit the risk, it was a quick post and I certainly wasn't expecting anyone to go gung-ho into it.

I see what you are saying. However my main point was not if you nvest well or not. The point is not to invest everything you have in one type of investment. Over the last few years any muppet could have made money from property, and many have!

EdInvestor

mroller wrote:

I think shares should be left to the professionals, it would be really difficult for an average person (even more qualified ones) to outperform the market.

One of the problems is that salesman seem to think people want to "outperform the market".

Actually IME most investors want to see consistent improvement in their wealth - whether from capital growth, dividends or a combination of both.Direct investment in shares is often the easiest way to achieve this.

si1503

EdInvestor wrote:

It's probably sensible to keep a largish chunk in cash and invest the rest directly in shares or unit trusts.A basic or lower rate taxpaper won't have any tax to pay on dividend income from shares, so you can get a better deal than cash if you choose higher yielding shares or funds.

The HYP idea is worth a look

I've just read that link, and the others following on from it. Very interesting. One of them (Hyp 3 i looked at) has doubled in value since 2003 and provided roughly 5k in dividend income each year (increasing year on year), from a 75k investment. Pretty nice though the markets have seen bull growth since then. One of the things that did suprise me is all the companies are just your regular FTSE 100/250, a selection that your Grandma could probably pick out, no red hot penny shares or anything restricted to those in "the know".

I might look into doing something like this. Could you just hold one of these HYPs in a basic TMF or Halifax sharebuilder account? (not that the trading costs would matter, as trade frequency seems very low). Also am I correct in thinking it is best to pick the shares with the best dividend yields, kind of like a self selected income portfolio?

EdInvestor

One of the things that did suprise me is all the companies are just your regular FTSE 100/250, a selection that your Grandma could probably pick out, no red hot penny shares or anything restricted to those in "the know".

A key factor with the HYP is security: hence Size Matters There are other "risk filters" applied as well as big market cap.

Could you just hold one of these HYPs in a basic TMF or Halifax sharebuilder account?

Yes, no problem.

Also am I correct in thinking it is best to pick the shares with the best dividend yields, kind of like a self selected income portfolio?

Look at the article from the link on how to pick the shares.Generally you will take the top yielding share in the sector ( eg LLoyds for banks, United Utilities for utilities) BUT the risk filters, especially diversification will ruled out some candidates because you already have too many shares in the sector.

Chrismaths

Moonbeam - have you ever worked for the company whose shares you are selling? If you have, you might be able to cut the tax payable.

si1503

EdInvestor wrote:

A key factor with the HYP is security: hence Size Matters There are other "risk filters" applied as well as big market cap.



Yes, no problem.



Look at the article from the link on how to pick the shares.Generally you will take the top yielding share in the sector ( eg LLoyds for banks, United Utilities for utilities) BUT the risk filters, especially diversification will ruled out some candidates because you already have too many shares in the sector.

Thanks Ed.

Any personal experience in doing this? Do you prefer this approach over investing in UTs/OEICs? Less charges and all.

EdInvestor

Any personal experience in doing this? Do you prefer this approach over investing in UTs/OEICs? Less charges and all.

Definitely.It's been very successful for me. Partly that's been timing, but if you look on the link at the performance of "HYP1" which started in 2000 and thus went right through the market crash, you can see the strategy is very defensive in downturns,as well as providing strong dividend and capital growth.

The HYP is a kind of "DIY" equity income fund, same principle, so that's the equity sector to look in for those who prefer a fund based approach.(Invesco Perpetual's High Income fund is probably the best known EI fund, and it's no coincidence that it's now the most popular unit trust in the UK.)

There is also a new exchange traded fund (ETF), the IUKD dividend tracker fund, which is doing quite well and may be of interest.

https://www.ishares.net