New to Saving & Investing

grey_gym_sock

i doubt that it's worth paying 2k to take financial planning exams. if you're prepared to invest some time in studying, that can very worthwhile, but it's more likely only worth buying a few books.

Forever

Thanks everyone for your help

@Bank Notes, thank you ever so much for all your advise. I have taken all your comments on board

@gagdet mind, I'm not sure if I should be embarrassed by saying this but I have only read one book so far But I have read through most of the wikipedia finance pages and from this, have written a number of pages explaining what all the different terms mean. I also have been using a number of other websites such as monevator, this is money, the economist and just general google searches. I feel like I am making a dent in grasping it all but I am aware that I still have gaps in my knowledge.

I even started reading on one website how the different states of an economy effect which investments. I definitely need to come back to this so I have a better idea of how to approach things.

I also did do a university economics course a number of years ago but unfortunately for investing purposes, the course focused more on macro than micro. But I still think this has been of help in researching all of this.

I would love to know how all the investment veterans on here gained their knowledge. Is it from slowly experimenting, reading and learning as you go along? Or from professional careers? I am quite curious to be honest.

@BLB53 Thank you ever so much for the book recommendation for 'Slow and Steady Steps from Debt to Wealth'. I downloaded it yesterday evening and finished it very quickly. I love the way he has spelt out a simple strategy for approaching investments. I have now gone back through this book and have made lots of notes!

One thing I am sure of now is that judging how high property prices are in the UK, I think you would make more money investing in equities than having a mortgage for 25 years. Maybe I am wrong but I suspect I am right.

@grey gym sock, thank you for the advice of not bothering investing in courses and to just learn from home studying and reading.

If any of you forum members have any books that you think would be particularly worth reading, I would welcome your help.

I am now breaking down my portfolio as:

Existing:
- Cash ISA: 2,218
- Frisa Bond fixed 3.1% until year end:7,160

Adding to Portfolio:
- Cash ISA + ISA S&S: add max amount of 11,280. Is it best to take advice from the Nationwide on ratio and which S&S to add especially as a newbie to investing?

This then leaves me with 9,342 to invest. I want to currently break this down as:

EQUITIES UK & GLOBAL:
- Slowly buying shares & ITs following guide from Slow & Steady book with a view of investing long term. Need to ensure I fully research tax implications and if I can get round this. I'm also not sure if I should do anything further if I will already hold equities in my ISA S&S?

BONDS:
- Research high interest/inflation linked bond products
- Research more into gilts, corporate bonds etc

PROPERTY - NOTHING AT PRESENT:
Will have to cash in on bonds and maybe the ISA(s) if becomes a proposition.
- Short term - Spain?: If prices of property become undervalued due to Spain dropping out of the Euro and there is no civil unrest, then this is a possibility
- Mid term - UK?: If property prices slowly come down in the UK to global levels ie. not over-valued, I may research a BTL

COMMODITIES:
- I am still wavering over buying a small quantity of gold sovereigns (2000 pounds worth) just as a back up rather than as any sort of investment.

CASH - NOTHING AT PRESENT:
- A sum of cash has already been put aside (6 months survival) so apart from ensuring I am getting the highest interest rate possible for an easy access savings account, no further actions required for my portfolio.

As you can tell, I still have further to go into sorting out my portfolio but I think I am slowly getting there....

But of course, I would welcome any comments

BLB53

@BLB53 Thank you ever so much for the book recommendation for 'Slow and Steady Steps from Debt to Wealth'. I downloaded it yesterday evening and finished it very quickly. I love the way he has spelt out a simple strategy for approaching investments.

Glad you found it helpful - investing does not have to be complicated, and often I think it is best to keep it simple.

The main thing, imo is to find a style of investing and a balance of asset allocation with which you feel comfortable. This may take a while to become established and you will make adjustments and fine tune as you become more experienced.

jimjames

Forever wrote: »

- Cash ISA + ISA S&S: add max amount of 11,280. Is it best to take advice from the Nationwide on ratio and which S&S to add especially as a newbie to investing?

General advice is not to get advice from a bank or building society. They can only advise on their own products not what is best for you. If you are looking for a S&S ISA then one that you have choice from the whole market would be better rather than only one banks offerings. I use HL.co.uk and also Cavendish which have better discounts but less friendly website.

Forever

@BLB53, Thanks for the advice of keeping it simple. I have decided to do just that too! I'm finding working out my portfolio in the current climate quite a bit of work but it has definitely been invaluable so far.

@jimjames, thank you very much for the recommendations on Hargreaves Lansdowns & Cavendish. I have noticed both of these companies being heavily promoted in various places. However, I just feel a little insecure that if these businesses go bankrupt etc, I could loose my money. Hence I feel more secure with one of the main banks and building societies.

I'm also feeling a little over my head with dealing with equities - and even some bonds - so would appreciate a little hand holding too especially initially.

But I am probably being overly cautious, I am sure

---

My latest update for working out my portfolio is:

Projected viewpoint of the most likely future of UK economy: mainly stagflation with inflation for considerable time
Other considerations that I consider of lower risk: deflation, depression, hyperinflation and return to normal growth figures

CASH SAVINGS:
- open cash ISA with Santandar 2 years at 4% AER and put in 5,640 plus transfer my previous cash ISA of 2,218
- open Nationwide MySave Online plus savings account with 3.06% AER
- need to sort out another easy access savings account

BONDS:
- existing Frisa Bond at 3.1% with 7,160 until financial year end
- open the Santander 3.7% AER 2 year fixed account

- ISA S&S with the Nationwide offer low risk bond fund products in corporate bonds, gilts etc. but they tend to show low yields. With 3% initial charges plus 1% yearly fee, I would earn more with interest in a savings account at the moment!
- have not found a short term indexed link bond yet

ASSETS:
- I am hoping I can find fund(s) that invests wholly in essentials like food, energy and medical supplies where continued survival is more likely to be guaranteed. Otherwise, I'm not sure if I want to invest in any other assets as the global economy with the Euro zone looks unstable at the moment.
- I also need to finish looking through all the Nationwide offered funds as they may have something that I can put into my ISA S&S

COMMODITIES:
- Still wavering over buying gold

PROPERTIES:
- Wavering again over investing in a BTL as an alternative to the above but very concerned over decreasing property prices over the long term.


One thing that needs thought is that inflation rates for the last few years are:

2009: -0.5%
2010: 4.6%
2011: 5.2%

The last couple of years shows that if this inflationary trend continues, even the best products available means I will be loosing money.

The most developed countries in the world now have low interest rates or moving towards low interest rates too.

Jegersmart

Forever

You do not need to be concerned about Cavendish or HL going bankrupt because if you are investing in funds that are run by First State, Investec, M&G etc. all those are covered in terms by gurantees. The Cavendish and HL's of the world are purely the platform through which you invest. I use Fidelity personally and sometimes invest in their own funds as well depending on the situation.

In terms of banks, most are technically insolvent (thats what QE 1/2/3/4/?/LTRO/etc is for) but are likely to be bailed out possibly. To be clear, your money invested through Cavendish or any other platform is also covered by the same guarantee as the banks - linked to which corporation owns the fund you invest with.

With regards to BTL, I see what you are saying - I have not owned a property since around 2005 (sold last one just alittle too early)and am now renting. One of the things to consider is that if you can do a BTL with a mortgage where the rent covers the repayment mortgage then your risk decreases over time. That is to say if 5% of the mortgage is paid off by someone else every year then any falls in house prices are potentially mitigated in a worst case scenario, and potentially better than that in all likelihood. Just watch how much capital you tie up in a BTL though - if you have to sell after 2 years because you need the money then there could be a risk there.

My own view is that property prices will on the whole flat line over the longer term. This is because property values have soared over the past few decades in the main through massive credit expansion - which is unlikely to continue because there is already too much debt in the system. Money=Debt after all.

In any case, it is a good thing that you are giving this due consideration!

J

atush

Forever,'

Never go to your bank or BS for investment advice. They are sales agents and only want to make money from you.

Are you a teacher? You mentionned teaqching in a previous post. If so, have you not joined the Teachers pension scheme?

The only way to keep your cash from eroding due to inflation is to invest some of it.

Never put more than 10% of your money in something such as gold if you are new to investing.

pqrdef

Forever wrote: »

BONDS:
- existing Frisa Bond at 3.1% with 7,160 until financial year end
- open the Santander 3.7% AER 2 year fixed account

Need to distinguish savings bonds and investment bonds. Savings bonds are just fixed-term savings accounts, and the Santander 4% ISA you mentioned is one of those. It's pretty much random which products have the word "bond" in the title.

Gilts and corporate bonds are a different can of worms entirely.

Basically, in round numbers, you've got £10K in old-money ISAs, and £10K for this year's ISAs, and £10K to keep handy for next year's. Then all your money is tax-sheltered, and up to £20K of that can be in cash. The rest will be in S&S, though you could move it back to cash later, against future years' allowances, if you aren't maxing out allowances from income.

If you worry about inflation, the options are

- get inflation-linked products

Inflation-linked cash savings mostly aren't wonderful unless they're tax-free. You might want to be liquid enough to grab some index-linked savings certificates quick if they reappear. Inflation-linked cash ISAs can also be found, though the best time for cash ISAs is March-April.

Inflation-linked bonds are available - gilts and a few corporates. Whether they actually beat inflation depends on what you pay for them and what you sell them at. In general you can probably say that expected inflation is already discounted in the pricing. You get insurance against inflation going mad, but you may pay a premium for that as well.

Buy for an ISA if the return comes as interest. This is less important if the return comes as capital gain, as with gilts and the Severn-Trent bond. To buy for an ISA they have to run for more than 5 years.

There are also inflation-linked bond funds, but not many that you can buy in small chunks for an ISA. Quite complicated, since they track the market rather than RPI.

-- try to beat inflation with fixed-term rates

Some people expected to do this even before inflation started falling. They may yet be proved right. Or not.

-- try to beat inflation with investments

Easy if you pick the right investments. But if anybody knows what they are, they aren't going to tell you. People will pay them for that sort of advice, and the people who get paid don't do much better than a monkey with a pin, if at all.

Don't plan on acquiring the expertise to pick winners. Even if you could predict the future of a company or a market, so can everybody else and it's already in the price.

Remember that everybody wants a piece of you. Watch the charges, especially the flat-rate charges, which eat into small investments. £5000 is often a reasonable chunk size, but if you aren't buying many £5K chunks you'll be very limited in what you dare buy. Many people would go down to £1K or less, but then it starts to be more of a hobby and you pay for the entertainment.

Have patience, don't rush to buy at bad times, wait for good deals.

Forever

@Jegersmart, thank you very much for confirming that Cavendish & HL etc are bona fide platforms for holding stocks and shares.

As I am new to this, I think I am going to think more about using these next year when I have more knowledge of how everything works and hopefully, I feel more confident about what I am doing.

So thank you very much for opening up this avenue to me

As for the BTL option, I suspect a slow decline for property prices but a flatline is also definitely possible. I haven't actually ruled a BTL out but at the moment, it looks like I am not eligible because I do not already have a mortgage and I am not in full time employment.

It also looks like I can get a better mortgage deal just buying a home and living in it when I return to a full time job too. Then switch to a BTL if I want to move away for any jobs.

I also haven't ruled out buying property (and working) in the European continent in the future too especially if house prices in the UK remain at their current levels.

So I've decided that all of this is something to consider in 1 or 2 years down the line .

@atush, with regards to the pension, I have never worked in the state system so unfortunately, I don't have much of a pension. But it's ok. I had fun when I was young so I can't really complain if I have to work and be poor when I am old instead.

With regards to gold, if I do buy any sovereigns and it's a big 'if', I'm not planning to pay more than 2,000 pounds worth. I already think this is a 'risky' hedge against inflation anyway.

And I agree with you that my best bet to try and work against inflation is to invest my money in something. I'm slowly trying to work out my strategy

@pqrdef, thank you very much for your detailed explanation.

I haven't found many index-linked savings at all so far and I would love to pick up certificate savings if they come around again.

And you make a good point in putting money in fixed term interest accounts too as if inflation does start to ramp up, the government is very likely to put interest rates up. It is all a gamble.

And thank you for the note of taking my time and not rushing into anything. I am definitely going to give heed to your advice on this one

---

I have narrowed down some funds for an S&S ISA as follows:

5 year strategy:
- M&G Strategic Corporate Bond A Fund - active managed
It will primarily invest in investment grade bonds mainly in the UK.
Takes an income.

- Legal & General Sterling Income Fund R Acc - active managed
It will primarily invest in corporate bonds in the UK & overseas.
Takes an income.

- Jupiter Merlin Income Portfolio - multi managed
It can invest in a mix of all asset classes in the UK & overseas.
Takes an income.

Long term strategy (10 years +):
- L&G (N) Tracker Trust Acc - passive
FTSE Actuaries all-shares tracker.
Doubt I will make money on it but should keep up roughly with any inflation or hyperinflation.

- Newton Global Higher Income Fund Inc - active managed
It will invest in equities mainly in the US, UK and Overseas.
Will reinvest provided income.
In the short term, suspect this will perform poorly as global economic growth slows but should make money in the long term.

- First State Global Emerging Markets Leaders A Fund Acc - active managed
It invests in equities in emerging markets such as China, India and Brazil
Doesn't provide an income.
In the short term, suspect will perform poorly as global economic growth slows but should make money in the long term.

Does anyone have any viewpoints on these at all?

Forever

Well there is already a warning to stop buying M&G bonds!

So that is at least one of my potential investments I can happily walk away from.

http://www.telegraph.co.uk/finance/personalfinance/investing/9437631/Stop-buying-our-bond-funds-MandG-tells-investors.html

So this leaves me with:

Short-term strategy:
- Legal & General Sterling Income Fund R Acc - active managed
It will primarily invest in corporate bonds in the UK & overseas.
Takes an income.

- Jupiter Merlin Income Portfolio - multi managed
It can invest in a mix of all asset classes in the UK & overseas.
Takes an income.

Long term strategy (10 years +):
- L&G (N) Tracker Trust Acc - passive
FTSE Actuaries all-shares tracker.

- Newton Global Higher Income Fund Inc - active managed
It will invest in equities mainly in the US, UK and Overseas.
Will reinvest provided income.

- First State Global Emerging Markets Leaders A Fund Acc - active managed
It invests in equities in emerging markets such as China, India and Brazil
Doesn't provide an income.