Need First-time investing advice

innovate

merlingrey wrote: »

The largest deposit bank in the world with $27trillion on deposit, over 300 years old and was the first stock traded on the NYSE.

Large, old american banks have recently had a tendency to collapse in spectacular manner. So their size and age ain't impressive.

merlingrey wrote: »

Fees are 4% on purchase and usually 1.5% annual management.

That sounds massive.

merlingrey wrote: »

You could buy their funds at a supermarket, they are known as Newton funds. You can get a better rate through funds markets

Glad we got that into the open.

brasso

merlingrey wrote: »

Fees are 4% on purchase and usually 1.5% annual management. You could buy their funds at a supermarket, they are known as Newton funds. You can get a better rate through funds markets but i just have always used the firm direct.

"You can get a better rate through funds markets but..." But what? But I like to give away money needlessly....?

pc1271

I'd probably just go for a market-leading cash ISA for the time being - if you're a student now you might need some ready cash when you graduate to help with moving costs/deposits, buying a car, or just plugging a gap before you start earning.

delvinv

pc1271 wrote: »

I'd probably just go for a market-leading cash ISA for the time being - if you're a student now you might need some ready cash when you graduate to help with moving costs/deposits, buying a car, or just plugging a gap before you start earning.

Yeah i did consider that but they are too low yield. 2.5% isnt high enough for me.

From my prelimary research, it seems index trackers are good. I did consider gilt's but the uk government isnt particularly good financially atm it seems.

Then there are mutual funds which are medium risk and a return of 5-8& isnt bad after all.

These seem to be the options in my horizon. (there are other low-risk ones but seem low-yield), oh dont forget bonds!!

@BLB53 thanks for that, i will look into investment trusts.

brasso

delvinv wrote: »

Yeah i did consider that but they are too low yield. 2.5% isnt high enough for me.......

Then there are mutual funds which are medium risk and a return of 5-8% isnt bad after all.

The yield is low because that yield is guaranteed.

Not sure where you get the 5-8% figure for funds. They can range from and to..., well anything really: minus 50% to plus 50% is perfectly feasible for some funds. No fund will guarantee you anything, never mind 5-8%. Even if that's a historical average for some fund categories, you can make no assumptions about the future.

All that said, I agree that cash ISAs are pointless. When your return is below inflation, you are actually guaranteeing to lose money for yourself. Mad.

There again, given your time horizon and investment pot, you are not likely to gain an awful lot. Maybe the cost of a good night out out on the town? Maybe it's not worth the risk, as you could quite easily lose a chunk of it.

But in summary, if it was me I would probably accept plenty of risk and buy something like an ETF in small cap Japan. You could quite easily gain or lose 30%, but for 500 quid, what the hell? And if you were topping up with a hundred here and there, you get the benefit of dollar-cost-averaging. So if the price plummets, you can fill yer boots and watch the price climb again.

innovate

brasso wrote: »

All that said, I agree that cash ISAs are pointless. When your return is below inflation, you are actually guaranteeing to lose money for yourself. Mad.

It's not that black and white. Firstly, not every cash ISA pays below inflation - e.g. I still have a 4.25% one. Secondly, if you know you need the funds within a year or two, or if it is your "rainy-day fund", it is a lot less mad to put it into a cash ISA than into an S&S one.

brasso

innovate wrote: »

It's not that black and white. Firstly, not every cash ISA pays below inflation - e.g. I still have a 4.25% one. Secondly, if you know you need the funds within a year or two, or if it is your "rainy-day fund", it is a lot less mad to put it into a cash ISA than into an S&S one.

Fair enough -- 4.25% is relatively good, for sure.

I take your second point. If you need access to the cash in a short time and can absolutely not afford to lose a penny of it, yes, a savings account is the answer. Not sure there's any advantage in opening a cash ISA mind, if you're planning to spend it shortly. Just the highest interest rate you can find.

chriswatts

Firstly make sure you have cash you can get your hands on in the short term.

Unless you actually know what your doing avoid shares and leave the stock picking to fund managers. An excellent way to lose a lot of money putting it all on one stock and you've said you have no interest in trading.

Don't go direct to banks and fund managers to invest as you'll get charged ridiculous annual charges and management fees, instead go via a service that will get you a rebate.

Splitting up the investment is most certainly a good idea, usually you can invest a minimum of £50 in one fund but if you invest more you can spread it over more than one fund in a stocks and shares ISA.

As for where to invest that will depend on your level of accepted risk, at the lower end you have the index trackers which will track a single index and at the higher end emerging market funds. There are funds that invest in technology like GLG Technology Equity fund but this fund would be described as specialist and higher risk than that of a simple tracker.

What you really need to do is locate companies like Hargreaves lansdown or interactive investor and start reading up on investing.