Sharedealing where to begin with little amounts of money?

grandplonker

And yes the fees are changing in 2014. Unless I can find out what the new fees will be now, I'll just buy funds and then sell them if I don't like the new fees.

Money-Saving-King

bowlhead99 wrote: »

When someone is concerned (or just generally curious) about diversification if they only held one fund, it seems bizarre that you would recommend that they put it all into a fund that invests exclusively in equites and is focussed purely on the healthcare and pharmaceutical industry at the expense of every other type of company on the planet. The 'global' aspect of that fund is the only thing that is attractive to someone looking to diversify.

I'd prefer to have my money somewhere like that than say the FTSE 100 or other similar index's. The performance of that tracker seems much more stable than others, it also has no monthly fee which with someone like the op who has a very low starting point is important.

bowlhead99

adewalton wrote: »

I am right in thinking the vanguard LS 60/40 has a slight exposure to fixed income bonds?

It depends what you call 'slight'. The Lifestrategy 60% Equity find is, perhaps unsurprisingly, only 60% equity. The rest is fixed income, including a small amount of index linked government bonds plus a mix of regular gov bonds and investment grade corporate bonds.

The fixed income from these types of securities is not particularly high at the moment and the capital value of the bonds will change up or down with the market. To some, 40% bonds is a lot and to others it's not enough.

Don't buy a fund without reading the factsheet.

Whether a tech fund is the right thing to buy next depends on the prospects for the value of tech funds compared to everything else.

adewalton

What type / name of funds would I look for if I wanted more exposure to fixed income bonds?
Only drip feeding a small % into tech fund as from next month.
Looking for fixed income bond fund for next TY?
Thanks

bowlhead99

adewalton wrote: »

What type / name of funds would I look for if I wanted more exposure to fixed income bonds?

Bonds or Gilts or Fixed Income or High Yield are examples of words our phrases that appear in names of funds that invest in fixed interest securities.

Most/all fund platforms have some rudimentary filtering facility that allow you to search by sector or asset class or benchmark rather than guessing words that might appear in a name of a fund. Try Trustnet or Morningstar to search for stuff with a different interface from your chosen platform but be aware that your platform might not actually carry your favourite fund.

If you are new to all this which it sounds like you are, you could always pick another fund that is mixed equity and bond allowing the manager to make strategic choices. Or a strategic bond fund which picks different types of holdings based on their view of the market.

One observation is that a cash ISA probably pays as much fixed interest as a 10 year government bond at the moment, and with zero risk of loss whereas the capital value of the bond can decline. If you have the cash ISA capacity at the beginning of the tax year it may make sense to use that. You can transfer cash isas into S&S isas later, just not the other way around.

dtsazza

I realise people have covered the initial question now, but this paragraph seems to show some sort of misunderstanding that hasn't been covered:

grandplonker wrote: »

OK. HL funds is starting to look a little bit silly, because £20 funds is £19.70 a year later. It's gone down, but had I put it into an ISA instead it would have went up.

No, your statements here are just plain wrong (no offence intended, I'm just trying to be clear!).

The premise of the example was that the fund's invesments neither made nor lost money, so their nominal value was the same a year later. This is the value of the fund - regardless of what type account you chose to hold it in, its value/price will be the same. No different to a share like Vodafone - regardless of who you hold a sharedealing account with, its price was 172p last year and is 162.25p today. Hargreaves Lansdown have nothing to do with the price or return of the funds you can buy through them.

The other aspect is the charges, which in this example take the £20 down to £19.70. These charges are again levied by the company that manage the fund (Invesco Perpetual in your example), and if you bought it directly from them you'd pay the whole whack (1.375% in your example). HL, like most fund brokers, actually give you a discount on these fees by passing on some of their commission. So it makes more sense to hold funds in HL, or another fund supermarket, rather than to buy them directly from the investment company.

It seems like your negative reaction to this example was that you weren't making any money. But that was just part of the premise, which assumed the fund grew by 0% (in order to show the effect of management fees, without confusing the numbers with fund growth)...

However, funds (like currency and my commitment to the gym) can go up and down, so people still buy funds. That is my theory. Correct?

Yep, pretty much. If a fund's value goes down (or increases by less than the management fee) you lose money, but while this can happen they're generally expected to grow by much more than the management fee (and more than the guaranteed interest you can get in savings accounts). If people didn't expect this, they wouldn't buy them.