Investment management site vs Cavendish

WGPA

Hi all,

I'm looking to hold some stocks and shares however I have never traded before. I'm mainly after medium-long term growth.

As I'm obviously new to this I would start with a fairly modest initial investment of around £1-2000 and would like to drip feed £150-300 per month into the account.

Does the above therefore favour an investment management site such as Nutmeg over self trading on Cavendish due to transaction fees and low overall value?

As i become more comfortable with the process I would be able to invest more both regularly and possibly lump sums depending on work.

I'm aiming to get some exposure to the FTSE but also to overseas markets as well.

The temptation is to invest in a managed trust to 'leave it to the experts' then I could use a seperate account to dabble in particular investments if I thought I knew better for some reason without damaging my long term money :rotfl:

Thanks for the help!

JohnRo

I suppose the starting point is being honest and asking yourself whether you really want to actively manage your own investments, do you have any keen interest or desire to do so?

I think individual stocks and shares are generally viewed as an option for more experienced and risk aware investors. A collective investment fund(s) or trust(s) might be a safer, better option to start with.

donniej

Nutmeg (and other similar sites) are basically a discretionary fund manager, where they have a range of funds based on which risk level you are comfortable with. You can buy similar funds on the open market - the Vanguard Life Strategy funds are popular passive equivalents, and many provided have 'model portfolios' (aka 'master portfolios' or 'pre-selected portfolios') which are similar. The difference is that Nutmeg has no track record of managing investments, whereas more established fund managers such as Vanguard do.

If you are interested in learning about investing, you could check out some of the newer 'guided' sites such as rplan or BestInvest's First service option, which allow you to invest in funds with an established track record yourself, but give more feedback on how your investments are doing than a bare-bone site such as Cavendish.

grizzly1911

Cavendish are fine for simply trading of funds and monitoring with some simple analysis and tracking.

I use trustnet/morningstar (amongst others) for research, comparisons and portfolio monitoring.

monevator.com, Tim Hale Smarter Investing and if you have kindle a potted quick summary, of the same, Slow & Steady Steps from Debt to Wealth - JE Hutton.

WGPA

Hi guys,

Thanks for the advice, for this I would probably prefer to have the bulk of the portfolio managed if I'm honest as I would like this to be my 'main' stocks/shares Investment eventually (bread and butter if you will).

Nutmeg caught my eye but I read about the Vanguard funds as well and they also seem suitable. I recall not all providers allowed you to buy these though? Any suggested clients to use for them outside those named above?

If possible I would like the option to do some individual trades as an aside which is something Nutmeg doesn't offer. It would be nice to do it all under one roof.

Will small contributions attract transaction costs from clients?

Cheers

JohnRo

It might sound like I'm going off at a tangent but the most difficult thing about DIY investing imho is the psychological aspect of dealing with a large pot of your own money in an environment where there are very few safety nets.

I think it's important to have realistic expectations about return and an understanding of how the long term view is what matters, which can prove challenging especially when selecting collective investments based on past performance and not seeing any of it.

Personally I've chosen to have a split, a large managed portfolio I pay someone to manage which I can forget about and then building a DIY portfolio with my own views about passive index investing for efficient economies and managed for smaller companies within.

I think most people would agree that in the current environment, if preserving and growing your wealth is the aim, rather than a get rich quick punt, then diversification across regions, sectors and asset classes is very important.

It's worth saying though that for all the money you can save by going DIY there is a personal cost in time and effort which some people choose to underplay but imo it is a significant factor, certainly when first embarking on such an endeavor. For a novice the learning curve is quite steep even if it isn't quite rocket science. The problem is that mistakes cost real money so it's important to take a little time getting a better sense of not just what to invest in and how but also what you really want the investment to do for you and when.

enough waffle...

grey_gym_sock

even if you prefer to pay somebody else to manage your money, you still need to understand enough so that you have those realistic expectations.

otherwise, there's a risk of panicking when the market dips, concluding your manager is incompetent, and pulling your money out before the market recovers. and also a risk of thinking your manager is great, when they're actually quite poor, but the market has been doing well (a rising tide lifts all boats).

JohnRo

The split I refer to is a conscious decision on my part to have a transition, using the IFA managed portfolio to feed my DIY efforts, learning as I go along and in the process being prevented from making any hugely expensive mistakes because I can be a bit of a gambler at times. Also bearing in mind I (hopefully) have a much better understanding now than when I first started, about investing and also myself and how I behave with money.

As time passes the balance of power will shift heavily to my DIY pot by which time I will hopefully have gleaned enough knowledge to make the right sort of decisions in most cases.

WGPA

JohnRo - I agree with your position entirely and that is exactly what I am trying to replicate. Do you have any suggestions as for who to use for both managed and DIY investments?

All - I do understand the long term view is required and am realistic with expectations, certainly not aiming to be a millionaire overnight!

JohnRo

WGPA wrote: »

Do you have any suggestions..

Can't suggest an IFA but I'm more than happy with mine and the performance of the portfolio.

As for DIY I've chosen Charles Stanley for this years ISA allowance on the basis they're the only proper RDR ready platform and have a flat 0.25% annual fee. Their website is excellent imho and customer service very good (so far)

The downside with them is no automated regular investment facility and a minimum investment level of £500 per fund.

Others may have suggestions more suited to your requirements, for what it's worth I've tried most platforms.

WGPA

Thanks for that, my main concern just now is transaction fees as I would prefer to set up a regular transfer in each month into this pot. I will look into Vanguard a bit more now I am in a position to actually invest.

Given my small initial stake I doubt I will require an IFA at this point and will be aiming to wrap all funds in an ISA.