I will teach you to be rich UK Version. HELP!

fireblade28

Hi all,

I am currently making a bit of money so I bought the book with the idea that I could use that an moneysavingsexpert to make me some money. Now I am pretty new with investments and just most finance things.

So the book mentioned tracker funds and lifecycles as a good way to invest, it is very US orientated even with the UK version and I have no idea what it is talking about. Is this a stocks and shares ISA because I know what those are but the others I have no idea.

Does anyone have the book and can explain it to me?

G_M

With 'stocks and shares' you buy into an individual company (eg you could buy 1000 Tesco shares).

With a 'fund', you buy units in a fund that then uses your money, and hundreds of other peoples, to buy lots of company shares (eg Tescos, Sainsburies, Asdas etc). In this way you spread your risk. If Tescos goes bankrupt, and you hold shares, you lose all your money. If you hold units in a fund, the fund loses a bit of value but the sainsburies, Asda etc shares mean the fund continues to have a value.

Some funds, (as per my example) only buy retail company shars. Some buy manufacturing. Some specialise in buying 'smaller companies'. Some buy only Far Eastern companies - so you can choose what kind of fund you want.

A 'tracker' fund, buys shares in a specific stock market. eg the FTSE. A FTSE 100 tracker fund buys shares in the top 100 companies listed on the FTSE stock market.

Does that help?

ChesterDog

A stocks and shares ISA is a tax-free (income and capital gains) account in which you can trade and hold various share-related investments. You can only add funds (by which I mean money, not investment funds) to it up to the total of that tax year's ISA allowance.

Inside that ISA, you coukd hold shares, funds, investments trusts, ETFs (trackers), bonds, cash, etc., etc.

ChesterDog

I am not sure, not having seen the book, but I think Lifecycles might refer to Lifestrategy, which is a type of all-in-one investment by Vanguard. In these, you can choose the ratio of equities (shares) to bonds. As the former is generally more volatile ('risky') than the latter, the general idea is that as you get closer to retirement, you increase the bond element and decrease the equity element.

ChesterDog

While we are talking about nomenclature, and you are relatively new to the investment arena, don't confuse bonds (meaning corporate debt or government debt (gilts) which you can, in effect, finance by buying), with bonds (meaning fixed-term savings accounts that have nothing to do with investment as such).

And, as mentioned, funds (meaning a managed collection of investments like shares), with funds (just meaning something like 'cash').

Also trusts (meaning investment trusts, which are a type of fund with its own share price), and trusts (meaning a financial entity which is operated by a trustee on behalf of the ultimate beneficiaries).

Oh, and indeed, investment (selection of assets for longterm capital gain and, perhaps, income), with speculation (high-risk game-playing), gambling (which I would define as betting on something the outcome of which you cannot influence), or indeed saving (where you put your money into something and know the outcome in advance, well... generally!).

gadgetmind

Try "Smarter Investing" by Tim Hale. A dry read at times but that's no bad thing IMO.

fireblade28

Okay, this seems pretty confusing to me.

It seems like most things in life there are a few pointless names for the same thing.

The book does not really explain this in any easy terms which makes it difficult to understand.

So a stocks and shares ISA is a place where you are able to hold tracker funds? EFT's (Don't know what they are) and other stocks and shares?

The book also mentions bonds and what not.

Is there any simple way I can understand what I should be investing in?

All I want to do is make some automated cash flow that I can come back to in a few years. I already have a pension that I pay into and I have about 10k to invest that isn't doing much. I am young and want to get this sorted out so I can get started as soon as possible.

ExMugPunter

(Apologies if this is way off the mark and a bit basic!!)

Are you sure it was 'lifecycle' not 'lifestyle'?

It seems from what I have read (especially american based books) that it is/was, as there is now some debate over it, perceived wisdom to split your investments into 2 areas - Bonds and Stock Market Trackers.
How much of each 'class' you own is determined by how far away from retirement you are and your attitude to risk.

'Lifestyling' is to gradually reduce the amount of 'risky stuff'(stocks and shares) in your investments the nearer you get to retirement.

So ( I am guessing as I havent read the book) that they are suggesting you buy trackers, but then 'lifestyle' ie. convert them into 'safer' (less volatile?!) areas the nearer you are to retirement.

Hope that helps (probably doesn't though!!)

fireblade28

ExMugPunter wrote: »

(Apologies if this is way off the mark and a bit basic!!)

Are you sure it was 'lifecycle' not 'lifestyle'?

It seems from what I have read (especially american based books) that it is/was, as there is now some debate over it, perceived wisdom to split your investments into 2 areas - Bonds and Stock Market Trackers.
How much of each 'class' you own is determined by how far away from retirement you are and your attitude to risk.

'Lifestyling' is to gradually reduce the amount of 'risky stuff'(stocks and shares) in your investments the nearer you get to retirement.

So ( I am guessing as I havent read the book) that they are suggesting you buy trackers, but then 'lifestyle' ie. convert them into 'safer' (less volatile?!) areas the nearer you are to retirement.

Hope that helps (probably doesn't though!!)

YES!!

Lifestyle funds! I read it wrong, not surprising when I don't know what I am doing.

ExMugPunter

Don't worry mate, glad I could help.(I can't usually!)

You will learn loads reading these forums, there are some superb people on here ( Not me though, I havnt got a bloody clue - but we all start somewhere.!!)

Like you, I have only started this investment game quite recently. But the books I found usefull was 'Millionaire teacher' by Andrew Hallam, Smarter Invester by Tim Hale (as mentioned above), The Coffee house invester and the website Monevator.

Good luck.

gadgetmind

fireblade28 wrote: »

So a stocks and shares ISA is a place where you are able to hold tracker funds? EFT's (Don't know what they are) and other stocks and shares?

At its heart, a S&S ISA is a way to hold various assets such that income and growth are tax free. What assets you can hold, and how much you can contribute per year, are both controlled by government legislation.

You can hold any stocks/shares/equities that are listed on any major exchange, bonds with > 5 years to maturity, and "open ended" funds that go by various names such as OEICs, UTs and trackers but which are all "collective investments" with their own specialist areas and associated fees.

Exactly which of these you can hold, and what additional fees apply, depend on the platform you use for your S&S ISA as many introduce rules and limitations of their own.