What about FTSE Trackers for ISA?

Legacy_user

Hi,

I've got some money in an employee share scheme. Not a lot though. These are the only shares I have.

I think I can buy shares monthly in a share ISA for 1-2 years. After that, I will need to allocate the money I would have used, on house DIY jobs (which I am putting off).

In terms of cash savings, I've got £10k in an ISA which I've been told is the equivalent of 6 months spending if I lost my job.

I'd like to put £250 a month into a FTSE tracker because it looks easier that buying a specific company share. I'd be doing this for 1-2 years. At the end of 1-2 years, I am not selling the shares, just not buying more.

Does this sound reasonable when you consider returns and fees?

Thanks
J

dunstonh

Does this sound reasonable when you consider returns and fees?

Single sector, not diverse and typically above the risk profile of the average UK investor. Multi-asset options would be better but the apart from that, as long as it is long term, there is nothing else wrong.

CKhalvashi

For £250 a month, I'd say that's possibly the best way.

My shareholdings are all in companies I know well, and many are small cap PLC's, but this is far too high risk for many investors (which is why I wouldn't recommend it for you)

Remember too, that the FTSE is largely dictated by the 5 companies at the top.

CK

System

Thanks for this.

Single sector, not diverse, Multi-asset options - how would I work these out from looking for trackers. In fact - where would I look for trackers?

I've not used a IFO because of 1 horror story I got from a friend (i.e. given bad advice). That aside, should I be asking an IFO this question?

CKhalvashi

If you've never invested before, it may be worth speaking to an IFA, however this will have to be paid for under the new rules.

Dunston (or another IFA here) will be able to give you an idea with regard to cost for a one-off appointment, as I've taken to execution-only, so I don't use an IFA now.

CK

ExMugPunter

This investing lark can be daunting, but I dont see how you need an IFA for investing £250 a month for a couple of years.

Open a S&S ISA at either Hargreaves lansdown (lots of bad publicity about costs, but for us newbies they are still cheap enough) or Charles Stanley.
As Dunstonh says, rather than a Ftse tracker, you might be better ( more diversified) with a whole world tracker or something like the vanguard Lifestrategy. Other companies ( like blackrock) do simillar, but basically your money gets split up into a load of other share and bond trackers. It means that if the ftse tanks, you can still pick up growth from around the world and bonds to smooth the path.

PeacefulWaters

What sort of employee share schemes are available to you?

Are you maximising matching pension contributions from your employer?

What mortgages / loans are outstanding and what rate of interest are you paying on them?

dunstonh

I've not used a IFO because of 1 horror story I got from a friend (i.e. given bad advice). That aside, should I be asking an IFO this question?

IFAs account for just 1% of complaints at the FOS and most of those are rejected. They may have had issues where the adviser did wrong or they may have misunderstood something and blame the adviser. Or they may have seen an FA or insurance agent rather than an IFA. It would also be wrong to tarnish all advisers on the actions of 1.

That said, IFAs tend to deal with people with higher net worth. Your investment value is typically too small for most IFAs to be interested in unless it is due to an existing relationship or they are the family IFA. Realistically you dont need an adviser either for this amount.

I have restrictions on what i can say on the boards because regulatory requirements extend to what I write here as much as they would if I was giving advice in the "real" world. However, that does not extend to others and I can see some examples given in posts above which are the sort of thing you should include in your research.

System

Thanks for the information.

So, what would I say to my ISA helpdesk to use Vanguard Life Strategy? I see that there are different types - 60/80/100.

Is my humble £250 a month sufficient to be based on Vanguard Life strategy i.e. is there a minimum investment?

bigadaj

Your contribution is fine, unless you want to invest with vanguard directly when you need £100k.

Who is your platform as not all have vanguard available, and costs do vary.

The differing numbers refer to the percentage invested in shares, the balance goes into bonds and lower risk assets. The younger you are the more you should be in shares according to conventional investing wisdom. People are also nervous of a bond bubble no which pushes many towards shares still, so most people would be looking at the 80 or possibly 100.

badger09

moneyunwise wrote: »

Thanks for the information.

So, what would I say to my ISA helpdesk to use Vanguard Life Strategy? I see that there are different types - 60/80/100.

Is my humble £250 a month sufficient to be based on Vanguard Life strategy i.e. is there a minimum investment?

This isn't a bad place to start reading if the world of investing is completely new to you. Also, Tim Hale's book Smarter Investing?

http://monevator.com/category/investing/passive-investing-investing/

http://monevator.com/low-cost-index-trackers/

Other books and websites are available etc etc