Stocks & Shares ISAs- Any advice for a beginner?

bgscotty

Hello all!

I'm interested in investing in a stocks and shares ISA (I have already invested £3000 for this current year in an NS&I Direct mini cash ISA).

Can anyone give advice or pointers as to how a complete novice to the world of stocks and shares can begin working out how to open such an ISA?

Thank you.

Scotty

Lazy_Runner

I am not an expert but here goes.

As I am sure you are aware, the ISA is just a wrapper. See Martin's analogy in: http://www.moneysavingexpert.com/savings/best-cash-isa#what1

What you then decide to put in the ISA is upto you.

I am sure more knowledgeable people will be along shortly but.....

There are a number of factors to consider:
What is your risk level i.e. how much of your cash would you have to lose before you pulled out of an investment? (The scale is from none whatsoever - are you nuts!! to I am willing to lose upto 100% in order to get an outstanding return)
Do you want somebody else to manage this for your or are you willing to manage the stock picking yourself? (If manage yourself there are strategies that timewise take between half an hour a year to 10 hours per day)
What is the timescale you are looking to invest the money?
Are you saving for a specific date/event?

If you can make a start on answering those questions, advice will be bound to follow.

HTH

bgscotty

Hello!

Thank you for getting me started lazyrunner!

I've had a go at answering your pointers (see below). I'd welcome yours or other forum members' further tips.

Thank you.

Scotty



There are a number of factors to consider:
What is your risk level i.e. how much of your cash would you have to lose before you pulled out of an investment? (The scale is from none whatsoever - are you nuts!! to I am willing to lose upto 100% in order to get an outstanding return)
I'd be willing to push the risk boat out to try to get an outstanding return- so 100%...

Do you want somebody else to manage this for your or are you willing to manage the stock picking yourself? (If manage yourself there are strategies that timewise take between half an hour a year to 10 hours per day)
Willing to do the research so I could manage myself- but where to start??? Equally happy to have somebody else manage this as I am a novice...

What is the timescale you are looking to invest the money?
I can leave £8000 locked away for at least a minimum of 5 years

Are you saving for a specific date/event?
No date/event in particular

Aegis

bgscotty wrote: »

Hello!

Thank you for getting me started lazyrunner!

I've had a go at answering your pointers (see below). I'd welcome yours or other forum members' further tips.

Thank you.

Scotty



There are a number of factors to consider:
What is your risk level i.e. how much of your cash would you have to lose before you pulled out of an investment? (The scale is from none whatsoever - are you nuts!! to I am willing to lose upto 100% in order to get an outstanding return)
I'd be willing to push the risk boat out to try to get an outstanding return- so 100%...

Do you want somebody else to manage this for your or are you willing to manage the stock picking yourself? (If manage yourself there are strategies that timewise take between half an hour a year to 10 hours per day)
Willing to do the research so I could manage myself- but where to start??? Equally happy to have somebody else manage this as I am a novice...

What is the timescale you are looking to invest the money?
I can leave £8000 locked away for at least a minimum of 5 years

Are you saving for a specific date/event?
No date/event in particular

Remember to think very careful about your risk level there. What you just said was essentially that you'd be ok to lose the whole of the £8000. Personally, losing that much money would be a nightmare to me, and I consider my current profile to be in the medium/medium-high level (though that may be offset slightly if you include my cash savings as well).

Personally I've gone for a fairly reputable couple of funds within the UK, and a fund each in the Latin America and Natural Resources markets, and might extend to Russia and Europe and/or Japan at some point depending on how much more becomes available to invest and how risky it seems to me at the time.

As for how to set it up, if you're ok to manage your own fund selection, you can set up a Hargreaves Lansdown Vantage account and get discounted prices on pretty much all the funds you're likely to want to get in to (usually the fund manager takes a percentage of your investment as an initial entry fee, then takes a much smaller percentage each year as a management fee, with H-L the entry fee is usually 0% and the management fee is reduced somewhat as well, so I'm more than happy to stick with them). They also have a Vantage ISA, which is more or less the same thing, but free of any Capital Gains Tax (which may become important with an investment of £8000 over 4 years). I believe you could put £4000 of your money into the tax-free wrapper this year as a Mini Stocks and Shares ISA and the rest next year as part of the new system the government is apparently going to set up for ISAs.

Just remember to do your own research and be sure of your risk profile!

And if nothing else, definitely check my facts, because I'm in no way professional or even experienced at this sort of thing!

InMyDreams

bgscotty wrote: »

Can anyone give advice or pointers as to how a complete novice to the world of stocks and shares can begin working out how to open such an ISA?

Thank you.

Scotty

Yes, look at threads on this board such as

http://forums.moneysavingexpert.com/showthread.html?t=416337
and
http://forums.moneysavingexpert.com/showthread.html?t=450268

but there are quite a few others in the first few pages.

Then come back and ask some more specific questions and there's loads of lovely people here that might help you. I'm in the same boat... just waiting for my endowment money to come through and away I go :eek:

Lazy_Runner

If you are willing to lose upto 100%, this would be akin to gambling. You could try that. At this end of the spectrum there are also things like AIM listed shares, naked options, contracts for difference (CFD's), currency dealing.

If you are willing to lose more than 100% (i.e. lose more than you put in, as in you are liable), there is spread betting.

I learnt investment strategies at a Darren Winters investment course. I am fairly certain that the half an hour a year strategy is taught at his taster session. (If memory serves, this strategy returns about 10 - 20% a year). The rest of the stuff is on the actual course. If you do go to the taster session, there will be a hard sell to get you onto the actual course.

Thing about learning the investment strategies is that you can start looking at the charts and making guesses as to the direction of the underlying item (be it a share, the index itself or the currency). Then depending on your level of risk you can buy products match your risk and your expectation for the product.

Say you think the conglomerates sector is about to have an upturn (I am making this up and have no idea of specifics):

If you are medium risk, you could buy a unit trust that invests in conglomerates.

If you are slightly more risky, you could buy one or two shares in conglomerates.

If you are slighly more risky still, you can buy options on the underlying conglomerate stocks.

Upto this point, you can only lose the money you put in. Options are known to expire worthless, but if they go up, you make money big time.

If you are even more of a risk taker, you can do a spread bet. Again you can win big (and the government do consider this to be betting, so there is no tax on the gains); but if the bet goes against you, you will have to pay up.

You may also want to read the gambling and matched betting forum on this site.

Sorry about the long post, but as a start, it may be worth reading the posts that have been pointed out, as they will help clarify your thinking.

Also you have to remember this could all be rubbish. You need to do your own research.

ukdutypaid

Nutcase question here, but I get the impression that one can have up to 7k as a maxi, or 3K Cash and 4k S&S ISA...
Not looking for advice on what to put in the S&S ISA, but the more I read the less I understand if you see what I mean.
Q is this, can I just buy as many S&S ISA's as I like up to the value of 4k
(let's say 1k in four, or even 50 quid per month up to 300 per year each)

If that is the case then I can have several S&S ISA's and spread myself around, rather than say 10 diff funds from one provider, L&G for example...

Can anybody clear this one up? (Please)

Mr_Mumble

ukdutypaid, you can only open one S&S ISA in any one tax year. You can put any investment allowed by the S&S ISA provider into that wrapper.

If you use a specific product provider like L&G you'd be limited to their own products. If you use a fund supermarket (e.g. Hargreaves Lansdown) or a self-select stockbroker (e.g. Selftrade) you have access to literally thousands of different investment products.

ukdutypaid

Wow right,
So if I want say a fund from L&G and one from another provider, then I need to find a third party, through whom I have to buy them (seems a bit odd, why do I have to pay this third party, both the funds I want are classed as ISA's... That's just the way it's done, so live with it?).

How/where do I find such third parties?
Basically I want to do this.... buy the L&G Ethical fund through quidco with the 110 quid cash back, the CIS ethical one and possibly another couple.

I know not to invest more than 4,000 in them combined in any one year. However, if I need this third party organisation, whom I have to pay for the privilege of the provision of the ISA status (wrapper) also and I buy direct from the CIS and the L&G sites and say the AEGON ethical as well, then I'm scuppered aren't I?

Don't laugh.... I heard on the radio the other day that a lot of people don't know a secured loan is just that, secured..........

Am I the only one floundering here....

dunstonh

So if I want say a fund from L&G and one from another provider, then I need to find a third party, through whom I have to buy them (seems a bit odd, why do I have to pay this third party, both the funds I want are classed as ISA's... That's just the way it's done, so live with it?).

The third party, as you call it, would be a fund supermarket or wrap. Most of the time you can buy the funds cheaper than going direct do you arent actually paying the third party anything but are getting it cheaper.

jem16

ukdutypaid wrote: »

How/where do I find such third parties?
Basically I want to do this.... buy the L&G Ethical fund through quidco with the 110 quid cash back, the CIS ethical one and possibly another couple.

Basically you will have to decide between getting the cashback from Quidco or getting the funds you want.