20k investment trust query

Mr.prospector

Good evening all,


I have a lump sum of 42k that I'm looking to save/invest. I currently do not require to have the funds immediately available to me, however my circumstances may change in a year or two so after reading the main site and also the forums the plan would possibly be as follows....


£20,000 in a Santander 123
£2,000 in a flexdirect or TSB plus
£20,000 in investment trusts


The one question I have is regarding the investment trusts. How many investment trusts would you split the 20k between? I thought possibly 4 x £5000 amounts split into trusts such as City of London and Scottish investment. Would splitting the twenty thousand into a smaller or larger amount between more or fewer trusts make for a wiser investment?


Many thanks,


Mr.P

Drp8713

Why are you wanting to split them?


If its for diversity, trusts like Foreign & Colonial, Scottish Mortgage, Bankers etc are all globally diversified.


If its in case the trust went bust, very unlikely for the big ones, especially as they are really just companies that invest in other companies.


Plus there is a £50k FSCS protection.

robatwork

In "a year or two" will your circumstances change so that you need the £22,000 you have in savings, or to include the £20,000 also in investments?

Mr.prospector

Drp8713 -
Yes, it was to spread the risk but I didn't realise there was a £50k protection. So in that case would it be best to select one trust for the full £20k?


robatwork -
My thinking was that if needed I could use the £22k from the bank accounts if required but still leave the £20k in the trust. The "a year or two" comment probably sounds a bit vague, to be quite honest I have no real plans for the money in the short term, in the long term my aim would be just to increase/add to the full amount. I could possibly lower the amount in the accounts and increase the total amount which will be invested in the trust. As you can probably tell I have no real solid game plan or strategy as of yet.

BLB53

The one question I have is regarding the investment trusts. How many investment trusts would you split the 20k between? I thought possibly 4 x £5000 amounts split into trusts such as City of London and Scottish investment. Would splitting the twenty thousand into a smaller or larger amount between more or fewer trusts make for a wiser investment?

I hold a 'basket' of inv. trusts - I think it pays to diversify so I would probably select 6 or 7 trusts with £3K - £4K in each. The ones that have done well for my portfolio in recent years are Finsbury Gr. & Inc., City of London, Murray Intl., Temple Bar and Bankers.

As you say, it will be a good idea to developa solid strategy/plan for your investments so it will probably be worthwhile to do as much research as possible. A couple of sites I would recommend are https://www.monevator.com which has some really good articles mainly focussed on a passive approach using low cost trackers - for a more active slant https://www.diyinvestoruk.blogspot.co.uk

Good luck!

Mr.prospector

Many thanks for the links BLB53. I will read with interest ( and hopefully understand what I'm reading, or keep on reading until I do ).

ed44

You could also have a look on the Motley Fool investing for income forum,
where there's discussion of baskets of seven and eight investment trusts.

FatherAbraham

Mr.prospector wrote: »

£20,000 in investment trusts


The one question I have is regarding the investment trusts. How many investment trusts would you split the 20k between? I thought possibly 4 x £5000 amounts split into trusts such as City of London and Scottish investment. Would splitting the twenty thousand into a smaller or larger amount between more or fewer trusts make for a wiser investment?

How are you going to hold the investment trust shares? Anything in an ISA, or just naked?

Scottish Investment Trust has its own saving plan ("Stockplan"), which is basically free to run, including dividend reinvestments.

There's also an ISA variant, which has a fixed annual fee of £30+VAT, so trivial for your £20K investment size (and sales of shares are free, whereas Stockplan charges £12.50).

You'll find these under "Products" on the SIT website (http://www.sit.co.uk).

I think there's little need to split the money between different global investment trusts. Easier to stick it all into one of Scottish Investment, Foreign and Colonial, Alliance, Scottish Mortgage, Witan or whatever.

They'll probably all okay for a long-term core holding, and it's impossible to predict which will be the best.

As I say, Scottish Investment Trust has really cheap investment products. Most of my family's non-real-estate assets are in SIT, but that is as much a historical accident as anything else.

Warmest regards,
FA

BLB53

You could also have a look on the Motley Fool investing for income forum,
where there's discussion of baskets of seven and eight investment trusts.

Theres also a separate board for investment (and unit) trusts with lots of interesting threads - https://www.fool.co.uk

aspiration_2

BLB53 wrote: »

I hold a 'basket' of inv. trusts - I think it pays to diversify so I would probably select 6 or 7 trusts with £3K - £4K in each. The ones that have done well for my portfolio in recent years are Finsbury Gr. & Inc., City of London, Murray Intl., Temple Bar and Bankers./QUOTE]

Thanks to BLB3 and FatherAbraham.

My question is slightly off topic but I believe it is relevant as I also have ITs (avoiding high costs of Funds) and I realise that ETFs are completely different.

Can 6 or 7 ETFs do Whatever 6 or 7 Trusts do ?