Investment advice

Elizabeth__2

I am 17 years old and 18 this December; I will be receiving 50K inheritance. I would like to invest this money but have only a little knowledge of investing and the market. I studied Financial studies at A level; so I have no experience with investing but have learnt a little and decided that investing the money is right for me. Im not sure where I want to invest it or if I even have enough do this. Any advice would be extremely useful and appreciated.

colsten

Park the money in a savings account, such as an NSI Income Bond, until you have been able to read up about investments.

First decision you will have to make is how much of the money you expect to want to spend when. Anything that you need in the next 5-7 years should be kept in cash (savings, or current accounts). Only invest what you definitely don't need for at least 7-10 years. So you might wish to split your money into several pots.

The most desireable place for investments is a tax shelter - this will become important once you earn an income from a job, and it also reduces admin as you don't have to tell the taxman anything bout your savings and investments in tax shelters.

The only way you can invest if you are younger than 18 is in a JISA, and all you can get in there is £4,000 in each financial year. Once you are 18, you can open a normal ISA, into which you can deposit £15,000 a year. You can also start a pension (SIPP) but again, the max you can pay into it in any one year is up to the higher of what you earn or £40,000. If you don't earn, you can put in £2,880 each year. So it will take you several years to move the entire £50K into tax-free shelters.

Start reading about investments - there are several investment books recommended on this forum. There are also good websites such as monevator.com. Search the forum for 'books' etc, and spend time understanding various investment discussion threads on the forum.

lozzy1965

I started investing in the stock market, encouraged by my father, via a stock broker (phone line and postal service in those days ) at 18 years old. I also saved money in savings accounts though. I would keep most of your money safe for the moment, have a cautious play with 5 to 10K, and when you have more experience, decide whether stock market investing is for you. Do a lot of reading before you start investing. Motley Fool is a good site. Chat to others who do invest if you can. Read tips and the reasons for those tips from national papers and other sources. I particularly found reading old tips useful, and seeing what had actually happened!
I'm pro individual shares, I used to have 5 or 6 shares I was interested in buying. Read up about them, look at the share price movements, and decide when to buy. There is so much more information available now though, sites like Digital Look, London South East, Top Yields, the London Stock Exchange and Financial Times, to name just a few I know about.
Decide what strategy you like, and test it out.
Good luck!

Archi_Bald

'ere we go again, the old shares versus funds debate (aka lozzy1965 vs the rest of the board).

I think it is pretty much clear that the vast majority of posters on here would never recommend starting your investment life with shares. Instead people would recommend funds. The risk of a share selection being a bad selection is much higher than picking a bad tracker fund. Thus starting with funds is a much better idea, unless you have the highest risk tolerance. A lot / most people will stick with funds all their life.

Recommended reading thread: https://forums.moneysavingexpert.com/discussion/4752194

Totton

If you can stand losing in the short term and will not need the money soon, then consider splitting it 50/50 between cash and investments. I'd opt for investing into Investment Trusts which over time should give you a decent return. The likes of Law Debenture, RIT Capital Partners, Brunner, Finsbury Growth Trust and Lowland are good starting points for a little less risk than say Scottish Mortgage, Worldwide Healthcare and smaller company choices such as Aberforth & Henderson Smaller Co's.

Alternatively something that takes up less time would be Vanguard Life Strategy 100% which is a world tracker managed in the US.

Some good links for research are -
http://www.theaic.co.uk
http://www.morningstar.co.uk/uk/
http://www.trustnet.com

You can purchase many of the Investment Trusts through their own savings plans or you can use a broker, there are many of these. I use Hargreaves Lansdown who I find to be excellent but many would disagree.

Whatever you decide, give serious consideration to protecting your money from tax, maximise ISA's as soon as you can even if initially the tax advantage is not great it may become so in the future.

HTH & Good Luck!
Mickey

BLB53

Im not sure where I want to invest it or if I even have enough do this. Any advice would be extremely useful and appreciated.

Great that you are thinking about investing at an early age - the earlier you start, the longer your investment will have to compound.

I suppose the main decision is whether you feel confident to go diy or whether you may feel better with an adviser.

If you are going to try diy, then the next decision is whether to choose passive investments like low cost trackers or a more active approach with managed investments like investment trusts, OEICs or even individual shares.

Probably a good idea to spend time doing more research - some good websites are Motley Fool (discussion boards) https://www.fool.co.uk, Monevator good for passive approach https://www.monevator.com and for more active approach diy investor at https://www.diyinvestoruk.blogspot.co.uk

Good luck with whatever you decide!

lozzy1965

Archi_Bald wrote: »

'ere we go again, the old shares versus funds debate (aka lozzy1965 vs the rest of the board).

I think it is pretty much clear that the vast majority of posters on here would never recommend starting your investment life with shares. Instead people would recommend funds. The risk of a share selection being a bad selection is much higher than picking a bad tracker fund. Thus starting with funds is a much better idea, unless you have the highest risk tolerance. A lot / most people will stick with funds all their life.

Recommended reading thread: https://forums.moneysavingexpert.com/discussion/4752194

You do seem to get overly defensive every time I mention Shares Archi Bald.
1. I merely stated that this was how I started, and what I would do with the money, I leave it to others to offer their opinions.
2. I have stated that my "risk tolerance", as evaluated by an IFA, was low - yet I still invest in shares rather than funds!
3. Just because most people invest in funds does not mean other points of view are invalid, nor that this is the best option.

Now, to redress the balance again. Individual shares can be very risky. Dealing in AIM shares is the most risky. Dealing in FTSE100 shares is the least risky. I follow the High Yield Portfolio (HYP) strategy. There are many top 250 UK company shares (and in other countries if one is interested in other markets) that have provided, and are expected to provide, 5% plus dividends every year for the past 5 years. The volatility of the individual share price, or even average of the 'basket' of shares, does not matter as long as the dividend is paid, and you do not need to sell the shares. Once you have bought the shares there is no ongoing cost, unlike funds, where there is a cost every single year. Another poster on this forum also pointed out, that they found, a lot of the funds they invested in, also had the backbone of their holding in the same such individual companies.

Now over to you Archi, to whinge and moan about my point of view, even though I am merely offering it as an alternative to the other posts.

ManofLeisure_2

lozzy1965 wrote: »

Dealing in FTSE100 shares is the least risky.

Not so sure about that. Wasn't Northern Rock in the FTSE 100? Shareholders were left with zilch - I'm one of them :mad:. Oh yes and then there was Bradford and Bingley :mad:. Crikey the list goes on........

lozzy1965

ManofLeisure wrote: »

lozzy1965 wrote: »

Dealing in FTSE100 shares is the least risky.

Not so sure about that. Wasn't Northern Rock in the FTSE 100? Shareholders were left with zilch - I'm one of them :mad:. Oh yes and then there was Bradford and Bingley :mad:. Crikey the list goes on........

Your point being? That shares can go down? That there is always a risk? Yes they can, and there is. That's why one diversifies. I held shares through the 2008 crash, including bank shares. My portfolio went down 30% that year. My dividends were still paid. My portfolio recovered. Through the worst stock market crash in many generations I have still made an average of over 8% per year for the last 8 years, not by being lucky, but by investing sensibly and diversifying sensibly.

It's not for everyone, but it's an option if you know the risks, are happy with the risks and want to get into it.

colsten

lozzy1965 wrote: »

I held shares through the 2008 crash, including bank shares. My portfolio went down 30% that year. My dividends were still paid.

You can't have held many Lloyds Banking Group shares then as they didn't pay a dividend for 5 years.

lozzy1965

colsten wrote: »

You can't have held many Lloyds Banking Group shares then as they didn't pay a dividend for 5 years.

Diversification? Anyone know what this means or how it works?

I actually held Lloyds, Santander, Barclays and HSBC. I averaged down on Lloyds and managed to get my money back, then got out because they didn't fit into the HYP requirement any more.

I'm guessing funds didn't perform particularly well in 2008? Did they give out any income?