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Tracker?

I am totally new to investing in anything other than an ISA and would like to start off sensibly, while its an attractive option to pick some shares myself I don't have either enough money or the experience. I have been looking into trackers and I like the look of the one which tracks the S&P 500, do you think this is a good option for a beginner with a limited amount of start up funds (£800) but which I can drip feed some each month into?
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Comments

  • Silian
    Silian Posts: 165 Forumite
    Why not go with a global tracker instead? Something like the Vanguard Lifestrategy fund will diversify for you - no effort needed.
  • dunstonh
    dunstonh Posts: 119,883 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I have been looking into trackers and I like the look of the one which tracks the S&P 500, do you think this is a good option for a beginner with a limited amount of start up funds (£800) but which I can drip feed some each month into?

    No. Its poor quality investing as it is single sector. It is high risk (40% loss potential in 12 months) and way above the typical tolerance of a new investor and £800 would suggest you dont have much to spare.

    Multi-asset solutions are a better option for smaller values.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Spurs_2015
    Spurs_2015 Posts: 33 Forumite
    Thanks, I assume the Fidelity Index World Fund is something I Should be looking into then for diversification?
  • delmar39
    delmar39 Posts: 1,447 Forumite
    edited 24 July 2015 at 8:43AM
    You mention the Fidelity Index World Fund have a look at their range of trackers to compare charges. Why not start with their (or other provider) lowest charge tracker and add more as you go to spread the risk. Then look at other options when you have your foot on the ladder so to speak.


    Fidelity are changing the way they charge from December 2015 so important to look at this.

    https://www.fidelity.co.uk/investor/tracker-funds/our-range.page
  • fun4everyone
    fun4everyone Posts: 2,369 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper Photogenic
    delmar39 wrote: »
    Fidelity are changing the way they charge from December 2015

    What are they changing exactly? I had a look at the link and specifically the "charges" tab but could see nothing about forthcoming changes.
  • Aretnap
    Aretnap Posts: 5,821 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    What are they changing exactly? I had a look at the link and specifically the "charges" tab but could see nothing about forthcoming changes.
    IIRC rather than just charging a flat 0.35% pa, they're introducing a minimum charge of £45. This will make them more expensive for people with relatively small portfolios, and very expensive indeed for someone with £800 to invest.
  • I assume this will also apply to Cavendish online, who use Fidelity? That would be annoying as I've literally just started to drip feed so would probably have to switch platform :-/.

    Chris.
  • KDH_2
    KDH_2 Posts: 132 Forumite
    Part of the Furniture Combo Breaker
    AFAIK -£45 charge will not apply to Fidelity via Cavendish Online .

    Cavendish platform charges are 0.25% in total rather than Fidelity's 0.35%
    (For very large portfolios Fidelity drops to 0.2% making the direct route cheaper)
    http://www.cavendishonline.co.uk/investments/our-service/
  • That's true, thanks KDH, I forgot that Cavendish wasn't also 0.35%. Hopefully it will stay at 0.25% for now.
  • delmar39
    delmar39 Posts: 1,447 Forumite
    What are they changing exactly? I had a look at the link and specifically the "charges" tab but could see nothing about forthcoming changes.

    This has been covered by others, but being as though you asked here you go:

    Service fee

    This covers the costs of everything the administrator of your investments offers you. At Fidelity, the service fee is typically at 0.35% of the value of your holdings (or less if you have more invested with us). This fee reduces to 0.20% if you have £250,000 or more with Fidelity Personal Investing. In addition, we won't charge an annual service fee on any assets above the level of £1,000,000.

    From December 2015, the service fee will be a flat rate charge of no more than £45 (and £25 for Junior ISA or Junior SIPP), if the value of your portfolio is less than £7,500.For full details please refer to our Doing business with Fidelity document.
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