Getting Started seems very complicated

AuntLily

Starting an S+S ISA seems very complicated. I have spent a few days reading. So I understand the fund supermarket platform but picking the funds seems a complicated procedure.


I feel I'm missing something?


Attitude to risk cautious to moderate, decided after much reading to follow the FTSE with a tracker but how does one pick one?
Having said attitude to risk is cautious to moderate I was tempted to just stick a pin in a list (only this attitude could be adopted by a girl who was bought up on a racing yard).


Intention is to drip money in each month as I can afford too. So looking at between £50 to £400 a month subject to income from farm or lack of.


Initially thought about buying shares - but - my preferred list of shares are expensive and I think a fund might be a better option.


I feel utterly daft for not actually knowing how to get started - can someone help out ?

TrustyOven

I would start off by reading about diversification, and why it's daft picking only a FTSE fund. Read about home bias. And why it is bad for UK investors.

Then read about what the difference is between shares and funds. Why most people should probably have funds. Why most people cant pick shares ("Monkey with a pin" and all those books and blogs and research).

I would then consider that appetite to risk is more than just the "cautious", "moderate" (or my most fave! "medium") or "adventurous", and that such phrases and levels of risk are there because people dont know any better and are spoon fed by others (I only seem to hear about those in pension investments oddly enough).
And that even in cautious investments you have risk, just as you have risk with cash savings - it's just different kind of risk (inflation is one of them). And read about risk vs reward.

As for actually doing it, as long as you open an account with a share platform or a fund supermarket platform, you then pay some money in and select what shares or funds to invest in.

Read some of the great websites like monevator.com, read http://www.getrichslowly.org/blog/category/investing/ (but beware that is a USA site with their different tax and naming systems etc.), and a bunch of other ones that I have in my feedly.com account.

Get yourself a library copy of Smarter Investing by Tim Hale. You keep reading...

When I started out, I found it useful to watch the moneyweek videos on youtube. And just read as many threads on this forum as I could. And other websites, that unfortunately, were mosly for USA people. Bogleheads is another good one but USA specific. You keep reading...

Don't think in terms of "punt" or gamble. Read about Warren Buffet, watch documentaries, etc. You keep reading....

For me, it took about 2 months of reading before I opened my S&S ISA with the fund platform I am with, and even then I really knew nothing - the field of knowledge in investment is so vast that it can take years or decades to learn everything (and still find there's more to learn). I setup a direct debit, and told it to go into one equity fund and one bond fund, just like a monevator.com article told me. I think it was this and one other page: http://monevator.com/what-should-a-new-investor-do/
Follow the links on that website. Read every page. Soak up information and critically, think about why things are like they are and don't just follow people blindly.

Anyway, I don't know if I answered your question. It was more of a brain-dump. I hope you find my response useful. Something to think about. Ponder about it.

colsten

Don't give up - it's like riding a bike. Once you have learnt how to do it, you wonder why you ever had problems keeping your balance. But it does take a while to figure out how to stay on.

You do need to invest some time understanding investments (whether ISA, SIPP or unwrapped). A short cut could be working through http://monevator.com/category/investing/. If you are after a bit more theory, try "Smarter Investing" by Tim Hales.

One piece of "advice": do not put all your money into any FTSE 100 tracker. It is far too narrow, and therefore far too risky, a selection for most people, and certainly for novice investors.

atush

Following the FTSE with a tracker is actually high risk. 100% equities, and UK only.

If you want all equities, go for a low cost global tracker. That way if one area or country goes down, you wont lose as much. If you want less than 100% look at the Vanguard series, the 80 is 80% equities and 20% bonds/etc.

Glen_Clark

atush wrote: »

Following the FTSE with a tracker is actually high risk. 100% equities, and UK only.

'UK only' is debatable since 70% of FTSE 100 companies profits come from overseas.
Problem is the FTSE 100 is heavily biased towards oil, mining and banks...

Radiantsoul

It is something that is probably made complex.
On a lot of platforms you can buy and sell funds for free. So if you make a mistake it is not too bad, you can always change it latter.

I would suggest picking a platform with no fees for dealing; Charles Stanley Direct is probably the cheapest(no fees for buying/selling funds), but I am with TD Direct who are also fine(tiny bit more expensive, but no fees if you should choose to leave).

The best funds to start with are probably Vanguard Lifestlye, Blackrock Consensus or Legal and General Multi-Index. Choosr between the brands by tossing a coin or something. I don't think it matters too much.

The only other thing is to determine how risky you want your investment to be. Probably best to start being slightly cautious.

Then just invest a little bit every month and continue to read about it and learn more. Or don't bother reading and learning more, but do keep adding more every month.

colsten

I agree that Vanguard Lifestyle, Blackrock Consensus or Legal and General Multi-Index could be candidates for a starter portfolio, and that platform cost also needs to be kept to a reasonable level. But it's one thing to buy some funds because a stranger on the internet mentioned their name. It's an entirely different thing to choose the same funds knowing why you chose them and not some others.

redpete

AuntLily wrote: »

Starting an S+S ISA seems very complicated. I have spent a few days reading. So I understand the fund supermarket platform but picking the funds seems a complicated procedure.

It's a series of important decisions so should not be expected to be quick and easy. You are thinking of spending up to £400 a month, maybe £3000 a year on this - it deserves some careful consideration.

I feel I'm missing something?

Probably

Attitude to risk cautious to moderate, decided after much reading to follow the FTSE with a tracker but how does one pick one?

Not the best idea as explained by others.

Having said attitude to risk is cautious to moderate I was tempted to just stick a pin in a list (only this attitude could be adopted by a girl who was bought up on a racing yard).

Even worse idea.

Initially thought about buying shares - but - my preferred list of shares are expensive and I think a fund might be a better option.

What do you mean by expensive? That individual shares cost a lot? If so then £100 spent on shares buys you £100 worth of shares regardless of whether they are £12 each or £1.20 each. It's not the same as comparing the price of one pint of milk against another. The 'value' of a share is related to the size of the company, the earnings per share, the potential of future profits relative to the current value etc.etc. etc. But having said that buying shares in individual companies is an even worse idea than sticking a pin in a list of tracker funds, particularly for a cautious investor.

I feel utterly daft for not actually knowing how to get started - can someone help out ?

Read up some of the referenced sources on diversifying - geographic, shares vs bonds vs cash vs property vs ..., When you've decided where to put your money (i.e. a fund or group of funds that match your objectives) then look for funds that meet these objectives and compare their costs.

That's a good start.

BLB53

Initially thought about buying shares - but - my preferred list of shares are expensive and I think a fund might be a better option.

Just starting off, I think you are wise to avoid shares. Far better to use funds, particularly the low cost index options.

With a cautious attitude to risk, the Vanguard Lifestrategy funds would be a good choice - I hold the VLS60 which is 60% equities and 40% bonds but maybe the VLS40 - 40% equities would be better starting off.

If you are drip-feeding money on a regular basis, be sure to select a broker that does not charge for buying funds - so the likes of Charles Stanley Direct.

Some good articles on Vanguard LS and other options on monevator http://monevator.com/category/investing/passive-investing-investing/ and diy investor uk http://www.diyinvestoruk.blogspot.co.uk/2015/04/vanguard-lifestrategy-one-stop-solution.html

Also the Vanguard UK website https://www.vanguard.co.uk/documents/portal/literature/lifestrategy-brochure-retail.pdf

All this may seem a bit complex to start off but its not really when you get your head around the basics.

Good luck with it!

dunstonh

Attitude to risk cautious to moderate, decided after much reading to follow the FTSE with a tracker but how does one pick one?

So, you worked out your risk is cautious to moderate. Yet you have decided to give with a adventurous investment. Why is that?

And that ignores the fact that picking single sector investments as a sole holding is bad investing. It lacks no sector allocation or asset allocation.

Its not complicated but its like anything you do. You either research it well and do a good job or research it badly and make a pigs ear of it or you get someone to do it for you.

AuntLily

dunstonh wrote: »

So, you worked out your risk is cautious to moderate. Yet you have decided to give with a adventurous investment. Why is that?.

I thought about how I would feel when the investment sinks, which it may do rather than rises. But actually that isn't the point here.



I probably made that assessment from a lack of knowledge which is why I posted. And some really lovely people have taken a lot of their own time to make some great suggestions for further reading/research so I get to build my knowledge basis. Wasn't that lovely of them?

dunstonh wrote: »

Its not complicated but its like anything you do. You either research it well and do a good job or research it badly and make a pigs ear of it or you get someone to do it for you

Which is why I really valued those comments from people who made sensible suggestions for the research and a way forwards.