Getting Started seems very complicated

AuntLily

Wow! I am so impressed with your kindnesses in posting and for sharing resource ideas and comments.
Thank you all so very much.
Have this morning picked up a copy of Smarter Investing and am about to start reading. Will be back to check links.
This is exactly what I was hoping for - some clues to get me started in the right direction - so that I can become better informed before getting started.
Thank you so much for taking the time to help a stranger.

ToriP

As a couple 29 and 33 (now) we obtained a mortgage and are overpaying while interest rates are low.

We also wanted something long-term that may grow, more so than a normal higher interest account

We decided on our risk profile - moderate. Although it's quite subjective what that means

In the end I opted for Vanguard Lifestratgy 60%. That should over the long term even out any troughs. It's a S+S ISA through Charles Stanley Direct and we pay a regular amount in.

The other contenders were the L&G Multiindex and BlackRock consensus.

dunstonh

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.

Its not a case of may do. its a case of when. A FTSE tracker would have loss potential of around 45% in 12 months. So, you could halve in value. That would have happened twice in the last 15 years.

Glen_Clark

redpete wrote: »

You are thinking of spending up to £400 a month, maybe £3000 a year on this .

If you were to switch it into a different savings account would you call it 'spending'?
I just wonder if that word frightens some people off putting some of their eggs into other baskets?

AuntLily

ToriP wrote: »

We decided on our risk profile - moderate. Although it's quite subjective what that means

I think it is too. I only put it down as an indication that I wasn't a gambler and I'm glad I did as there have been some really helpful comments. My gambling tends to be on a race track and I was bought up to only gamble what you were willing to loose even if the horse seems a certain winner


I'd rather not loose the investment and it seems more research and information is needed

Glen_Clark

dunstonh wrote: »

Its not a case of may do. its a case of when. A FTSE tracker would have loss potential of around 45% in 12 months. So, you could halve in value. That would have happened twice in the last 15 years.

If you are that certain it will fall why invest in it?
Why not just wait until it falls?

dunstonh

Glen_Clark wrote: »

If you are that certain it will fall why invest in it?
Why not just wait until it falls?

Everyone who invests should be certain there will be a fall at some point.

When is it going to fall? It could be tomorrow. it could be in 6 months, 1 year, 3 years, 5 years or 10 years. Nobody knows when. you just know it will.

xylophone

There is a difference between loosing a horse and losing a horse (although once the horse has been loosed it might also get lost....):)



http://www.oxforddictionaries.com/words/loose-or-lose

With regard to the matter in hand, if you cannot stand the thought of seeing your investment at a lower level than you originally paid, then saving rather than investing might be your choice - I am sure that you are aware by now than there are numerous high interest current accounts where (at the moment), you can achieve a return above both CPI and RPI inflation.

However, received wisdom is that over a long period, you are likely to do better with share based investments.

You need to decide if you are ready to dip a toe in the water and start a Stocks and Shares ISA?

Perhaps a mixed asset fund might suit you?

I started with ( and still hold) Invesco Perpetual Distribution. It has not been immune from downturns of course but has been a fairly steady performer and I am content with it, which is not to say that you would be.....

Charles Stanley info on Z gross Acc here https://www.charles-stanley-direct.co.uk/ViewFund?Sedol=B8N4554

ToriP

AuntLily wrote: »

I think it is too. I only put it down as an indication that I wasn't a gambler and I'm glad I did as there have been some really helpful comments.

We thought about it in terms of our ages and what we would like for the investment.

There is enivitably going to be some ups and downs and the longer the period you can leave it, the more chance you can ride any storms. We decided we can afford to leave it for the long haul if necessary.

As we get older, I imagine our risk appetite will change to mild to none and I would plan to transfer to low risk investment with less fluctuation which would help with retirement planning

bowlhead99

Glen_Clark wrote: »

If you were to switch it into a different savings account would you call it 'spending'?
I just wonder if that word frightens some people off putting some of their eggs into other baskets?

If you move it into another savings account you are clearly not spending it, you are simply moving your cash deposit into another deposit pot which is likely just as guaranteed and insured as wherever the money started out originally.

By contrast, if you move it into an investment which is further up the risk scale, without doing much research in advance, there is a very real risk that a portion of the money will indeed be "spent" on "investment losses" which is something that you did not intend to buy.

The goal of course is to make money over the longer term, and a sensible balanced investment that delivers a range of returns that stays within your range of expectations for the longer term can be a very good thing to buy, and be very much more valuable than a pile of cash that just sits there and is eroded away in real terms by the effects of inflation.

So it's true that you are not necessarily "throwing money away" or "spending money" if you simply exchange your cash for investments. But you should think carefully about what you are doing because if you get it wrong you may be buying more losses (i.e. buying negative investment performance) over and above the amount that you were really willing and able to afford.

Calling it "spending" does help to focus the mind. For example if you couldn't decide whether to buy a petrol Nissan Micra or a diesel Jaguar XJ or a Sony PlayStation 4 or an XBox or a holiday to Snowdonia or New York with your £400 this month, you should think about what you are spending your money on and do some research to see which one suits your needs. Especially if you are going to be committing to spending another £400 on the same sort of thing next month and the month after for a decade.

In this case the OP wanted to "buy" a FTSE tracker because they wanted a cautious or moderate risk investment and they thought it might be suitable. There is a serious risk that they end up with something that isn't wanted, so it's very different from converting a cash deposit with bank A to a cash deposit with Bank B.

If they had thought of it as "spending", and been looking to buy a car, they would have swiftly realised that a lumbering Jaguar diesel estate is not a two door city car. This comes from basic research without necessarily needing to be an expert in the second hand car market. Similarly looking at what a FTSE index is, you don't need to be an investment industry expert to see that the FTSE All Share was about 3275 in early September 2007 and had fallen to under 1800 by early March 2009 and that is not a cautious investment.

Investing £400 a month into that index over the intervening 17 months would have given you a result that most would consider quite scary for a "cautious" investor and could well have resulted in that cautious investor selling out to "get rid". So, you must do research and you must do good research and you should consider that you may be spending money on unwanted losses if your research is just a cursory glance at a factsheet

This is not to put the OP off or belittle them but to highlight the importance of knowing what you are getting into before you get into it.