Stocks and shares isa- absolute newbie needs advice

Changingoftheguard

Hi there,

New to the forum!

My grandad left me a bit of money this summer. He wasn't a rich man, but a working man who had investments.

I currently have the money sitting around. My mother has advised me to leave it in my bank account and thinks it's ridiculous that I would consider "gambling it". But for me, I know that my grandad told me that all you need is a leg up and money makes money. I don't think he would think it was foolish to invest.

Trouble is, I am clueless as to where to start. I don't know anyone who knows about this sort of thing. There are lots of links on here and lots of guides, but people on the investment boards on this forum have disputed the Accuracy of this. I wouldn't know where to start, or how much money to use. Do I buy shares? How do I get them? How do I manage them?


I'm not a high earner by any stretch, live modestly, and may need a few grand to move house with and not planning on using the money for say 3,4 years maybe. I won't be investing it all, just a very small amount (what sort of amount should you start with?) whilst I work out what to do. It's just that I don't know where to start.

Any ideas for total beginners?

Thanks! :beer:

chelseablue

Following this with interest

Eco_Miser

I'm sorry for your loss.

Don't buy shares, buy funds (The funds buy the shares, in many more companies than you could).
But if you expect to spend this money within 5 years, keep it in high-interest bank accounts instead.

In any case keep at least six months normal spending plus any planned spend (eg new car, holiday) in bank accounts.

Just about everyone discussing investments here agrees that investments will beat cash over the long term (at least 10 years), but they may disagree about which investments to hold.

If you buy funds or shares or bonds you would normally use an online broker platform (and pay for the privilege, one way or another).
Monevator has a comparison table to help you decide which would be best for your circumstances. Monevator also has much other useful opinion.

Archi_Bald

Changingoftheguard wrote: »

I'm not a high earner by any stretch, live modestly, and may need a few grand to move house with and not planning on using the money for say 3,4 years maybe. I won't be investing it all, just a very small amount (what sort of amount should you start with?) whilst I work out what to do. It's just that I don't know where to start.

If 3 or 4 years is your timescale, you should not be investing in anything at all. Instead, you should be saving, probably in interest paying current accounts and in regular savings accounts. You don't say how much "a bit of money" is, so it's not really possible to give you further details.

dunstonh

not planning on using the money for say 3,4 years maybe.

Unless you can go 5-10+ years, then you should stick with cash savings. Investments are long term. You get growth years, loss years and nothing years. You need to be able to average out the good, the bad and the ugly. 3-4 years is not enough. For example, a stockmarket crash could occur and that would typically take 18 months to 3 years to recover. In a 10 year timescale, that is easy but you havent got that time with just 3-4 years.

Changingoftheguard

Thanks everyone for your advice. Really interesting read and hope it would help others. Could I invest a small amount- in a fund, say £1000, £2000 would it be worth it? I'm talking about investing maybe a couple of thousand and then I would probably do this for the longer term, but I think I would probably use the bulk of the cash for a deposit, you see. at least that's what my initial thoughts are, but not that I know anything about this!

AlanP_2

You can certainly invest 1 or 2K as lump sum with an online platform but make sure you are comfortable leaving it to do its thing for 5-10-15 years or longer and that you can live with it dropping by 10 - 40% at times before it recovers and grows again.

Having access to CASH as you save for a house deposit is very sensible though, you may need that in 12, 18, 24 months so don't want to be in a position where a falling market could delay your purchase. Lots of good interest paying current account options available that are discussed in various threads on here.

bigfreddiel

Don't buy funds either, by etf's a lot cheaper, and just as good and diverse, because all you need to do is create a passive ETF portfolio. Check out monevator web site.

And don't do this if you're not going to leave it invested for at least 5 years, preferably 10+

And don't bother going down this route with less than the full ISA allowance.
You must use an ISA to eliminate tax and any record keeping for your tax return.

Invest £15k each year for the next 10 years and you will accumulate a tidy sum.

Good luck

colsten

bigfreddiel wrote: »

Don't buy funds either, by etf's a lot cheaper, and just as good and diverse, because all you need to do is create a passive ETF portfolio.

If you are recommending ETFs, please do at least tell people that they need to understand the different types of ETFs.

I am not saying ETFs are not good - indeed, I got some myself - but it is just plain wrong to suggest Funds couldn't be cheaper/better/easier than ETFs.

Changingoftheguard

okay, so here can I ask about ETFs?

BLB53

Here's a link to an article on Monevator

http://monevator.com/etfs-vs-index-funds-differences/

and a link to their passive investing page

http://monevator.com/category/investing/passive-investing-investing/

it would be well worthwhile taking a little time to read through some of the excellent articles so you can make a more informed decision.

Personally I like the Vanguard Lifestrategy index funds.