Advice on drip feeding

frenchplonka

Im currently working full time and in a position where I have more coming in than I have going out this has prompted me to think about investing I have posted here before regarding buying pure sures but I don't know enough about this to really put the money behind it.

I have heard of funds which I am assuming a group manages a pot of money and invests it on behalf of the clients into shares isas etc?

I have around £100 - 150 a month I can put away and not think about and my attitude to risk has always been high so im willing to ride out any bumps over the 5-10 year period.

So here's my questions:

1) Is it even worth investing £100 - 150 on a monthly basis into a fund?

2) Who would you recommend in terms of good website, decent costs, ease of use for a new user to investments.

3) Do funds pay dividends?

Im sure I have more questions but payday is nearly here and i'd like to get the ball rolling

colsten

frenchplonka wrote: »

I have posted here before regarding buying pure sures but I don't know enough about this to really put the money behind it.

Pure sures?

Sounds like a guaranteed scam.

frenchplonka

colsten wrote: »

Pure sures?

Sounds like a guaranteed scam.

Sorry just my way of saying instead of investing in say a ISA or FUND I buy shares in things like apple BT Vodaphone

princeofpounds

1) Is it even worth investing £100 - 150 on a monthly basis into a fund?

Well, what you get out is dependent on what you put in, but yes, it is definitely worth investing surplus cash over a long term time period. Investing, on average and over the long term, tends to grow the value of the cash.


The key to investing over a lifetime is not to get freaked out during periods of poor performance. You might find after 5 years there is a crash and your investment has gone nowhere. But that is exactly the time to keep contributing - over time the averages play out.

2) Who would you recommend in terms of good website, decent costs, ease of use for a new user to investments.

I'm sure other posters will name names, I have only interacted with a limited set of providers. But any of the well-known brands should give you a decent service and a good range of products, you just want to pick one that has fees towards the lower end of the scale (both at a fund level and at a platform level).

3) Do funds pay dividends?

They can do. There are typically two types - accumulation units or income units. The former reinvests the dividends in the fund automatically. The latter pays them out.


Which is the optimal choice is normally determined by your tax situation - the investment returns will be effectively equivalent with either option (as long as you reinvest your extra dividend income).


Given you have few investments, you are probably best with accumulation units as you won't be paying capital gains tax, as you won't have to keep track of any income, just what you buy and what you sell.


And you probably want to be investing those funds within an ISA 'wrapper' (an ISA is just like a normal account, which can hold a wide range of normal investments, but registered as an ISA with the government which can help reduce tax a few years down the line)

pure sures

pure shares, I think you mean.


If you want to take a view on individual companies, you can do. But most beginner investors are recommended to start with funds.


The reason for this is that diversification is provided simply, cheaply and efficiently by funds.


Diversification is a good thing because on average you take much less risk for the returns you generate than in individual stocks.


The easiest way to think about this is that a diversified portfolio can fall a lot, but will - short of nuclear war - never go to zero. An individual company may well go to zero.

frenchplonka

princeofpounds wrote: »

I'm sure other posters will name names, I have only interacted with a limited set of providers. But any of the well-known brands should give you a decent service and a good range of products, you just want to pick one that has fees towards the lower end of the scale (both at a fund level and at a platform level)..

Thanks could you please explain what you mean in terms of fund vs platform

BLB53

So here's my questions:

1) Is it even worth investing £100 - 150 on a monthly basis into a fund?

2) Who would you recommend in terms of good website, decent costs, ease of use for a new user to investments.

3) Do funds pay dividends?

1. Yes - get the ball rolling and try to increase the amount as and when.

2. Lots of great info on the likes of https://www.monevator.com and https://www.diyinvestor.blogspot.co.uk also Motley Fool etc.

If I was starting off now I would open a diy S&S isa with a low cost broker like Charles Stanley Direct and invest my monthly drip feed into something like Vanguard Lifestrategy index funds - fire and forget is a good strategy imo

3. You presumably will not need income so select the accumulation option (acc)

Good luck!

colsten

frenchplonka wrote: »

Sorry just my way of saying instead of investing in say a ISA or FUND I buy shares in things like apple BT Vodaphone

frenchplonka wrote: »

Thanks could you please explain what you mean in terms of fund vs platform

You ought to take a really massive steps back if you don't understand the difference between a platform and a fund, or if you think an ISA and a Fund are the same, and that there is anything 'sure' about shares. And that a conversation on an internet forum would sort it all out for you before your next payday.

I would suggest your best bet is to put your monthly surplus cash into a good interest-paying current account for now, and then spend a few months reading up about and understanding investments. There's a great thread with a collection of recommended reading on MSE but you can take a shortcut and start with monevator.com.

Once you know a lot more about investing, and made sure you have no debts and a decent size emergency cash fund, you can then take some or all of your money from your savings/current account and invest it.

colsten

BLB53 wrote: »

1. Yes - get the ball rolling and try to increase the amount as and when.

We know just about nothing about the OP's financial circumstances but we know he is a novice to investing. Given this, I think it is irresponsible to recommend the OP should "get the ball rolling" with investments.

masonic

colsten wrote: »

We know just about nothing about the OP's financial circumstances but we know he is a novice to investing. Given this, I think it is irresponsible to recommend the OP should "get the ball rolling" with investments.

Well, if memory serves me correctly, we know the OP works for Plusnet and is planning to max out on a BT sharesave scheme shortly. Given his last plan was to go right ahead and buy a load of BT shares on the open market, we seem to be moving in the right direction at least...

frenchplonka

colsten wrote: »

You ought to take a really massive steps back if you don't understand the difference between a platform and a fund, or if you think an ISA and a Fund are the same, and that there is anything 'sure' about shares. And that a conversation on an internet forum would sort it all out for you before your next payday.

I would suggest your best bet is to put your monthly surplus cash into a good interest-paying current account for now, and then spend a few months reading up about and understanding investments. There's a great thread with a collection of recommended reading on MSE but you can take a shortcut and start with monevator.com.

Once you know a lot more about investing, and made sure you have no debts and a decent size emergency cash fund, you can then take some or all of your money from your savings/current account and invest it.

Don't get me wrong i'm not dumb or anything I understand there are differences as you mentioned other things this is what i'm currently doing.

1) have 3k in the TSB current account plus which pays a decent %

2) I pay into a cash ISA with TSB currently this is around £125 a month

3) Debt wise i have around 3k of debt all historic and not due to fall off my credit report till 2018 so makes no sense to pay all that off in one lump sump as it wont improve my attractiveness to lenders so paying that off till 2018 interest free.

As for my 'newbie' to shares v isa v funding and platforms this is why i'm here to hopefully be educated like i said i can put another 100-150 away in something more risky that has no guarantee of a return and in the full knowledge i could lose money (less likely with a fund as opposed to investing my money into single companies on my own research)

not sure what u mean about sure shares as i thought id explained that

frenchplonka

without going into what I earn v what I pay out i easyily have a disposable income per month of around £500