Advice on drip feeding

frenchplonka

colsten wrote: »

I am not 'looking out for you', I am just trying to give balanced comments.

You have provided a bit more information that explains why you may be unable to get other current accounts right now, and why a cash ISA might be the best place for your money.

Being on a DMP isn't good enough reason to have £1K linger in a TSB Plus without earning interest. It's also not a reason to throw spare cash at investments you don't understand.

I don't know whether your DMP prohibits you from building up an emergency cash fund - though if it did, it probably would also prohibit you from building up any investments, whether inside or outside an ISA.

I appreciate you might not want to lay your entire financial situation bare on here but I do think you are not in control and lack financial knowledge. You might be able to get some confidential assistance from your CAB or from Money Advice Service.

My opinion is, based on what you have posted in this thread and others, that you shouldn't go anywhere near investments before you fully understand your financial situation and what investments are about.

I am out now as I have contributed as much as I can to this thread.

Surely the fact I have 500 spare a month doing nothing says that my financial situation is pretty rosy infact better than most people? My debt is under control and being paid off again a plus point the only negative i found is i'm lazy with moving money around to earn the best possible % not sure if anyone else agree with this breakdown of my situation

frenchplonka

I have started reading the links provided to the monevator and DIY Investor and I really cant see what downside I can have 'investing' extra money where I understand the risks?

masonic

frenchplonka wrote: »

Surely the fact I have 500 spare a month doing nothing says that my financial situation is pretty rosy infact better than most people? My debt is under control and being paid off again a plus point the only negative i found is i'm lazy with moving money around to earn the best possible % not sure if anyone else agree with this breakdown of my situation

Based on what you have said, I'm assuming that if you lost your job and had no money coming in at all, you could survive on your cash savings for >3 months - perhaps a lot longer depending on the size of your ISA (and continue to meet your obligations from your debts). If that's the case, then there isn't any reason to rule out investing. A 3 month emergency fund would be considered quite small and £100-£150 out of your £500 disposable income would allow you to build up cash reserves while at the same time get to grips with investing.

I do agree with costen in so far as you need to do more research into investing and you have been provided with some good websites to read in order to learn more. Spend a Sunday afternoon doing some reading - it really doesn't take long to digest enough information to formulate a plan.

frenchplonka

masonic wrote: »

Based on what you have said, I'm assuming that if you lost your job and had no money coming in at all, you could survive on your cash savings for >3 months - perhaps a lot longer depending on the size of your ISA (and continue to meet your obligations from your debts). If that's the case, then there isn't any reason to rule out investing. A 3 month emergency fund would be considered quite small and £100-£150 out of your £500 disposable income would allow you to build up cash reserves while at the same time get to grips with investing.

I do agree with costen in so far as you need to do more research into investing and you have been provided with some good websites to read in order to learn more. Spend a Sunday afternoon doing some reading - it really doesn't take long to digest enough information to formulate a plan.

Cheers for the replies in my short reading I think that I will start with investing in Index Trackers that's where I think the money will be safest but i'm still reading so please don't slate me

AndyT678

frenchplonka wrote: »

Cheers for the replies in my short reading I think that I will start with investing in Index Trackers that's where I think the money will be safest but i'm still reading so please don't slate me

If you think that then you definitely need to keep reading. Index tracker does not equal "safe".

frenchplonka

Really? this is why I joined here least i get some opinions by safe i mean as say i bought 100 apple 100 bt 100 sainsburys and 100 joe blogs shares surely investing in a tracker which has a wider spread of companies etc is safer?

frenchplonka

Im not after something where there is no risk but I also dont want something that is so safe it will only give me a tiny return after 10 years

frenchplonka

Index investing is all about simplicity, so I’ll try to keep this brief.

When you invest in an index fund, it’s like putting money into every single company tracked by that index, for just a tiny fraction of the cost.

Since you own a bit of every company, your index investment is wholly aligned with the returns of the stock market segment tracked by that index – as opposed to the performance of a fund manager (with an active fund) or individual companies (with your own stock picks).

Track the S&P500 or the FTSE 100 via a cheap index fund and you’re guaranteed to get the market return each year, minus <1% for fees. (I’m ignoring small tracking errors for now as insignificant.)

Index investing works because:

Over the long-term, the return on a broad spread of stocks has usually beaten cash or bonds.
Index investing enables you to capture this superior return at a low cost.

Thats where I got my safest assumption

AndyT678

Investing in a fund that tracks the FTSE 100 for example is certainly safer than piling all your money into one stock such as BT. That doesn't mean that it's safe, your investment could easily lose 50% of its value in a couple of days. How would you feel about that?

Also the FTSE 100 is a pretty naff index. Lots of mining and banking but light on technology and manufacturing so maybe S&P would be better? But then that increases your currency risk and you're still missing large swaths of the world economy. So what is the answer?

Start by figuring out your risk appetite and desired asset allocation then go from there. And if you don't know what that means then keep reading until you do.

frenchplonka

My Risk appetite is not conservative at all maybe i'm being blazie but its something i'm willing to drip feed into and forget about for 10 years.

As for the Asset allocation i'm guessing you are getting at what industries or sectors my investment tracks or reflects or maybe the mix up of my portfolio say 70% in UK top 100 and 30 in overseas im guessing thats what your getting at???

Im not asking for the silver bullet and the advice i have so far has had me reading, as a new investor im likely to make mistakes but better to make them on day one than on day 1000 when my fund has more money in it at risk