Advice on drip feeding

george4064

It might be worth speaking with an Independent Financial Advisor, just for a one off consultation to build your portfolio and get you started?

cloud_dog

I'm starting to feel sorry for frenchplonka....

A lot of what everyone is going on about only comes through exposure and with experience. I am an experienced investor (doesn't mean good but certainly experienced).... If you were to ask me my risk profile I wouldn't have a clue. Obviously I'm sure I could Google it and I'm sure there may be a way of obtaining some enlightenment on this in the interweb but even so....

The fact that FP has come/is coming from a DMP position and that they have approx £500 disposable income pm, and has a few thousand in savings, and is asking questions all points to a very positive state of affairs.

FP, my opinion (and it is only that) is to go with one of the early posters advice; go with a Vanguard Life Strategy fund, use some of your disposable income (£100 - £150) to commence investing.

This is not an all or nothing situation and you should continue to use some other of your disposable income to build up a reserve / pot to repay the 0% debt.

Playing_with_Fire_2

If I were you, knowing only what I've read on this thread, I would read Monevator's 'How to invest on a Budget', to get an overview, then the guide to the cheapest/best online platforms to decide who to open the S&S ISA with, then 'Which asset allocation is right for you,' to decide what asset allocations to go for , and finally 'Low cost index trackers that will save you money,' and match the funds to the asset allocation.

If you want to start now and do more research later, read the information sheet on Vanguard LifeStrategy and pick either 40, 60 or 80. This won't be perfect, but it is a good starting point when you are still learning, and you can buy lots of different funds in one go, making it good for monthly contributions (there is often a minimum spend per fund). It will also automatically balance the asset allocation, making it suitable for drip feeding and forgetting.

Yes, asset allocation is the mix of your portfolio, you can invest in global companies, UK companies, Europe, US, Asia, big companies, small companies, etc. By investing in different geographic areas, you reduce the risk of having a big drop in your portfolio if something bad happens that mostly effects businesses based in the UK. This is geographic diversification. It is a similar theory to buying a index tracker rather than individual shares to reduce the risk, as you've already identified.

I'm assuming that you've considered contributing to a pension instead, that you're happy with the risks of investing and that you won't panic sell the first time there is a drop in value. You do need to check out that thing with the DMP, not that you can't afford it, but because of the rules around a DMP. You seem sensible, and you recognise that there is more to learn. There is no problem in asking questions to learn.

Given your level of disposable income, investing around £100-150 per month seems a reasonable amount to start with, learn as you go.

bowlhead99

george4064 wrote: »

It might be worth speaking with an Independent Financial Advisor, just for a one off consultation to build your portfolio and get you started?

I doubt it, because someone on a debt management plan without an emergency savings fund would probably find it difficult to justify spending £200ph now for a tailored consultation on how they should build a portfolio at £100 per month at some point down the line once they've built an emergency fund.

The advice would surely just be to build an emergency fund (to avoid ending up back on another DMP after the next personal crisis), and then once there is a good cash pile in place, put the £100pm into a multi-asset investment fund, having used the next few months researching what investments and platforms are.

Reassess the affordability and look to increase the total monthly invested amount as and when personal circumstances and your other shorter-term savings needs permit. After five years or if the portfolio hits £8-10k, revisit and consider more about what you are investing in and for. If earnings reach the 40% tax bracket, consider diverting some of the monthly investing amount into a pension for the tax relief (if you can live without it 'til your 50s).

You can get those kind of sensible comments for free without spending £500+ on an IFA.

Playing_with_Fire_2

cloud_dog - agreed!! (we cross posted).

If I had waited until I knew everything I'd never have started. It seems that people are trying to look out for FP, but all the advice is coming across as a bit of a downer.

Regarding risk profile, if you've seen a couple of dips and not drawn it all out and you know when something is looking at is too risky for you then you know enough. I did the Simplus test (work offered it to me for free). It was moderately interesting to see where I fit in on a percentile basis to other people, but none of the questions were ones I hadn't thought about before, and I didn't really learn anything doing it.

frenchplonka

Thanks guys great advice and feel like i know more about this already!!

MadMat

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

Are you paying interest on any of those debts? If you are then directing your disposable income towards clearing the debts quicker may be the better move.

paying £100 off a debt charging 19.9% APR saves you more in interest than investing the same £100 would likely gain in any investment fund!

Mat

cloud_dog

MadMat wrote: »

Are you paying interest on any of those debts?

FP has previously mentioned this was 0%.

frenchplonka

Ok so I have had a read through a few articles online and come to some idea of how I want to proceed im going to write it all down then post here see what people think as a first time investment etc. keep tuned