Student Investor (wannabe)

tyster

Hello MSE-ers, I'm Ty.

Now the pleasantries are done, I'm going to get straight to the point.
I'm 19 and currently a (sponsored basically an apprentice) student studying for a HND, as i have a stable income until 2018 I would like to start investing, I've got enough put away to fall back on should something go wrong, and feel like I am ready, having read these forums and a book "Smarter Investing" by Tim Hale. BUT I would like to start only by investing small amounts - £50 at first, then £100 and so on... and this is where I start to get lost
What sort of investing product do you think I should use to start with? obviously a lot of people on here advise not going straight into stocks and shares.

Am willing to accept the risks hat come along with investing just need a little help with the above questions. if you need to know more, please do ask and I look forward to reading your replies!

Thanks in advance!
Ty

JohnRo

I don't think it's accurate to say contributors advise against going into stocks and shares, what they often advise is the most cost effective and practical way to do so. Which is the collective investment route.

A single multi asset fund is the obvious candidate, on a platform that charges nothing for trading funds and has a low annual custody fee.

Playing_with_Fire_2

Hi Ty, after reading Tim Hale, I got an ISA with SelfTrade (it is free as long as you make a trade every quarter). I then bought some Life Strategy funds due to the low charges. You can choose to have 0, 20, 40, 60, 80, or 100% in equities (the whisky) and the rest in bonds (the water). The website Monevator is really good for learning more.

Are you sure that you've thought about the timescales, attitude to risk and that you might want the money when the stock market is down?

tyster

JohnRo wrote: »

A single multi asset fund is the obvious candidate, on a platform that charges nothing for trading funds and has a low annual custody fee.

Hi JohnRo - I will look into these, having had a glance over them, I agree they may be ideal for what i'm looking for! do you have any particular recommendations?

Playing_with_Fire wrote: »

Are you sure that you've thought about the timescales, attitude to risk and that you might want the money when the stock market is down?

Hi Playing with Fire - Timescales its for the future 5years+. in regards to risk and needing the money, I see that as part in parcel of investing, there is always the risk and you HAVE to be able to accept it, in my opinion anyway.

BLB53

What sort of investing product do you think I should use to start with? obviously a lot of people on here advise not going straight into stocks and shares.

'Smarter Investing' is a good choice. If you are sold on the recommended route of index funds then I would suggest the Vanguard Lifestrategy 60 or 80 via a low cost platform like Charles Stanley Direct.

If you are investing relatively small sums then you do not want to incur any charges for buying.

george4064

Welcome to MSE tyster. I want to start off by saying well done for doing some research/reading before getting stuck in, too many people on here ask questions/start before reading the basics/background of investing.


I actually starting investing myself at 19, but fortunately I was working at a stockbroking firm then (and still work in financial services) so all these investment products are what I work with and I know a lot about them.


As you have already opening an ISA with SelfTrade, I'll skip all the which platform should you consider blah blah.


In terms of investing, very broadly speaking there are three types of investments you should consider;


- Funds aka Unit Trusts (you invest in a pool of assets managed by a fund manager, this gives you diversification across many companies in a cost effective way. There are many different funds that cover different types of companies, geographical areas, size of companies etc..)

- Investment Trusts (similar to a fund, you invest in a pool of assets managed by a investment manager, however these are quoted on London Stock Exchange like any other normal share [see below]. Generally speaking investment trusts have lower charges than funds, and over the long-term majority tend to outperform their unit trust peers. HOWEVER, investment trusts are more risky that unit trusts for a few reasons; 1. they are allowed to borrow money to invest, known as gearing, which means they can use this extra money to boost returns, however if investment trust falls then it will fall further by investing borrowed money. 2. Investment trusts can swing to a premium or discount to its NAV (Net asset value), this is the actual value of all the underlying holdings divided by the number of investment trust shares on the market. So you'll see investment trusts trading at a premium to their NAV, as well as some trading at a discount to their NAV. This makes them more volatile than funds, as funds only move by tracking the underlying investments not by demand and supply with an investment trust.

- Individual stocks (pretty self explanatory, most risk here but most potential reward on offer).


I would say the key is diversification, and try to gradually build up your portfolio over time by feeding more money into your ISA and (hopefully!) as your assets grow. Re-investing dividends is a big thumbs up for me too, this creates a compounding effect and can reward you handsomely if you stick to it.


The easy/simple option is to invest in Vanguard LifeStrategy funds, you can't go wrong with them but you can certainly do better if you have the time to do the research.