Advice for first time UK based investors

balmofgilead

A group of friends and I (four of us in total) are planning start an investment fund in December, in which we each all invest £20 a week (£80 in total weekly... £320 in total monthly), and buy a particular stock once a month after carrying out some due diligence. In doing so, we hope to learn more about building a well balanced, diversified portfolio, and grow in confidence to allow us to do it ourselves. We expect it to be a 9-12 month project, and project that most of the investments will be long term. Judging by our current situation, I was wondering if anyone could recommend an UK based broker to process all of our trades, and to assess whether our investment strategy is reasonable.

dunstonh

Don't do it.

Your amounts are too small to do what you want and the dealing costs will be too high. You wont be able to use the ISA wrapper.

By all means talk about investing between you but each do their own investments and until you have a larger amount, stick to funds.

Biggles

If it's just to learn and gain confidence, as you suggest, then go ahead. But, as dunstonh says, don't expect to make a profit unless, maybe, you adapt your scheme somewhat. Maybe buying shares every three months and making it a three-year project might give you more chance?

balmofgilead

dunstonh wrote: »

Don't do it.

Your amounts are too small to do what you want and the dealing costs will be too high. You wont be able to use the ISA wrapper.

By all means talk about investing between you but each do their own investments and until you have a larger amount, stick to funds.

Thanks for your advice.

Firstly - can you recommend any funds for us to have a look at?

Secondly - how much is upfront is required to get into share dealing.

xylophone

You might all do some reading before you do anything.

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

Smarter Investing by Tim Hale

http://www.moneyobserver.com/how-to-invest/how-to-set-investment-club

dunstonh

Firstly - can you recommend any funds for us to have a look at?

Such activity is regulated by the FCA and would put me in breach. Even if we could, it would be impossible on the criteria you havent given.

You need to do some research first.

Secondly - how much is upfront is required to get into share dealing.

Probably not worth it on under £500 per purchase. £1000+ more ideal

panter

Why are you and your friends doing this? Is it to have fun as a group? Is it to make money? Why as a group and not as individuals?

If it's to have fun, well, OK. But buying small numbers of shares will cost you a lot and you will almost certainly not strike lucky and buy the share that will make you all rich.

It's a lot less entertaining, but if you are investing to make long-term money then do it individually and perhaps start off by investing in something like a FTSE all share tracker fund (eg this one) or maybe a worldwide index tracker. If you are each putting £80 a month in via a direct debit that is a great way to invest. Perhaps you could each set up an account with someone like Hargreaves and each select different funds, then meet up every now and again to see who is doing best, and why, and develop your experience that way.

Playing_with_Fire_2

Put your money in a cheap tracker, then use a free virtual portfolio such as Power Portfolio by thisismoney or play the London Stock Exchange fantasy trading game to debate and learn about stocks and due diligence. You could every use a spreadsheet to track which stocks are doing well or not. Weenie at QuietlySaving.blogspot is running a (mostly) virtual stock picking league if you want to have a look at how it can be done.

You can then compare the performance of both (don't forget costs!).

In terms of funds, I like Vanguard (other excellent providers are available), if you like UK stocks then I would think about the FTSE 100 or All Share, or a Global tracker (or Global developed world) if you want a more international flavour.

If you will be buying funds regularly then SelfTrade has no fees for buying funds as long as you buy every three months. There are charges to sell, and Monevator has a good comparison table.

snowqueen555

You mentioned funds and also shares.

A few brokers charge funds with annual charge, as little as 0.20%, I am also looking to open a S&S ISA with an online broker.

Shares usually have a dealing fee, from £5.95 to £11.95 per trade which is why most poeple on here recommend you don't do that.

http://monevator.com/compare-uk-cheapest-online-brokers/

You can download fantasy apps where you don't use real money, that s worth a look.