Is it worth starting S&S with small deposits?

imjayw

I’m 24 and have always tried my best to save money, and years ago was advised to open an ISA account to keep the savings. Only recently I have been taking advantage of opening regular savings accounts getting 6% interest, and benefitting from switching bonuses.

I’m now interested in getting involved with stocks and shares, and still doing as much reading and research as I can before I take the first step, but I had a few concerns.

My plan is to keep the S&S money untouched for at least 10+ years, and didn’t want to put all of the money I’ve saved in so was thinking maybe a lump sum of £1000, and monthly deposits of maybe £100/£200.
My concern is, is this too small to get started? Would it be best to save as much as I can through current accounts and once I have accumulated enough, then start S&S?

Also because I plan to keep this untouched for the long run, would a higher risk investment be more suitable? What types should I be focusing on?
Any help appreciated, even a small push in the right direction and I can try and research everything myself.

Thanks

westy22

Now is always the best time to start and for the next 4 months utilise this years allowance before it disappears on 6 April.

The amount you are starting with is not too small but I would choose a platform that has no transaction or fixed charges whilst you are building up your pot. A % based platform such as Hargreaves Lansdown is a good starting point for smaller ISAs http://www.hl.co.uk

Invest in a fund that will give you instant diversification. Just one general UK All Share tracker should be enough for your first £5,000 or so and work on building that up before you add other funds or markets at a later date.

jimjames

If you are investing in funds (which would make most sense for those numbers) then it's definitely not too small amounts.

I started out at £25 per month and then as my knowledge and finances improved I increased it.

imjayw

westy22 wrote: »

Now is always the best time to start and for the next 4 months utilise this years allowance before it disappears on 6 April.

The amount you are starting with is not too small but I would choose a platform that has no transaction or fixed charges whilst you are building up your pot. A % based platform such as Hargreaves Lansdown is a good starting point for smaller ISAs

Invest in a fund that will give you instant diversification. Just one general UK All Share tracker should be enough for your first £5,000 or so and work on building that up before you add other funds or markets at a later date.

jimjames wrote: »

If you are investing in funds (which would make most sense for those numbers) then it's definitely not too small amounts.

I started out at £25 per month and then as my knowledge and finances improved I increased it.

Hearing my deposits are not too small is a great relief! In the future I may increase those deposits but it would always be a minimum of £100 pm.

Thank you westy for the info, I will be looking into HL and what they have to offer.

I was browsing other similar threads and was linked to an article on monevator (I can’t post links) about Vanguard’s LifeStrategy 60 or 80% Equity Fund. Would this be another good option to consider?

I have read over and over never to leave all your eggs in one basket; but this had me confused. If I go with HL or Vanguard, all my eggs would be with them; which is bad?

webnibbler

Do you have a goal in mind for your S&S ISA? For example, is the goal to build up a house deposit in the next 10 years or to supplement an early retirement. Understanding the goal you have for the money really helps to shape the choices which you need to make. I have a simple one line goal written down for each of my investment and savings accounts.

Also keep things simple. As Westy22 suggests, a UK All Share Tracker bought on a percentage based investment platform like Hargreaves Lansdown. would be a great place to start.

webnibbler

imjayw wrote: »

I was browsing other similar threads and was linked to an article on monevator (I can’t post links) about Vanguard’s LifeStrategy 60 or 80% Equity Fund. Would this be another good option to consider?

I have read over and over never to leave all your eggs in one basket; but this had me confused. If I go with HL or Vanguard, all my eggs would be with them; which is bad?

Monevator is a great resource and you won't go far wrong following what's written on that website.

The Vanguard LifeStrategy funds are designed to be one-stop funds for portfolios. This means that the LifeStrategy funds are well diversified across many funds and don't carry the risk having all your eggs in one basket.

There is the tiny risk that Vanguard could go bust. But this is very unlikely and is a risk you would carry with any investment vehicle. Until you have a large amount of money invested, I wouldn't be concerned. Monevator has an interesting article on this very subject: http://monevator.com/assume-every-investment-can-fail-you/

jimjames

webnibbler wrote: »

Also keep things simple. As Westy22 suggests, a UK All Share Tracker bought on a percentage based investment platform like Hargreaves Lansdown. would be a great place to start.

I agree HL is a good place for new investors to get started. I'm not sure just having a single UK tracker is a good idea though.


The suggestion for Vanguard would give you a portfolio using a single fund so that would be a decent option to use.

imjayw

webnibbler wrote: »

Do you have a goal in mind for your S&S ISA? For example, is the goal to build up a house deposit in the next 10 years or to supplement an early retirement. Understanding the goal you have for the money really helps to shape the choices which you need to make. I have a simple one line goal written down for each of my investment and savings accounts.

Also keep things simple. As Westy22 suggests, a UK All Share Tracker bought on a percentage based investment platform like Hargreaves Lansdown. would be a great place to start.

If I were to settle with one goal as a priority it would be to build a house deposit in the next 10 years, but I plan to add other investments with larger contributions for other longer goals such as an early retirement.


A second voice vouching for a UK All Share Tracker sounds like a good idea so it is definitely an option I will consider; but for how long? Stick with just this tracker for the entire 10 years? What else could be an option to include over the years?

webnibbler

jimjames wrote: »

I agree HL is a good place for new investors to get started. I'm not sure just having a single UK tracker is a good idea though.

You're right. One of the higher percentage equity VLS funds would probably be a more diversified choice to start with.

AndyT678

imjayw wrote: »

A second voice vouching for a UK All Share Tracker sounds like a good idea so it is definitely an option I will consider;

Don't think of your £1,000 as an "egg" think of it as 1,000 "eggs" and continue the analogy:

- buying £1,000 of shares in a single company is like putting all 1,000 of your eggs into a single basket - bad idea.
- buying £1,000 of shares in a fund of funds like VLS 80 is like putting your 1,000 eggs into 1,000 separate baskets that are all spread out all over the world.
- buying £1,000 of shares in a FTSE tracker is like putting your 1,000 eggs into say 100 baskets many of which are clustered together and therefore probably more at risk from an individual mishap. But these are UK based baskets and you may be more comfortable with that familiarity.

It all depends what you want to own. If you like HSBC, BAT, BP, GSK etc... but don't fancy owning any part of Apple, GE, Samsung, SAP etc... then buy into the FTSE. If you fancy owning some of a wider selection of companies then cast the net wider.

imjayw

AndyT678 wrote: »

Don't think of your £1,000 as an "egg" think of it as 1,000 "eggs" and continue the analogy:

- buying £1,000 of shares in a single company is like putting all 1,000 of your eggs into a single basket - bad idea.
- buying £1,000 of shares in a fund of funds like VLS 80 is like putting your 1,000 eggs into 1,000 separate baskets that are all spread out all over the world.
- buying £1,000 of shares in a FTSE tracker is like putting your 1,000 eggs into say 100 baskets many of which are clustered together and therefore probably more at risk from an individual mishap. But these are UK based baskets and you may be more comfortable with that familiarity.

It all depends what you want to own. If you like HSBC, BAT, BP, GSK etc... but don't fancy owning any part of Apple, GE, Samsung, SAP etc... then buy into the FTSE. If you fancy owning some of a wider selection of companies then cast the net wider.

Thank you for an amazing and simple explanation!


I'm going to look more in detail in the Vanguard LS 80. From my small understanding, it covers a slightly above average risk; what would be the absolute minimum time frame to invest in this package? Would the 60% be better?