I want to invest my £5,000

xylophone

You might start a stocks and shares ISA using your £5000, and contribute monthly thereafter.
Start here http://monevator.com/category/investing/passive-investing-investing/

DrSyn

http://www.comparefundplatforms.com/home

http://monevator.com/find-the-best-online-broker/


Remember the less you pay in charges the more money ends in your pocket!

grey_gym_sock

a relatively simple way to start investing is to buy a fund which gives you a complete investment portfolio in 1 package - this can be called a "portfolio fund" or a "multi-asset fund".

some examples of portfolio funds:
- vanguard lifestrategy ( see http://monevator.com/vanguard-lifestrategy/ )
- legal & general multi-index
- blackrock consensus
(actually, those are 3 ranges of portfolio funds: within each range, there are a number of funds, with different risk levels, to choose from.)

you buy your choice of fund on a platform. 2 cheap platforms, for small (less than £20,000) amounts invested are:
- charles stanley direct
- cavendish online

put it in a (stocks & shares) ISA. (the platform provides the ISA wrapper.)

either drip feed your money in month by month, or put it all in at once. your choice.

Flobberchops

Investing doesn't necessarily mean stocks and shares. Had the OP considered Peer to Peer lending, for example? Sites like Moneything offer up to 12% APR and without all the barriers to access that investment platforms have (minimum holding to make it profitable, trading fees, inactivity fees, yada yada).

Are you eligible for a 4% HTB ISA? Or willing to open one of the 3/4/5% current accounts? Call me a boring git but I'd like to know at least some of my money was making guaranteed gains and FSCS protected.

Eco_Miser

dutchcloggie wrote: »

By the way, I know there is a wealth of information at my fingertips. However, I have no understanding of financial matters and maths and numbers are a mystery to me (I'm one of those people who can speak multiple languages but struggles with maths).

Forget about maths, how are you at simple arithmetic? (They are actually quite different things.)
If you can count, add, subtract, multiply and divide, and know that a percentage is a fraction times 100, that's all you need for investing, and a calculator will do most of that for you.

Read here, monevator and other financial blogs, take note of investments mentioned, (such as in grey gym sock's post above), do your own research as to whether the investment is suitable for you, likewise with brokers/platforms.

Cactus_Jack

I'm close to going for Vanguard Lifestrategy, using Charles Stanley Direct. It seems a pretty decent, low cost way of starting.

What I am struggling to gain knowledge of, is any short term investments for example, 5 years or less. I am fine growing my money but it'd be nice to get some faster income/accumulation too.

JohnRo

I have decided I can afford to risk lose the money in exchange for potentially growing it.

The risk of losing the money is minuscule if you purchase a balanced global multi asset fund as per GGS post above. Personally I'd favour a strong equity bias if it's a long term endeavour. Admittedly it won't make you rich any time soon but will provide you with superior growth based on historic returns.

I have read a lot of things and I just cannot wrap my head around the financial world.

If you're not good with numbers and don't know anything about investing then keep it simple, it doesn't have to be complicated to be any good, pick a cheap multi asset fund, pick a cheap platform to use, purchase then forget about it until you feel the need to do something with it.

The one caveat is the platform fees based on the investment balance, they will need to be paid and typically require a small cash balance to be maintained. To make sure they're covered it would need only a small amount on £5000, just over £1 a month at 0.25% pa.

You could just hold a £15 cash balance and maintain it annually.

BananaRepublic

redux wrote: »

Start reading about collective vehicles such as investment trusts, unit trusts and OEICs.

Some still have their own savings schemes, monthly from £25 or £50 upwards, lump sums from £250 or so, or you can buy via a choice of brokers.

See above.

Shares are very risky, you really don't know if the company will suddenly go breasts up, or make a mint. I know from first hand experience that the company prospectus and balance sheet may hide a multitude of sins. You can reduce risk significantly by buying shares in lots of companies. And for most of us the best way to do that is via unit trusts and other collective investments. You can buy direct, or from a bank, but brokers such as Torquil Clark, Fidelity, and so on will give you significant discounts, usually refunding the initial charge. It makes sense to find a broker who provides online facilities to track the performance of your investments, allowing you to do the modern version of sitting up at night counting your sheckels and cackling.

So the next question you may ask is which fund to choose. Well, you need to decide on the sector such as UK small companies, or biotech, and the management style i.e. passive or active. Passive, also called trackers, are perhaps the safest for the novice, and you reduce risk by spreading over multiple sectors e.g. UK, Europe and US. You can see historical performance figures online, AJ Bell and many others provide them for free. Obviously the past is not indicative of the future, but in lieu of foresight, it's the best we have. The other advice here about funds seems good.

Oh yes, and for shares you really need to invest for the long term. The markets bounce up and down, but over 5-10 years you should make a decent gain from dividends and share price rises.

JohnRo

BananaRepublic wrote: »

So the next question you may ask is which fund to choose. Well, you need to decide on the sector such as UK small companies, or biotech, and the management style i.e. passive or active....

With £5K to invest that sounds like complicating a simple process.

To the OP, if you wanted to take on more risk with the potential to reap a higher reward without complicating things, then there is also an option to go for 100% global equities in the Vanguard Global Small Cap Index Fund albeit with a heavy US bias.

It tracks the MSCI global small cap index, so it is geographically diverse to a certain extent and holds thousands of individual companies.
It is also, as the name suggests, stuffed with companies smaller than the mid, large and mega caps in the major global indexes.

That said it contains companies that have established themselves so it does tend to rise and fall in tandem with the broader global market but has outperformed it over the longer term.

The trade off is that the magnitude of the peaks and troughs will be greater.

BananaRepublic

JohnRo wrote: »

With £5K to invest that sounds like complicating a simple process.

And yet you effectively go on to do exactly what I suggest. :T