If you could get 5% in a bank account would you bother with the stock market?

thebananapimp

I'm in the process of working through the latest MSE Savings tips but I'm interested in a small portfolio of shares.

Brexit has brought uncertainty and will do for a couple of years but nonetheless - if you were to enter the market for shares with £5000 where would you sign-up to and what would you invest in?

Curious to hear some responses. :undecided

JohnRo

Exactly the same as before Brexit, a globally diversified portfolio of financial assets.

thebananapimp

JohnRo wrote: »

Exactly the same as before Brexit, a globally diversified portfolio of financial assets.

How would you make that happen independently of funds or services like Nutmeg? Let's assume I'd like to take responsibility for my the contents of my portfolio.

JohnRo

I understand the Nutmeg comment but what do you mean by independently of funds?

It's not feasible to hold international equity and assets around the world any other way than through various bespoke financial instruments offered for sale in the UK, unless you're an extremely wealthy globe trotter.

TheTracker

thebananapimp wrote: »

I'm in the process of working through the latest MSE Savings tips but I'm interested in a small portfolio of shares.

Brexit has brought uncertainty and will do for a couple of years but nonetheless - if you were to enter the market for shares with £5000 where would you sign-up to and what would you invest in?

Curious to hear some responses. :undecided

Tax status matters a lot. The advantages for SIPP and ISA shouldn't be underestimated.

Personally, I would fill £50k in non-risky high interest current accounts at circa 3.7% before inflation and tax before heading near risk-laden equities, where the long term expectation is maybe 4-6% above inflation. No doubt some people would agree and others find that very conservative. But if I was in a situation where the employer matched pension contributions it'd be a different matter.

And don't put money into equities if you think you'll need all the money within 10 years.

Eco_Miser

To answer the title question, if I had only £5000, I'd keep it in 5% current accounts drip feeding 5%/6% regular savers.

If I had just £5000 spare after making provision for all expected expenditure for a year or two, and all the 3% or better accounts filled, I'd probably put it in a Vanguard LifeStrategy fund, with a low cost platform. Buying individual shares at that level would be too expensive, and not diversified enough.

thebananapimp

JohnRo wrote: »

I understand the Nutmeg comment but what do you mean by independently of funds?

I meant going directly to a stock-broking service and purchasing individual stocks, rather than investing in a fund. I wish I was an extremely wealthy globe trotter

Thanks TheTracker and Eco Miser - good advice. I guess it pays to be sensible.

dunstonh

How would you make that happen independently of funds or services like Nutmeg? Let's assume I'd like to take responsibility for my the contents of my portfolio.

You wouldnt use Nutmeg for a start as it doesnt meet your objectives.

However, you are only talking about £5000. There is really no point trying to build a DIY portfolio on £5000. Complete and utter waste of time.

1 - what asset allocation models are you going to use?
2 - How often are you going to update the portfolio to match the latest model?
3 - if the model says put 3.5% in Japan, then that is just £175. Is it worth it?
4 - Do you have the knowledge and understanding to run such a portfolio?
5 - Until you get to around £10k+, it really matters little where you invest as the differences in the returns do not make that much of a difference. e.g. 1% on £5k is just £50.

You are just better off using a multi-asset fund until you get the knowledge, understanding and a larger amount.

Rollinghome

thebananapimp wrote: »

I'm in the process of working through the latest MSE Savings tips but I'm interested in a small portfolio of shares.

Brexit has brought uncertainty and will do for a couple of years but nonetheless - if you were to enter the market for shares with £5000 where would you sign-up to and what would you invest in?

Curious to hear some responses. :undecided

I wouldn't be investing directly in shares with £5k and if I did I wouldn't be looking for tips from people unknown to me on any message-board.

Nor would/did I invest directly in a portfolio of shares until I could have at least 15 holdings with at least £5k in each. For anything less than than that the additional returns are unlikely to be sufficient an incentive for anyone to give each holding the attention it requires.

Funds would be more suitable but even then I certainly wouldn't bother for £5k if I could get 5% on it without risk from a bank. You need to decide whether the aim is a hobby or to increase your wealth. I'd prefer to build St Pauls cathedral out of match-sticks for a hobby and maximise the return on my money. Those who invest for excitement generally don't make much money.

DragonQ

I have about £20k earning 4-6% in various accounts and a good pension. I suppose I should get an S&S ISA at some point but I'm also going to need a new (used) car soon and paying cash will probably net me a better deal anyway so I'm content with my setup right now.

bigadaj

DragonQ wrote: »

I have about £20k earning 4-6% in various accounts and a good pension. I suppose I should get an S&S ISA at some point but I'm also going to need a new (used) car soon and paying cash will probably net me a better deal anyway so I'm content with my setup right now.

When buying a car then it's generally cheaper to take the finance, that way the dealer gets his commission from the finance company, then settle the finance after a few weeks.