Which Platform to buy a Index Tracker Fund?

Jenegade

I am VERY new to investing money, as in I have never invested any and have no savings to currently invest. My plan is to to set up a DD to invest £100 a month into an Index Tracker fund, where I can let the money grow over time, hopefully giving us money to live on when we would like to retire. The amount of money we can put in each month will hopefully increase over time, but I want to start now to let the money accumulate.

As a newbie I really don't know which platform to buy from and whether I should go for a FTSE 100 tracker, which was my original thought. Since Brexit, I think maybe I should use a world tracker, but don't know if that's wise with such a limited amount to invest? I also don't want to be paying much in costs to a fund manager, but I don't know if that is wise?

Any advice would be appreciated. Thank you.

Dird

First, forget about investing. If you have no savings then you need to save. Investing in a tracker then having the washing machine/car break & you needing to take a 8% AER loan isn't the way to go.

After you have at least £5k savings then you should invest in LifeStrategy 100% or the Fidelity world index fund. Anything but FTSE 100. But not before your £5k savings

Jenegade

Thank you! When I say we have no savings, we have no current savings, however, we can easily save a couple of hundred a month when we cut back. Enough for a new dryer or car maintenance, which I put aside in another account for emergencies, still giving us another £100 or so for investing. What I guess I really mean is that I haven't got several thousand in the bank. However, I know that if we invest in the long run we should start earlier to let the money accumulate, rather than sit in a bank doing nothing. Surely not everyone starts off with investing 5k? Sorry, if I wasn't clear in the original post!

bigfreddiel

Rule of thumb says you should have six months worth of wages in the bank, or £5k whichever is the greater.

Then you should get your pension sorted. Pay in half your age as a percentage of your earnings, so if you are 30, then you would be paying 15% of your salary into a pension. This sticks at 15% as you get older, so when you are 60, you sytill just pay 15%, not 30%. From that you can see the younger you are the less you pay in because it's over a longer period. If you started at 18 you only need to pay in 9% for the rest of your working life.

Than you start investing, Lifestrategy 100 is good but use an ISA wrapper.

Good luck fj

dunstonh

I have never invested any and have no savings to currently invest

So nothing to invest then.

however, we can easily save a couple of hundred a month when we cut back.

That is not good enough. You need a cash savings buffer. Often referred to as an emergency fund. You are talking about 6 months expenditure as a minimum.

Surely not everyone starts off with investing 5k?

No. They start their savings pot first. Build that up and then start investing.

ColdIron

Jenegade wrote: »

we have no current savings, however, we can easily save a couple of hundred a month when we cut back

Isn't that like saying I'll take a backup when my card disk crashes?

Dird

Jenegade wrote: »

Surely not everyone starts off with investing 5k?

The £5k wasn't to invest. It was to sit in 3-5% bank accounts* in case your partner loses his job then the next month the dryer breaks & the MOT throws up lots of unexpected issues. Once you have that then you can start £100/month investing but still making sure you save extra for things like the MOT so your emergency fund doesn't get depleted over time. You should cancel your monthly investing before you start eating into the £5k emergency fund imo

* if you're on less interest than this then you should switch, you can make a few £hundred in the process from offers too

Eco_Miser

Monevator has a table comparing platforms. They also have a lot of useful info about investing. Start there and keep following links.

But before you start investing, have enough cash so that you won't be tempted to withdraw your investment if you have an unexpected demand on your finances, or an expected one you forgot about -- say six months expenditure plus any forthcoming bills like MOT or new car or holidays.

bigadaj

Jenegade wrote: »

Thank you! When I say we have no savings, we have no current savings, however, we can easily save a couple of hundred a month when we cut back. Enough for a new dryer or car maintenance, which I put aside in another account for emergencies, still giving us another £100 or so for investing. What I guess I really mean is that I haven't got several thousand in the bank. However, I know that if we invest in the long run we should start earlier to let the money accumulate, rather than sit in a bank doing nothing. Surely not everyone starts off with investing 5k? Sorry, if I wasn't clear in the original post!

That's a bit worrying to be honest.

Sounds a bit like I'll stop smoking/ go in a diet/ start exercising/ pay off my loans or cards next week because I can, eventhough next week never comes.

If you haven't got the discipline to currently put by cash savings then you can't afford investments, as everyone here keeps saying, put a few thousand into cash, don't touch it until you absolutely have to, then look at investments.

Do you currently have a pension, if not and your employer contributes to one then that is a better value product than a stand alone isa or unwrapped account.

tacpot12

How about starting two savings accounts? One for emergencies and one for 'investing'. Pay £100/month into the 'investment' account and save hard into the emergencies fund. Keep the one for investing in cash until you have £1000 in the emergencies fund. £1000 will pay for most common emergencies, but not a new boiler or new roof so you need to keep saving hard into the emergencies fund.

How about starting a virtual portfolio? Using Trustnet you could select and buy £1000 of a few of your candidate investments and monitor them for a couple of years to get into the habit of reviewing your 'investments' and their returns.

The platform decision can wait till you are ready to invest as the charging models do get tweaked over time. Good luck

AnotherJoe

Do you have a pension?