Complete beginner

Windofchange

I'm starting down the same path as you currently. Was in a lot of debt, but am nearly out the other side as per signature. I could get the credit card paid off now, but I am putting money into a S&S ISA instead. I will then trickle money onto the card to get it cleared by the end of the year. We differ in that I am a few years younger, and although I do have a rainy day fund, it isn't immediately accessible.

I have taken to buying £500 of funds every month since the start of the year, and these are going up nicely. There will be blips along the way, and there already have been, but I am looking to hold these long term. I think the advice about not panic selling is shrewd - I dabbled with stocks and shares a decade or so ago and sold up far too quickly when things went down.

Do some reading (which you are already) and get signed up to a broker - I use Charles Stanley direct based on a recommendation on here, and no complaints so far. After you have a broker then my advice would be managed funds for now. You pay a small percentage as a management charge - usually 0.5 - 0.75%, and you have the knowledge that a professional is looking after this day to day.

I would agree with the advice about picking stocks - leave that till you are a bit further down the line and know what you are doing. I have taken on a position in a penny stock for £200 on a hunch, but I'm prepared to loose that sort of money if it goes south. I wouldn't be prepared to lose large sums of my cash though, hence I'm leaving the bulk to the professionals for now.

Fatbritabroad

Sea_Shell wrote: »

Just given us our light bulb moment!!! Thanks. We've been apprehensive about putting more into our S&S ISA....but happily been making our pension contributions. Doh!

Every day's a school day!!

Like I say even someone who works in financial service and 'totally got' pensions and isa only really clicked this year. You are very welcome

todd89

Hey guys,

I'm looking at doing the same thing. I got 10k spare and want to take advantage of investing rather than sitting in a bank. I'm looking at Cavendish online or Charles Stanley Direct since the Monevator website recommends them.

Why did you choose CSD and why did you choose Lifestrategy 60 and not 80 or 100? Is an all world index fund?

Fatbritabroad

Csd is good for smaller portfolios (I believe under 30k but the difference is minimal up to 50k as their charges are a%of holding) . Higher than that and fixed fee brokers become more sensible. I m working my way towards this!

I hope the op will say he's chose the lifestrategy fund because it's an easy option for the unsophisticated investor with a small pot to learn how to invest. And he chose 60 40 because he feels he can take some (but not a huge amount) of risk (volatility) in his holdings. It's not a world index fund (I made this mistake too) its a fund of other vanguard funds with the added advantage of automatic rebalancing. If you want an index you need vwrl or something equivalent although bear in mind life strategy includes bonds (apart from the 100% which I hold) whereas I believe vwrl is just equities so you'd want a bond fund aw well assuming you don't want to be 100%in equities

Hey I think I'm just about beginning to vaguely understand some of this stuff. It's only taken me 3 years! Feel free to correct me if I'm wrong on anything!

todd89

Thanks for the swift response. Glad you're happy to help.

You've raised some good points from a previous post too and I hope you can answer the following questions to help me decide.

1. We should know why we are choosing a fund rather than someone telling us it is good. Therefore, I want to know why people go for a lifeguard strategy.

2. Equity vs bonds...why have you opted for 100% equities? I can't find any decent articles but if you could help me workout whether I want some bonds as well then that will help.

3. Is a difference between S&S ISA and a fund - ETF, Index etc. Which brings me on to asking whether I should go for a S&S ISA or fund such as Vanguard - assuming they are different.

Long story short ...I'm 27, working overseas and finish my contract in June. I've saved a lot and want to think about my retirement. I've got 10k I can forget about. I am open to risk so want to make a good return. I will fund the account each month with £300-£500. Will definitely go with Cavendish or CSD and a % fee platform from the advice here and from my own reading. I just want something simple and a good fund. I want to know why I'm investing in that fund. So if the Lifestrategy is a good bet please help me justify this. Rant over

todd89

I think I've just found the answer - correct me if I'm wrong! - the ISA is the empty wrapper and I decide what I want to invest in. So would be nice if you guys can give me some direction.

Deedlebod

Fatbritabroad has pretty much covered it. As a complete beginner I wanted to get started quickly with something simple. The vanguard fund has a good reputations and is well recommended across lots of sites I checked. the risk profile suits me for this point in my life and they do the automatic rebalancing for me. As I get a bit more knowledge on all this stuff things may change in the future but for now this decision left me feeling comfortable, I do not want to be constantly checking and crapping myself about every blip

Fatbritabroad

I'm 100% for a few reasons really

I'm only 36 so can afford to take risk

I have a work pension I'm already contributing 16%of my income to Inc employers contribution with 109k it which is in a balanced fund containing equities bonds etc. Now I've got my head round it I view my isa as an extension of this and am happy to be, 100% in the hope of greater returns I've just fixed my mortgage for ten years (I was left with a large ish one following a divorce though at 3 and a half times salary it's manageable) so I'm viewing the s and s as a way to clear that by hopefully generating a return higher than 2.59% on the mortgage

Bonds are there to act as a counter point to shares as traditionally they've moved in the opposite direction to shares and so reduce volatility. However everything I've read (and there is very definitely another viewpoint on this which someone will hopefully post as a counter) says that years of lower interest rates coupled with quantitive easing have meant bonds are now not offering the diversification they once were. They usually drop in yield as interest rates rise and with brexit inflation is already creeping up so I'm banking on a rise in next ten years. Even if that doesn't happen my pension pot will be the largest part of my retirement fund.

Worst case in ten years I'll use some cash savings to pay down the mortgage and I'll have paid a substantial sum off anyway. If it goes really well I could be almost mortgage free in ten years but that's a pipe dream!

todd89

Thanks for the response.

Well it sounds like you have a plan and know what you are doing.
For me though, I'm not so sure. I'm new to investment and just want to save money for my retirement but also have some available if needed. Therefore is it silly if I was to open an SIPP and ISA with the same broker - Cavendish or CSD and have say VLS 100 and World tracker? If this is a good idea which fund would go with which wrapper?

My goal - retirement money and some money growing but with access

Fatbritabroad

There's no particular reason why you couldn't have both with the same platform and both in the same fund. It depends what your objectives are. If you view them both as part of your retirement why would you do anything different with it than your isa unless say you wanted to be a bit more ballsy with one bit than the other. You could view your sipp as the 'safe option' and stick this in a vs 60 40 for minimum volatility and the rest as something you could be more aggressive with.

The pension is better for higher rate tax payers as you get 40..% tax relief on way in and potentially less on way out plus the 25.% tax free. the isas as you say is accessible (but maybe not if it crashes tomorrow or in two years time due to brexit and takes ten years to recover but being accessible has its own dangers. I think I'm ready psychologically for a crash but if I panic take it out and lose thousands I've still got my pension with the majority of my retirement income in

Same thing different wrappers remember . I'm aware from the FIRE BLOGS like retirement investing today that some people choose to spread investments round platforms due to the inherent risk of there being fraud at the platform but in my opinion this is remote in the extreme for mainstream platforms like csd and bordering on tin foil hat territory and there is a certain level of protection for this anyway for 50k I'll worry about this when I've got more in it and probably post on here asking for a straw poll of what others do . That said if I'd built up over 1m in investments I may be a lot less blas! about the fraud risk than my measly 20k!