Investment newbie

inkypinky999

Hello All,

I have 12K to invest, which at the moment are in saving account (~1.5% p.a.), I want to build up my investment portfolio but have not done serious share/investment dealing (max I did was buy share of one company and made a very little profit).

What do folks here recommend me to do to build up my portfolio?
I don't understand how the investment funds work vs buying shares directly of companies.

JohnRo

I'm not sure this will help much but it's worth a read

http://monevator.com/investing-for-beginners-the-global-stock-market/

this goes into a lot more detail

http://monevator.com/category/investing/passive-investing-investing/

bostonerimus

inkypinky999 wrote: »

I want to build up my investment portfolio but have not done serious share/investment dealing (max I did was buy share of one company and made a very little profit).

......and I would totally avoid "serious share/investment dealing". I would decide on an asset allocation and then automatically contribute to your portfolio every month.

inkypinky999

JohnRo wrote: »

I'm not sure this will help much but it's worth a read

http://monevator.com/investing-for-beginners-the-global-stock-market/

this goes into a lot more detail

http://monevator.com/category/investing/passive-investing-investing/

thank you, I will have a read on this.

ColdIron

inkypinky999 wrote: »

What do folks here recommend me to do to build up my portfolio?
I don't understand how the investment funds work vs buying shares directly of companies.

Find out how funds work and forget company shares

inkypinky999

bostonerimus wrote: »

......and I would totally avoid "serious share/investment dealing". I would decide on an asset allocation and then automatically contribute to your portfolio every month.

at risk of sounding totally silly what does asset allocation means and how to decide/go about it?

bostonerimus

inkypinky999 wrote: »

at risk of sounding totally silly what does asset allocation means and how to decide/go about it?

There are lots of different investments......government bonds, corporate bonds, UK equity , UK small caop, US, Japan.....International index........the list is never ending. This can paralyze the novice investor. So I suggest you do some reading.

As a novice I would suggest a mult-asset fund that invests in a mix of equities and bonds around the world.

Linton

inkypinky999 wrote: »

at risk of sounding totally silly what does asset allocation means and how to decide/go about it?

You can invest in various types assets - shares, bonds, property and others. Each has its own advantages and disadvantages. You need to decide what % of your money to put in each to meet your objectives.

Looking at shares in particular. There are various subdivisions that behave differently - eg different countries, different industries, different sizes. Again you can decide how best to allocate your money.

You need to be invested in many different things so that if one company, one industry, one part of the world etc has economic problems your portfolio doesnt drop in value more than you can accept.

This is asset allocation.

As a newbie, with in the overall scheme of things a very small portfolio, its not worth worrying about the details. Better to start off with a single fund where the manager takes the responsibility of ensuring that you are widely invested. Look for multi-asset funds.

The need for a diversified asset allocation is a major reason for not buying individual shares. Any you buy will probably be limited to the UK and you wont have sufficient money to buy the number required to provide a broad range of industries.

inkypinky999

bostonerimus wrote: »

As a novice I would suggest a mult-asset fund that invests in a mix of equities and bonds around the world.

thanks, any specific books/websites I should focus on?

cynicaldoc

As a relative newcomer to investment, but one who spent 6 months reading thus far, can I suggest you look at:

Vanguard LifeStrategy funds. They do a variety of portfolios that vary from 80% bonds/20% equity to 100% equity depending on how risk averse you and how long you have to keep your money in. They offer a pretty reasonable spread across most sectors that would be difficult for a newbie to beat by picking a variety of global indices.

I personally have split my (far more modest) portfolio:

Vanguard LS 80% equity - 40%
Scottish Mortgage Trust - 25%
Black Rock UK Equity tracker - 20%
L&G international index - 15%

I probably could put the BlackRock+L&G indices into the Vanguard too.

I thought this was a decent spread across sectors for moderate-ish risk with only 1.3% overall charges ish via Hargreaves Lansdown.

Caveat: there are infinitely more learned contributors herein.


Alternative 'one-stop shops' are available every from Blackrock and others too.

I have a far smaller amount but

bostonerimus

inkypinky999 wrote: »

thanks, any specific books/websites I should focus on?

Well this site for one.

Check out

http://www.vanguard.co.uk

They have a reassuring intro video and some straight forward explanations about investing in their funds. If you open an account with them you can only buy their funds.....which isn't necessarily a bad thing for the novice as it stops the paralysis of too much choice.....FYI I've invested for 30 years in the USA and 90% of my money is in Vanguard funds even though US Vanguard has a full service brokerage and I could buy anything.

Also look at the US Bogleheads site that is a good intro to low cost index investing. It's from a US perspective but the principles can be applied anywhere.

https://www.bogleheads.org/wiki/Main_Page