How should I take my first step into investing?

henry114 · 27 October 2017 at 2:39PM

I am looking to start investing some money but need some advice. I am completely new to investing but would be able to open something with a small lump sum of around £1000 and then small regular investments (£25-£50) per month. What would be the most suitable route to take? I have been looking at the AJ Bell stocks and shares ISA and using their passive fund. I also hold a Help to buy ISA would this impact my options at all?

ewaste · 27 October 2017 at 2:56PM

Lifetime ISA? I'd imagine if you've got a HTB ISA your saving for a house.

It really depends on what you want to eventually use the money for and your wider financial situation, are you also making some provision with regards to pensions? Don't forget to also have some form of emergency fund in cash, with an amount equivalent to at least a couple of months outgoings.

If your after passive and low cost then a S&S ISA directly with vanguard may be an option worth considering.

henry114 · 27 October 2017 at 3:01PM

From what I understand the LISA has to be used for a house purchase or retirement, I have a help to buy to go towards a property and I do have a pension in place with my work. Ideally I want to invest as a way of building up some more money for my future and for some extra income as it seems a better alternative to putting my cash in a savings account that pays next to nothing in interest. Thanks for the reply and I will have a look at that product!

ewaste · 27 October 2017 at 3:17PM

Indeed a Lifetime ISA has restrictions on it somewhat similar to a HTB ISA although the LISA has a higher savings allowance and therefore bonus compared to a HTB ISA, this may or may not be useful to you but perhaps worth a look. Apologies if you've already considered it in detail

If your already holding an emergency fund in accounts like Nationwide at 5% and the others detailed on the main site then I can understand you seeking alternative opportunities.

I note that AJ Bell waive their dealing charge and platform/custody charge until January 2019 on their own passive fund, although their fund charge is still 0.5% which is greater than alternatives from the likes of Vanguard or HSBC.

Holding Vanguard Lifestrategy directly with Vanguard would charge 0.15% for the platform and 0.22% for the fund itself with no dealing charges for buying, which you could do monthly.

Edit:- Ah just checked Vanguard monthly minimum appears to be £100

henry114 · 27 October 2017 at 3:25PM

I have looked into the LISA but thanks anyway, all advice is helpful!

Yeah I have built up an emergency fund as part of trying to get my finances in good order.

With regards to the charges - what exactly is a custody charge? As this is something I couldn't quite get my head around.

I have just looked at the Vanguard options and it does seem quite appealing particularly with the easy access to your money and the low account fee!

henry114 · 27 October 2017 at 3:41PM

£100 per month would probably be just over my maximum which would be £50 per month, I see alternatives could be the HSBC world selection ISA or possibly the ISA offered by Cavendish.

Do you think these would be suitable alternatives? With regards to charges and being a relatively low cost way of investing?

JohnRo · 27 October 2017 at 3:47PM

https://www.vanguardinvestor.co.uk/

tacpot12 · 27 October 2017 at 3:55PM

... - what exactly is a custody charge? As this is something I couldn't quite get my head around.

It is a charge for holding something. When investing in shares, you might hold the share certificate at home, but your shares might also be held for your by a custodian - someone you pay to hold them.

if you buy units in a Fund, the units are only ever held by a custodian; they don't exist in physical form.

The custodian is your agent; you are paying them to hold your assets for you. They have the systems to do so electronically, so do not need to handle paper share certificates. This speeds up trading.

henry114 · 27 October 2017 at 4:03PM

The only thing that is putting me off this option is the £100 per month, do you know of any similar options that would allow a minimum of £25-£50 per month??