How should I take my first step into investing?

TheShape

Alexland wrote: »

Although I am a big LISA fan the main downside of transfering a HTB ISA into a LISA is the low interest rate from Skipton and the 12 month holding period before it can be used.

This isn't a problem if the OP intends to buy a property in the next 1-3 years but for people planning to buy in the next 4-7 years they end up in LISA nowhere-land where the timescales are so long that the poor interest errodes the additional bonus but too short to invest in shares/bonds with a high probability of an inflation beating return.

A great deal of care needed for anyone thinking of transferring a HTB ISA into a LISA then to compare return on (Cash) LISA vs return from HTB ISA + additional savings over various timescales. Very useful post once again Alexland.

Apologies for taking this thread somewhat off-topic.

bostonerimus

There's lots of good information on this website and you might also take a look at

http://www.bogleheads.org/wiki

It's an American site, but gives good information about the principles of portfolio construction and low cost investing. Then take a look at the UK Vanguard site, there are plenty of other low cost places to buy funds, but I've been with Vanguard in the US for 30 years and I like them a lot. Here are some simple princples to help you invest.

1) Spend less than you make (ie Mr Mcawber had it right) and do a detailed budget to track spending
2) Save 6 months spending to an emergency cash account
3) Avoid high interest debt, pay off the credit card in full each month
4) Use your workplace pension, ISA, SIPP etc for tax deferred investing. If you have a final salary pension make sure you fully understand it.
5) Try to save and invest at least 20% of your gross salary.
6) Inside your pension or ISA buy low cost diversified investment funds like Vanguard LifeStrategy or make your own portfolio with low cost tracker funds and rebalance when your asset allocation goes off target.
7) Avoid individual shares and actively managed funds, they are expensive and often risky.
8) Don't fret about performance.
9) Fees matter, don't pay a financial adviser 1% a year to do what you can do yourself.
10) Be cynical about advice and educate yourself.

henry114

Thanks for all the advice guys! I may look into the lifetime ISA in more depth now as an alternative to my Help to Buy, and from all the recommendations it looks like Vanguard may be the best platform for myself! All much appreciated!

bostonerimus

henry114 wrote: »

Thanks for all the advice guys! I may look into the lifetime ISA in more depth now as an alternative to my Help to Buy, and from all the recommendations it looks like Vanguard may be the best platform for myself! All much appreciated!

Vanguard is an inexpensive and simple option. They are a bit limited right now as they don't offer a SIPP and you can only buy Vanguard funds. I expect that to change relatively soon, but If you want a SIPP or to buy non-Vanguard funds you'll have to use another platform.

henry114

That should be perfect for me as this will be my first time experimenting with investing, so the simpler the better whilst I try to clue myself up on it a bit more for future years! Thanks for your help!

bostonerimus

henry114 wrote: »

That should be perfect for me as this will be my first time experimenting with investing, so the simpler the better whilst I try to clue myself up on it a bit more for future years! Thanks for your help!

I think that's a sensible approach. Use your workplace pension as much as possible and then use Vanguard for an ISA. I think a LifeStrategy fund will be a good start, but please educate yourself and understand what you are buying by reading and clicking around the websites. You can find all the details online....so understand the percentages of equities and fixed income you are buying and where they are located and in what economic sectors. You should do the same if you have a DC pension. Contribute regularly and check your balance and gains/losses regularly, but not too often and don't worry about losses or get too excited about gains.

Alexland

bostonerimus wrote: »

Vanguard is an inexpensive and simple option. They are a bit limited right now as they don't offer a SIPP and you can only buy Vanguard funds. I expect that to change relatively soon, but If you want a SIPP or to buy non-Vanguard funds you'll have to use another platform.

I can already buy the actively managed Global Balanced Fund (from Wellington for those who know the history) or the Global Emerging Markets fund (which have Baillie Gifford, Oaktree Capital and Pzena as management advisors) from within my Vanguard ISA.

So your choice is currently limited to Vanguard and friends.