Advice for a total beginner in stock investing

steevan16

Hello,

I am a total beginner to stock investing. I live and work in the UK. After having read a few MSE articles I am planning to invest a little of my savings into stocks using my ISA allowance. Who knows where it will end...

I have a few questions if you do not mind answering...

1. The important thing is I have no intention of going above my annual ISA allowance (if ever) and also I am not going to regularly buy/sell shares, instead just would like to buy may be 2 to 3 times a year and similarly sell, therefore would like to know what kind of account I should go for, which would minimise my monthly expenditure?

2. With ISA is it possible to buy Microsoft stock for example? How do I do it? Do I need to spend more money to manage this non-UK based company stock compared to a UK based stock?

3. Instead of buying individual stock, if I were to go for ETF based fund, is there something I should be concerned about? The one I have on my radar is iShares NASDAQ 100 UCITS ETF

4. Another question I have is about these fund management companies - who regulates them and how safe are they? In the event they have some financial problem what happens to my investment? Has there been any precedent where people have lost their investments because these companies went down?

Due to lack of sufficient knowledge in this field my questions may sound illogical, hope you will be able to put up with them

Best wishes
Steve

eskbanker

I'd repeat a fairly frequently copy/pasted post: start by doing some research at sites suited to inexperienced investors, such as:

https://www.moneyadviceservice.org.uk/en/articles/investing-beginners-guide
https://www.hl.co.uk/beginners-guides/investing
http://www.monevator.com
http://kroijer.com/
http://diyinvestoruk.blogspot.com/

as well as bearing in mind a number of key points of principle:

1. Only consider investing once you have adequate accessible cash reserves.
2. Only invest if you're happy to commit for at least 5-7 years and preferably 10-15 or more.
3. Diversify - ignore individual shares, etc, and concentrate on collective investments that spread your eggs over many baskets. Global multi-asset funds are a good place to start, available from the likes of HSBC Global Strategy, Vanguard LifeStrategy, Blackrock Consensus and L&G Multi-Index.
4. Choose what you want to invest in before considering which platform to hold it/them on.
5. Keep an eye on ongoing costs for funds and platforms - they shouldn't be the primary consideration but can make a noticeable difference over the long term.

In terms of your specific questions:

1. A S&S ISA certainly makes sense - there are many platforms, readily compared at the likes of:
   
   http://monevator.com/compare-the-brokers/
   http://www.comparefundplatforms.com/
   https://forums.moneysavingexpert.com/discussion/5583030
   
   but as above, sort out what you want to invest in first.
2. Pretty much any S&S ISA platform will allow individual stocks, and most will support multiple exchanges. However, investing in individual stocks is highly risky, hence the advice to diversify, which realistically means buying funds, at least until you've accumulated a substantial portfolio of, say, six figures.
3. Likewise, no harm in buying ETFs but again it's better to diversify more broadly than one individual index of 100 stocks.
4. Only invest in FCA-regulated platforms and fund managers. There is FSCS protection but only in limited circumstances, essentially protecting against fraud - if a platform went under, the assets would be picked up by another.

DrSyn

1. I would suggest any beginner should take a look at :-

http://www.kroijer.com/

https://www.ifa.com/indexfundsthemovie/


2. As Post 2 suggested, Global Multi-Asset Funds are a good place to start. Those mentioned have wide diversification while minimising risk, at low cost.

3. I am not aware of any UK ETF's. They normally are based somewhere like Ireland or Luxembourg. How Brexit will effect them, remains to be seen. So you might wish to stick to funds for the time being.

4. Beginners should avoid Investment Trusts because their share price can be at a Premium or Discount to their Net Asset Value.

5. No investment should cause you sleepless nights or worry if you invest within your risk tolerance.

LobsterMemory

DrSyn wrote: »

4. Beginners should avoid Investment Trusts because their share price can be at a Premium or Discount to their Net Asset Value.
.

If I were a beginner, I'd want a better reason for not investing than that

Or, more concisely: Eh?

System

DrSyn wrote: »

4. Beginners should avoid Investment Trusts because their share price can be at a Premium or Discount to their Net Asset Value.

What a foolish suggestion! I bet many beginners who invested in Woodford funds wish they had bought investment trusts instead.

Lungboy

steevan16 wrote: »

Hello,

I am a total beginner to stock investing. I live and work in the UK. After having read a few MSE articles I am planning to invest a little of my savings into stocks using my ISA allowance. Who knows where it will end...

I have a few questions if you do not mind answering...

1. The important thing is I have no intention of going above my annual ISA allowance (if ever) and also I am not going to regularly buy/sell shares, instead just would like to buy may be 2 to 3 times a year and similarly sell, therefore would like to know what kind of account I should go for, which would minimise my monthly expenditure?

2. With ISA is it possible to buy Microsoft stock for example? How do I do it? Do I need to spend more money to manage this non-UK based company stock compared to a UK based stock?

3. Instead of buying individual stock, if I were to go for ETF based fund, is there something I should be concerned about? The one I have on my radar is iShares NASDAQ 100 UCITS ETF

4. Another question I have is about these fund management companies - who regulates them and how safe are they? In the event they have some financial problem what happens to my investment? Has there been any precedent where people have lost their investments because these companies went down?

Due to lack of sufficient knowledge in this field my questions may sound illogical, hope you will be able to put up with them

Best wishes
Steve

As others have said, watch the Kroijer videos on his website or YouTube, they are free and extremely helpful. I have to wonder, how did a " total beginner" end up with a NASDAQ 100 ETF on their radar? I also see a reply from someone with no posting history recommending online share tips. I'd suggest you avoid those like the plague. Also beware anyone private messaging you with suggestions or offers of help. Keep everything as open on this forum as you can because there are some extremely sophisticated scam artists out there who choose to prey on newbie investors.

lpgm

mikhealseagal wrote: »

use the internet to share marketing tips or watching video on youtube is also give you lots of knowledge.

I think they want to learn how to invest, rather than pick up tips on marketing.

lpgm

steevan16 wrote: »

Who knows where it will end...

If you keep on saving hard and investing sensibly... perhaps financial independence!

DrSyn

LobsterMemory and Economic

The OP is a total beginner to investing and collective investments have been suggested as the way to start.

Funds and ETF's for a beginner, are easier to understand and do not suffer the large share price premium/discount to NAV that Investment Trusts can have.

Examples

Lindsell Train Investment (LTI), Premium = 78.46%

Hansa Trust (HAN), Discount = -29.11%


Unless a beginner understands the affect the Premium/Discount will have on their investment, I think they are best avoided. You two however think otherwise.

System

DrSyn wrote: »

LobsterMemory and Economic

The OP is a total beginner to investing and collective investments have been suggested as the way to start.

Funds and ETF's for a beginner, are easier to understand and do not suffer the large share price premium/discount to NAV that Investment Trusts can have.

Examples

Lindsell Train Investment (LTI), Premium = 78.46%

Hansa Trust (HAN), Discount = -29.11%


Unless a beginner understands the affect the Premium/Discount will have on their investment, I think they are best avoided. You two however think otherwise.

And the Bank of England Governor is not a fan of funds:
https://www.ft.com/content/e6d5bf04-980b-11e9-8cfb-30c211dcd229

IanManc

Economic wrote: »

And the Bank of England Governor is not a fan of funds:
https://www.ft.com/content/e6d5bf04-980b-11e9-8cfb-30c211dcd229

That link takes you to a paywall.