New to investing - looking for tips

OliverNW3

Hi guys

I'm quite new to saving, let alone investing, so just looking for some advice. I've been reading a few threads on this forum and think the advice and topics are really interesting so I will definitely be hanging around more regularly now that I've signed up.

My profile: I'm 34, Irish and moved to the UK last year. I have saved around £25k so far (no debt - would have saved more but invested in an MBA so the move last year was a clean start and I'm happy with the amount saved so far, but need to start thinking about what to do with it). So, yeah, 25k, no debt, salary around 55k-60k, try to save around 1.5k a month, so on track to be around 50k saved by end of next year. I have most of my savings in a Cash ISA, and a smaller amount in a Help To Buy ISA. I don't have immediate goals to buy a property - it just seemed sensible to open one at the time, but that may become an issue over the next few years so I guess I should take that into account (i.e. whether I'm going to be a first time buyer in the next 5 years) when choosing my investments.

I just don't think the Cash ISA is doing much for me (especially as I'm with Ulster Bank and the interest rate on it is dreadful). I think I'm relatively risk averse, but I'd be happy to kind of put maybe 10k in global equities for 10+ years. Problem is, I don't know if that's a good idea, or where I would start to do that.

Taking into account my situation and financial profile, any advice about where to start would be greatly appreciated.

Thank you!

Edit: be gentle with me!

ColdIron

As a higher rate tax payer how is your pension provision?

OliverNW3

Good question. I am enrolled into a pension scheme with my employer, which includes Salary Exchange which is about 230 a month. I think it's 8% a month in contributions, 5% from me and 3% from the employer.

OliverNW3

To clarify/elaborate, even if I decide to opt for some equity investments, and some low risk bonds, etc (the opinions here would be greatly appreciated, and I know my saved amount is modest), I'm not sure where I go to make those investments? Should my own bank be helping me or should I go somewhere else - and if so, would I have to pay for some advice?

SonOf

I think I'm relatively risk averse, but I'd be happy to kind of put maybe 10k in global equities for 10+ years.

If you were to take a typical 1-10 risk scale. Someone who calls themselves risk-averse would be at the lower end. The fund style you describe is at the upper end.

How do you marry up what you are saying with what you are proposing to do?

At some point, that investment would lose nearly half its value. How are you going to react to that?

steampowered

Welcome! Get your money out of a cash ISA and into a stocks & shares ISA ASAP.

Do a bit of research but honestly you won't go wrong just buying a low cost fund (such as a Vanguard fund) with high equities exposure and leaving it there for a long time.

OliverNW3 wrote: »

I'm relatively risk averse, but I'd be happy to kind of put maybe 10k in global equities for 10+ years. Problem is, I don't know if that's a good idea, or where I would start to do that.

Yes, it is a good idea. Over a 10 year period, inflation risk and shortfall risk become more of an issue than just investment risk.

This graph from Nutmeg helpfully illustrates the effect of holding shares for a longer period.
.

Albermarle

There are lots of Stocks and Shares ISA providers online no need to go to an expensive bank, as they will not be the best value .
Just as a start have a look at the websites of Hargreaves Lansdown; A J Bell: Fidelity, Interactive investor ; Nutmeg etc etc


There is no need to pay for advice but some more basic research into investing would help .
https://www.moneysavingexpert.com/investments/
https://monevator.com/investing-for-beginners-why-do-we-invest/

OliverNW3

SonOf wrote: »

If you were to take a typical 1-10 risk scale. Someone who calls themselves risk-averse would be at the lower end. The fund style you describe is at the upper end.

How do you marry up what you are saying with what you are proposing to do?

At some point, that investment would lose nearly half its value. How are you going to react to that?

Good question.

To clarify, I guess the 10k investment for this that I mentioned is something that I'm willing to ring fence and put into an investment and leave it long term. I'm thinking that the longer I leave it, and less I react to the typical market shocks etc, that when I'm much older, in 10-20 years, there's a good chance this could be a good investment if it's like a Global Index Equity Fund (I don't know much about these things so I can be corrected).

If at some point it loses half its value, I guess I leave it for a few more years.

OliverNW3

SonOf wrote: »

If you were to take a typical 1-10 risk scale. Someone who calls themselves risk-averse would be at the lower end. The fund style you describe is at the upper end.

How do you marry up what you are saying with what you are proposing to do?

At some point, that investment would lose nearly half its value. How are you going to react to that?

steampowered wrote: »

Welcome! Get your money out of a cash ISA and into a stocks & shares ISA ASAP.

Do a bit of research but honestly you won't go wrong just buying a low cost fund (such as a Vanguard fund) with high equities exposure and leaving it there for a long time.


Yes, it is a good idea. Over a 10 year period, inflation risk and shortfall risk become more of an issue than just investment risk.

This graph from Nutmeg helpfully illustrates the effect of holding shares for a longer period.

Thanks for this.

My bank, Ulster Bank, don't offer a Stocks and Shares ISA - do you have any recommendation for a good one in the UK that does? I need to move my account to a new bank ASAP, been procrastinating on this.

Interesting graph, by the way.

Once I want to put it into a Stocks and Shares ISA, is that when I have choices to make as to whether I opt for bonds or equity, or how does it work?

steampowered

OliverNW3 wrote: »

My bank, Ulster Bank, don't offer a Stocks and Shares ISA - do you have any recommendation for a good one in the UK that does? I need to move my account to a new bank ASAP, been procrastinating on this.

Don't invest through a bank - they are a more expensive option. I like The Share Centre (https://www.share.com) - very easy to use for beginners.

Once I want to put it into a Stocks and Shares ISA, is that when I have choices to make as to whether I opt for bonds or equity, or how does it work?

A stocks & shares ISA is just a tax wrapper - not an investment. You have to choose what investment goes into the wrapper. You could purchase any number of shares, bonds or funds.

The usual advice is to pick an investment fund which is diversified across different geographies and sectors. Vanguard offer some good funds with low fees.

OliverNW3 wrote: »

I'm thinking that the longer I leave it, and less I react to the typical market shocks etc, that when I'm much older, in 10-20 years, there's a good chance this could be a good investment if it's like a Global Index Equity Fund (I don't know much about these things so I can be corrected).

That's 100% the correct attitude. The average long term return generated by the major stock markets over the past 60 years (stock price growth + dividends) is about 8% per year. Obviously some years are better and some years are worse, but it averages out at about 8%.

Over a 10+ year period, the chance of making a loss in a balanced fund is close to zero even if you invested all of your money at the worst possible time (as shown by the nutmeg graph), you would reasonably expect to be average 8% a year.

OliverNW3

Thanks - I've looked at the Share Centre, they just need me to call them as one of my address lived at within the last 3 years was in Dublin so can't complete online application. A S&S ISA with them is £5 per month - is that considered good value? With it being with these guys, rather than a bank, are they open to more risk, or as regulated as any bank? I assume Vanguard are basically a competiitor to Share Center?

I've also made a move on getting my account switched to First Direct so I will have a proper UK bank account at least. Ulster Bank are in Norther Ireland, was just easier to open my account there at the time, prior to moving over here, so I had a UK account set up in advance etc, but the interest rates they offer are paltry.

Thanks for all the help so far!