Investing first steps

tl202

Hi all,

Hopefully this is an appropriate place for this. I couldnt see a sticky of questions not to ask here so apologies if its too simple.

In essence, I'm a 28/yo currently looking to get started with investing. Without going into too much detail of my finances, I've come to the conclusion that I can probably invest £5000 initially and then follow this up with monthly top ups.

I've been reading up on 'getting started' guides in a variety of places and am currently leaning towards a variety of Vanguard index funds as a good place to start. Of course, if anybody has any thoughts on this I would be very grateful to hear them.

My main question however, seems be SO basic that none of the guides I've read up on have even really discussed it. Namely, actually how to use an ISA. Whilst I get the core concept, I haven't really found much at all about how money you have in an ISA is invested. My assumption is that after opening an account you have options to send the money into various pots for different funds where it's value either decreases/increases depending on the performance of the fund. Then (somehow) you are able to withdraw some or all of that money back into the ISA where it becomes a cash value and isn't at risk?

I know this is probably a really silly question, but after over a week of research almost every single 'getting started' article/video podcast I listen to regarding UK investing just says to use an investment ISA, but then just launches straight into what to invest in...

Anyway, thank you in advance for any advice. If anyone has any really really bare bones guides they can think of that actually cover things like how to move money from ISA's into funds I would be really greatful. I get the distinct impression that things would become much clearer if I just threw myself into it all but I'm obviously reluctant to start off investment with a haphazard jump into the world of 'this will probably work'.

Eco_Miser

tl202 wrote: »

My assumption is that after opening an account you have options to send the money into various pots for different funds where it's value either decreases/increases depending on the performance of the fund. Then (somehow) you are able to withdraw some or all of that money back into the ISA where it becomes a cash value and isn't at risk?

No. You invest in an (S&S) ISA in exactly the same way as you invest in a GIA (General Investment Account), namely you choose a platform, open an account (either ISA or GIA or both), then buy funds (or trusts, or if you're feeling particularly brave or foolhardy shares in individual companies) using the platform's mechanisms for purchase (locate the fund you want and click on the BUY button usually).

You can sell the funds etc whenever you want, and buy others, all within the ISA. Cash within an S&S ISA has the same risks as cash in a bank account (it probably is in a bank account), but is earning either no interest, or a very, very low rate.
If you need the money, you can withdraw it to your bank account.
You could conceivably transfer cash from your S&S ISA to a cash ISA, but I've never done that.

Albermarle

You invest in an (S&S) ISA in exactly the same way as you invest in a GIA (General Investment Account), namely you choose a platform, open an account (either ISA or GIA or both), then buy funds (or trusts,

This is for sure the case if you have an ISA with an investment platform , like HL etc .You have a separate cash account.
If you have an ISA direct with a fund provider , like L&G for example , I think it is not possible to hold cash separately within the ISA . When you deposit money you have to say there and then which fund(s) it should be invested in . When you sell, the cash is transferred directly to you and not held in a cash account . In both cases you can switch between funds without ever converting to cash .
That's my understanding anyway

Eco_Miser

Albermarle wrote: »

This is for sure the case if you have an ISA with an investment platform , like HL etc .You have a separate cash account.
If you have an ISA direct with a fund provider , like L&G for example , I think it is not possible to hold cash separately within the ISA . When you deposit money you have to say there and then which fund(s) it should be invested in . When you sell, the cash is transferred directly to you and not held in a cash account . In both cases you can switch between funds without ever converting to cash .
That's my understanding anyway

I'd forgotten about ISAs direct with the fund house, possibly because that massively restricts your ability to re-organise your investments. I think there is still need for cash held in these ISAs on occasion.

DrSyn

An ISA is just a legal wrapper to avoid paying tax.

(a) Cash ISA: Place money into one of these savings account and you will not pay tax on the interest you get.

(b) Stock & Shares ISA : Place cash or shares into this type of ISA, again you will avoid paying taxes on them. When you place cash into a S&S ISA, you are expected to buy investments with it.

You can buy can buy funds directly from a Vanguard, L&G, etc, within a S&S ISA

Or indirectly via a "funds platform" such as iWeb, providing they have the fund you are interested in, you need to check first. This can be done within S&S ISA wrapper.

If you sell these funds,the cash will still be protected against tax as long as it stays within the S&S ISA wrapper.

As a newbie this may be of interest to you.

First watch both of these:-

http://www.kroijer.com/

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

Then consider investing in a Global Multi Asset Fund which has wide diversification while minimising risk, at low cost.Invest at a risk level you comfortable with. Two such funds you might like to consider are:-

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds?intcmpgn=lifestrategyfunds_learnmore_link

https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/