Can you help out an idiot please?

thecakefairy7

Hi all,


I've never invested in Stocks and Shares in my life.
I have no idea what I am doing, despite reading everything I can regarding the subject.
I had a loose plan in mind to begin by putting £2000 into a managed fund, just to get me started, possibly adding a small regular amount to this and next year topping it up with a larger amount if I think it is for me.
I also have in mind to invest another £500 - £1000 into buying shares of a specific company. Again, possibly adding more later and again, no clue how to do this!
Any advice anyone could give me would be much appreciated!
So far I've looked at Wombat, Cavendish and Charles Stanley Direct.

woody_56

Put your money in a World index tracker add your regular payment
by mandate( direct debit) and forget.

HSBC FTSE GLOBAL ALL CAP.
FIDELITY WORLD INDEX TRACKER.
Are the two i use both slightly different.

SonOf

I also have in mind to invest another £500 - £1000 into buying shares of a specific company. Again, possibly adding more later and again, no clue how to do this!

High risk and with brokers fees on purchase and sale and the purchase being small in value, there seems little point doing this.

Small amounts are best sticking to investment funds.

eskbanker

Unless you have some particularly unusual circumstances, it's far more appropriate to diversify via collective investments such as funds, rather than buying individual company shares, which can lose you all your money, as Thomas Cook shareholders would verify (and many others before them).

I'd usually recommend starting your 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/
https://www.ifa.com/indexfundsthemovie/

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.
6. Use a Stocks & Shares ISA as a tax-efficient wrapper to avoid liability for income and capital gains tax.

DrSyn

SAVINGS: Money is in a safe place & not at risk. You expect to at least take out what you put in.

Money need within 5 years should be kept in a savings account.


INVESTING: Putting your money at risk where there is the potential loss of all your money. You hope to take out more than you put in, but this is not guaranteed.

Think of investing for at least 10 years at least.


1, First watch both of these:-

http://www.kroijer.com/

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

2. Then consider investing in a low cost Global Multi Asset Fund. They have wide diversification while minimising risk, at low cost. There are are a number of such funds.

You chose the risk level or share/bond split you are comfortable with, pay them the money & they do the rest. Examples:-

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

With this you chose the share/bond split. They then will re-balance to maintain it at that split. You have to accept the market risk that goes with the split.

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

With this you chose the risk level (say balanced) you are comfortable with. They the re-balance the funds assets to maintain it at that risk level. This is called a “Risk Targeted Fund”


3. https://www.moneysavingexpert.com/investments/

danm

DrSyn wrote: »

SAVINGS: Money is in a safe place & not at risk. You expect to at least take out what you put in.

Money need within 5 years should be kept in a savings account.


INVESTING: Putting your money at risk where there is the potential loss of all your money. You hope to take out more than you put in, but this is not guaranteed.

Think of investing for at least 10 years at least.


1, First watch both of these:-

http://www.kroijer.com/

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

2. Then consider investing in a low cost Global Multi Asset Fund. They have wide diversification while minimising risk, at low cost. There are are a number of such funds.

You chose the risk level or share/bond split you are comfortable with, pay them the money & they do the rest. Examples:-

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

With this you chose the share/bond split. They then will re-balance to maintain it at that split. You have to accept the market risk that goes with the split.

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

With this you chose the risk level (say balanced) you are comfortable with. They the re-balance the funds assets to maintain it at that risk level. This is called a “Risk Targeted Fund”


3. https://www.moneysavingexpert.com/investments/

The lettering on your CTRL, C & V keys must be wearing out

thickasabrick

I've been running an "experiment" with my adult children since October last year to encourage them to learn about investing .

1. Select a fund
Vanguard FTSE All-World High Dividend Yield UCITS ETF (VHYL)
reasons:
Global tracker
Familiarity with Vanguards offerings as I have LifeStrategy in my pension.
Wanted to explicity demonstrate dividends being deposited into the account.
Exchange Traded Funds have some features which I wanted to explore.


2. Open a Stocks and Shares ISA
Vanguard
Reasons:
Costs are low for the amounts we were investing (min £100 per month) and we would be sticking with Vanguard products.
It's a tax wrapper so you don't have to do any additional paperwork at the tax year end.
They allow you to link accounts so we can compare each others performance.

It's been a very rewarding experience and we all have a better understanding of "investing" rather than saving. My account was negative by a tiny amount for a few months which was a bit of an eye opener on risk.

I was a bit like you and fancied "gambling" with one or two specific companies during the year but common sense prevailed and I've stuck with global tracker funds. I would have had to open an account with a different provider to do that as Vanguard only offer their own products.

Have a read of the links provided by some of the other posters (eskbanker) and hopefully you will come to the conclusion that for novices and non - expert investors a simple low cost global tracker is probably the most suitable investment.

thecakefairy7 wrote: »

Hi all,


I've never invested in Stocks and Shares in my life.
I have no idea what I am doing, despite reading everything I can regarding the subject.
I had a loose plan in mind to begin by putting £2000 into a managed fund, just to get me started, possibly adding a small regular amount to this and next year topping it up with a larger amount if I think it is for me.
I also have in mind to invest another £500 - £1000 into buying shares of a specific company. Again, possibly adding more later and again, no clue how to do this!
Any advice anyone could give me would be much appreciated!
So far I've looked at Wombat, Cavendish and Charles Stanley Direct.

sevenhills

thecakefairy7 wrote: »

I also have in mind to invest another £500 - £1000 into buying shares of a specific company. Again, possibly adding more later and again, no clue how to do this!

I do this, but its a high risk strategy.
I enjoy following the different companies, I keep them long term if they perform poorly, if they do well, I sell them and buy another.

thecakefairy7

Thanks very much for the very helpful replies.
I did forget to say, I know that this should be viewed as fairly long term (5 - 10 years) and I'm happy with that.
The one off shares in one company, I realise it is much higher risk. I have this hunch about a certain type of business but it's a practical hunch, not a financial hunch because as my post suggests, I am absolutely clueless. I would only go ahead with this with money I could afford to lose. I probably won't even do it!
Thanks for all the advice and links. I will get reading.

enthusiasticsaver

No way would I invest in individual shares. Very very high risk.

Managed funds are more expensive than passive index trackers.

Do you have other savings you could access in an emergency?

Do you have debt which you would be better paying off or a works pension you can overpay into for the tax advantages and possible matching by your employer?

If you have other savings, no other debt and are already maximising your pension I would look at multi asset globally diversified investment funds.

LobsterMemory

Jeez.

I see I've owned about 150 shares since 1997, 1 has gone bust

As for Thomas Cook, if that is the type of share the OP is contemplating then he really is an idiot. Looking at the dividend history, I see that if I'd owned it in 2006, I would have sold at the very latest in 2011. Earlier if they didn't make a profit during that time

And as for investing small sums not being worth it, I see I bought my first share, which was Budgens, for £450 and sold it in 2002 for £1080 while receiving a few quid of dividends and a £60 bag of shopping every year at the AGM. So that's about £750 profit. Costs ate into that by about £35 (it was taken over so no selling costs). So that's £715 profit. I don't care what %age the buying costs are, it's £715 profit ( you can factor in inflation too if you want) and that was very nice indeed at the time, thank you. How were the good old Global Trackers doing at that time, I wonder?

I bought my 2nd share in 1998. It went bust very quickly. Lost £415

My third share bought with £300 in 1999 was taken over in 2000 pulling in £675. Don't go telling me that wasn't worth it.


No, it's not individual shares that's very, very high risk, it's lack of diversification. And you can gradually build that diversification up by investing small amounts in individual shares if that's the way you want to do it. It may or may not be the best way but it's a way.

So I'll adapt eskbankers golden rules to

Only consider investing once you have adequate accessible cash reserves.
Only invest if you're happy to commit for at least 5 years
Diversify

I'd also add

When you buy a share, make sure you know under what circumstances you will sell it. And stick to it.