Investing Help for a Newbie

TakeNoRoses

I've just turned 26 and keen to start investing properly. I own horses so my goal was to own my own land, which I achieved when I was 21. I borrowed some money from my family to afford it, which I will finish paying back by August next year. After that, I will be able to save and invest around £500-£650 a month.

I do have a few investments currently, but they aren't what I'd call "real" investments. I have £2k in savings, £100 going into my pension monthly, £50-100 going into NS&I premium bonds and £5k in P2P (Ratesetter) gaining interest @ avg. 5.6%.

So, the point of my post. Can you helpful guys point me in the direction of useful articles/books about investing that explain the different types of investments, pros and cons, how best to get into investing, good websites to use, and general investment advice in a way even an idiot can understand. I want to understand what I'm doing before I start but some of the articles I've read in the past have been a bit technical for me. :rotfl:

El_Torro

This forum is a great source of information, either by reading existing threads or if you have specific questions. Most forum members believe in (at least a form of) passive investing.

If you want to learn about the benefits of passive investing then one good place to start is with Monevator, for example here: https://monevator.com/category/investing/passive-investing-investing/

Just to comment on what you're currently doing: I'm not a fan of P2P. I would say get out while you can, though the decision is up to you.

As for Premium Bonds, don't think of it as investing. You should think of it more as a safe place to put your emergency fund, which, with average luck, should net you an annual return of about 1.26%. Yes, it's possible that you'll win big, but the chances of that are so small it's hardly worth thinking about.

eskbanker

If you are interested in finding out about investing, 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.

TakeNoRoses

Thank you El Torro and eskbanker for your very quick replies, this is exactly what I was looking for. It sounds like passive investing via index trackers would probably be best for me. I will look into the websites you have suggested and if I have any questions I will post them here.

El Torro - P2P, I know it's not the best of investments but at the time it was in a format I could understand (Ratesetter is very much like a savings account, just one where your money is at risk) and it's easy to manage. I'm not investing further into it and haven't for years but I'm pretty happy with the £2k interest/promotions I've gained from it. Once I start a proper investment portfolio I will be siphoning off my P2P. Premium Bonds - I thought I'd better mention that and my pension to give an idea of my current financial situation. For me, it's just an extension of my savings.

eskbanker - thank you for the list of key points, it's extremely helpful for me. I think one of the reasons I've not jumped in yet is I'm worried about choosing the wrong platform or having to manage multiple platforms, especially as I'd like to use a S&S ISA.

JohnWinder

And just because not everything decent is on one side of the Atlantic:
https://www.etf.com/docs/IfYouCan.pdf
http://1.droppdf.com/files/0opyj/the-four-pillars-of-investing-by-william-j-bernstein.pdf
And Bernstein’s very good The Investors’ Manifesto http://www.efficientfrontier.com/files/TIM.pdf
Jim Otar’s, Unveiling the retirement myth: http://docshare04.docshare.tips/files/22966/229669551.pdf
And a bit old fashioned, but ……… a book on paper: Smarter Investing, by Tim Hale.

Albermarle

If you want some help picking an investment platform then here is a link:
https://monevator.com/compare-uk-cheapest-online-brokers/

There is a tax advantage from investing in your pension but you can not access it for 30 years .
If your employer will add more if you add more then this is free money . Worth asking.

BLB53

So, the point of my post. Can you helpful guys point me in the direction of useful articles/books about investing that explain the different types of investments, pros and cons, how best to get into investing, good websites to use, and general investment advice in a way even an idiot can understand

A good book for those looking for a good introduction to investing is J Edwards 'DIY Simple Investing' which covers all the basics.

But essentially, choose your low cost broker, assess your risk profile and asset allocation, select your low cost globally diverse multi asset index fund - I prefer HSBC Global Strategy personally but book seems to prefer Vanguard Lifestrategy - set up your monthly DD and don't look at your portfolio too often!

cloud_dog

TakeNoRoses wrote: »

I've just turned 26 and keen to start investing properly. I own horses so my goal was to own my own land, which I achieved when I was 21. I borrowed some money from my family to afford it, which I will finish paying back by August next year. After that, I will be able to save and invest around £500-£650 a month.

Are you a director of your own Ltd company? If so, investigate the benefits of making pension contributions via the company rather than personally.

Hopefully by the time you have the 'spare' money to add to investments you will have a better understanding of which vehicle and what investment strategy but, just in case you are not there by that time you should still make payments in to pension or investment accounts as cash (benefit from pension taxation savings), i.e. invest the cash when you understand how to achieve your goals.