Introduction to stock investment

slhqoue

For the first time I'm considering investing my savings into stocks and shares rather than savings accounts. I was wondering if anyone has any advice as to a good 'Stocks and shares 101' introductory guide to the process - for a complete beginner - and what the options are. I couldn't find this on MSE - I'm guessing this isn't an area the website goes into. Thanks for any help.

eskbanker

I usually recommend starting such 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.

Mr.Saver

I'd recommend the free course "Managing my investments" from the Open University: https://www.open.edu/openlearn/money-business/managing-my-investments/content-section-overview?active-tab=description-tab

masonic

https://sensibleinvesting.tv/how-to-win-the-loser-s-game?Documentaries

Albermarle

I couldn't find this on MSE - I'm guessing this isn't an area the website goes into

https://www.moneysavingexpert.com/savings/investment-beginners/

slhqoue

Thanks all - plenty of excellent links for me to get started with!

cheerfulcat

Pete Matthew’s podcasts are worth listening to. Start here - https://meaningfulmoney.tv/category/podcast/season-2/

wiseonesomeofthetime

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

I know how we all love to pay our taxes 😉, however, CGT has always been one that hits a nerve for the following reason:
You risk your capital to try and achieve a gain at least in line with inflation over a period of time and the government, who risked nothing, say, "Thank you, we will have x% of your profit."
HOWEVER, if you do not achieve a profit, and instead incur losses, the government don't say, "Hard luck, here's some money back towards what you've lost!" 🤷‍♂️

Though it is the same with earnings. You put yourself out and work some overtime for additional money, and the government say, "Thanks for giving up your free time. We'll take at least 20% of your extra earnings!"💰

coyrls

If you don't want to be taxed on capital gains or income, how would you propose that government expenditure should be financed?

bowlhead99

wiseonesomeofthetime said

I know how we all love to pay our taxes 😉, however, CGT has always been one that hits a nerve for the following reason:

You risk your capital to try and achieve a gain at least in line with inflation over a period of time and the government, who risked nothing, say, "Thank you, we will have x% of your profit."
HOWEVER, if you do not achieve a profit, and instead incur losses, the government don't say, "Hard luck, here's some money back towards what you've lost!" 🤷‍♂️

Well, they have adopted a simple system for CGT so that:

- you get an exemption to allow you to make a certain amount of gains without paying tax, entirely separate from your income allowances;

- when you do pay tax on the money you've made from exposing yourself to capital risk rather than from engaging in productive work, it's at a lower rate than the taxes on income;

- if you make losses, you can offset them against the gains you make on your investments that are successful, and if you don't have any investments that are successful you can carry forward the losses indefinitely until you do, so that ultimately you are only paying the x% of tax on your net gains.

Granted, if you make a loss and then vow never to invest again, the government won't give you a contribution to those losses - unless they are particularly risky and incentivised investments (e.g EIS/SEIS schemes). But it is not quite as simple as pay tax if you win and don't save tax if you lose. If you lose, you offset (or eventually offset) the loss against the gains so you don't end up being overtaxed.

The annual exemptions for gains and the relatively low tax rates on gains compared to income will help to ensure that people don't get too harshly taxed just because of general inflation / time value of money and that people aren't put off the general concept of risk-based investing. People will build their tax costs and transaction costs into their evaluation of whether it is worth investing in something, but that doesn't mean investment will be stifled. Generally people do still invest in things in countries with CGT regimes.

benbay001

coyrls said:

If you don't want to be taxed on capital gains or income, how would you propose that government expenditure should be financed?

The tax on the profit of the companies you part own. 
Stamp duty you pay when buying.
Income tax you have already paid on the money youre investing.
There are plenty of ways to collect tax revenue, its up to the individual to make the most of the tax system the government choose.