Long term investment advice

dhardy91

Hi All,
Brand new to the forum so if this has been done to the death please guide me there. 

Im looking to invest roughly £100-200p/m for the long term, 25+ years. 

My initial thought was an index fund but as there are so many, I would like advice on which one would be ideal for me. I.e. would i be better off investing in dividend paying funds, location and risks etc. 

I'd rather not take too much of a risk but I understand the risk/reward balance so medium risk preferably but more research on that would be needed. 

How do you actually buy into them ? All my accounts are with Halifax currently so would it be easier to go through them? Do i need to open a stocks and shares ISA? Is it possible to have several funds and allocate my monthly input by percentages? E.g. I put £150 in, 20% to fund A, 30% to fund B and 50% to fund C (not massively important, just curious). 

Thanks for reading !

Albermarle

It would make sense to open a S&S ISA , as it keeps the admin simple . There are many providers. A few only offer their own funds , like Vanguard and Legal and General to name two . Others offer a vast range from the open market. Here is a comparison table ( the website is a good source of info generally as well )https://monevator.com/compare-uk-cheapest-online-brokers/
An index fund on its own is a relatively risky investment as it will follow the ups and downs of the market . In the long term it should provide good growth but can be a bumpy ride. For a medium risk investment , then a low cost multi asset fund is usually the better way to go .
You are right in that your question is not new and you could spend some useful time scrolling through a few pages of threads on this forum . If you do you will see one question always pops up - what is your pension situation ? Often it is better investing more via a pension than a S&S ISA due to tax relief on pension contributions . Especially if you have a long time frame .

Linton

Since we know virtually nothing about you and your circumstances it is impossible to say what is ideal for you.  What one can say is that a multi-asset fund is suggested as a sensible choice for new investors.  These invest in shares from across the world in all industries and in non equity areas such as bonds and property.  They come in a range of risk/return levels. Google can provide a lot of explanatory information.  Such funds are available from all the major fund managers such as L&G, HSBC, Blackrock, and Vanguard.  Just holding one should be sufficient for your purposes, at least for the next say 10 years.

You buy funds by opening an account with an investment "platform" which acts as a retailer.  Typically these give you online access to thousands of funds and shares which can be bought and sold as often as you wish.  When you set up a platform account you need to nominate a bank account for transferring money in and out of the investment account.  This bank account could be with anyone.

By searching through this forum you will see references to platform providers  like HL, AJBell, II and many others.  Halifax do offer such a service but there would be no particular advantage in using it just because you have other accounts there. Different platforms have different charging rates, you would need to investigate which is best for you.

Have you considered simply putting the extra money into your pension?  This could be worthwhile especially if you can get a higher contribution from your employer. If you do not want to do that you could consider setting up an S&S ISA for your investments. All the major platforms provide these.  Whilst it may not save you any money in the early years it does avoid the need to keep tax records which you would need to store for 6 years.

MaxiRobriguez

25+ year investment sounds like pension vehicle would suit. Workplace pension or SIPP, both will allow you to avoid/reclaim income tax at the very least, so you'll get a 20%+ boost straight away. Workplace pension might come with employer matching your contribution.

Both will (should) let you choose from a variety of funds to suit your needs. What those needs are and how they're suited - well, that's up to you. 

Audaxer

MaxiRobriguez said:

25+ year investment sounds like pension vehicle would suit. Workplace pension or SIPP, both will allow you to avoid/reclaim income tax at the very least, so you'll get a 20%+ boost straight away. Workplace pension might come with employer matching your contribution.

Both will (should) let you choose from a variety of funds to suit your needs. What those needs are and how they're suited - well, that's up to you. 

I agree that adding to a workplace pension or opening a SIPP seems the best place to hold your investment if not requiring access to the money for over 25 years, as you will get tax relief added to each contribution. If investing in a SIPP, as other have said a multi asset fund is the best choice. I would have a look at Vanguard LifeStrategy, HSBC Global Strategy and L&G Multi Index funds - they all come in different versions to suit your risk tolerance. Lots of information about these funds on this forum if you search these names. One of these funds is all you need in your SIPP until you have built up a substantial investment, when you may want to split between a couple of multi asset funds.

dhardy91

Thanks for the information everybody.

Pension wise I already have the full contribution from my employer, I'm assuming this way I would avoid capital gains tax? 

Its interesting stuff. I'm 28 with a young family, I saw 25 ish years as mid fifties could be a great time with ROI and mortgage paid off, with a pension would I be punished for taking it out early ? 

Thanks again. 

Albermarle

Pension wise I already have the full contribution from my employer, I'm assuming this way I would avoid capital gains tax? 

Well you would avoid capital gains tax but that would be the same in a S&S ISA .

The advantage of a pension over S&S ISA is that you get tax relief on all your contributions . You do normally have to pay some tax when you take the pension but there is still a minimum benefit of 6.25%. This can be greater depending on your personal circumstances . For example if you ever are subject to 40% tax the pension is really attractive. The downside is that currently pensions are not accessible ( at all) until you are 55 and this will have increased by the time you get there .

Nothing to stop you increasing pension contributions and having investments outside the pension that could be taken earlier.

cloud_dog

dhardy91 said:

Thanks for the information everybody.

Pension wise I already have the full contribution from my employer, I'm assuming this way I would avoid capital gains tax? 

Its interesting stuff. I'm 28 with a young family, I saw 25 ish years as mid fifties could be a great time with ROI and mortgage paid off, with a pension would I be punished for taking it out early ? 

Thanks again. 

If you are a basic rate tax payer and not paid via Salary Sacrifice (note: this is not the usual tax relief), then you may be better off looking at using a Lifetime ISA for somel of the additional monies; same 'uplift' from the Government (25% LISA bonus / 20% pension tax relief) but all withdrawals are tax free (at age 60).