Newbie investor. Where to start?

Mishomeister

With the savings rates, even on the regular savers now hitting the historical minimums  I feel the tinme has come for me to start looking in to investments.

I would still keep maybe a half of my money in the savings accounts for diversification, but looking at investing between 5k to 10k and paying in monthly circa £500.

My biggest fear is to lose money during especially during the current uncertain times, so I am not looking for a place where you can have a potential return of 20% per annum but also a risk of losing 20% of your money in a short time.

So, something more conservative with the losses of more than 5% pa being highly unlikely.

Another fear is that the place where my money held runs in to trouble and money become not available for withdrawal etc. as per recent stories about Neil Woodford.

As the investements are not protected by the Financial Services Compensation Scheme, I would want to minimise the chances of losing money becasue the company gone bust as was the case with Leman Brothers.

So perphaps, I am better off looking at the platforms that High Street banks can offer eg HSBC?

Any good advice will be appreciated.

Albermarle

I am afraid you are looking for the Holy Grail of better than inflation returns with minimal risk .
A typical medium risk fund that could maybe produce on average 2% above inflation ( hopefully) could easily drop >20% in a matter of a few days . You have to ignore short term volatility and normally it should perform over the longer term .

MaxiRobriguez

You need to properly define your timeline.

Investing should be for 5 years minimum, personally I prefer 10 years as a minimum, with the aim of holding longer. If you don't fit that criteria then you shouldn't invest as even lower risk investments comes with volatility that you're unlikely to be able to stomach. If you do fit the criteria then you can simply ignore falls of 20% because they're not actually a loss until you come to sell, by which point those losses will likely be a while previously and have recovered.

AnotherJoe

As others have said your criteria are wholly unrealistic. And not uncommon. And won't be helped by choosing a banks investments since they are generally more expensive. 

If your aim was "not to lose money" on a ten plus year timescale then there are investments that can be selected with minimal chance of loss and over 15 years, pretty much zero risk.

However within those 10-15 years there will be periods you will "lose money" compared to what it was a week before though probably not at the start, were  you to take it out.(after a few years) 

 If you can stomach that then you should invest, if you can't, you should acknowledge you will lose money over time to inflation due to Your unrealistic expectations. 

csgohan4

OP if you can find  an investment / fund that satisfies your criteria please come back and Share.

I only just started investing in a global fund and it's already lost a few %, am I bothered, no, because I am investing for 30 years. 

OP do your own research and find your own risk level. 

RobHT

csgohan4 said:

OP if you can find  an investment / fund that satisfies your criteria please come back and Share.

I only just started investing in a global fund and it's already lost a few %, am I bothered, no, because I am investing for 30 years. 

OP do your own research and find your own risk level. 

Don't forget monthly drop feeding, that's the best when these huge drops happen
If you can share your fund, it would be great, just as we know .
I have a similar discussion, look my profile.

Mishomeister

csgohan4 said:

OP do your own research and find your own risk level. 

Well, this is exactly what I am doing by asking on this forum.

Worth noting that I haven't got any constructive advice here yet, apart from people's sarcasm at my understanding of the matter.

I got no idea where to start my research tbh hence writing this here.

Before, you werw able to get a free advice from the financial advisers as they would get commission paid to them.

Now, the fianncial advice is so expensivem that unless you have 50k+ there is no fiancial sense in paying for it as it could cost 10-15% of teh sum you are planning to invest.

eskbanker

As well as other newbie investor threads on here, there are plenty of sites suited to inexperienced investors wanting to research, 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.

You'll hopefully reach this conclusion yourself if you don't want to hear it from others but it is worth reiterating that your holy grail of protected investments with negligible downside and meaningful returns isn't something that's realistically achievable!

Eco_Miser

Have a read of http://monevator.com/ particularly the articles on passive investing. Menu->Investing->Passive Investing or Archive line in top right.

Also please realise that when the valuation of your investments drops, you haven't lost real money unless you sell (or the company that investment is in goes into administration). So there's a 20% drop in March, but it's back up by September (or April, or next year or ...). Likewise if there's a 20% rise,it may be followed by an equivalent fall, but over 10 years or more an equity investment is very likely to be in profit.

Thrugelmir

Start by dipping your toe in the water slowly. A set sum every month into a broadly based diversified fund. Don't expect to touch the money for at least 10 years. Get used to the rises and falls in market prices. As it's part and parcel of investing. With experience increase the monthly sum. 
Given you are starting the investment  journey in the greatest period of uncertainty in a very long time. Don't expect a smooth ride. No one knows how the global economy is going to recover. Going to be some years to recover the output that's been lost. 
Initially aim simply to beat the return on cash and be above the rate of inflation. There'll always be a better fund or market than you are are invested in. That's life. 

thegentleway

As you're just starting out, I would suggest reading some investments books. I read Smarter investing by Tim Hale, automatic millionaire by David Bach, the invesment answer, and master the money game by Tony Robbins. You've got plenty of time to learn as if you're worried about 5% losses in the short term, investing isn't for you.
Independent financial advise is relatively expensive because there's a lot of regulations that advisors have to demonstrate they comply with. That's where this forum comes in very handy, lots of very helpful free advise if you ask the right questions. You want to get the basics sorted like having 3-6 months expenses emergency fund, paying off debt, paying into your pension, etc... before you think about investing.