Best way to start investing regularly

thor

Apart from my workplace pension I have not considered gambling with investments until now and have decided I can afford to risk about £200 per month.

So being extremely risk adverse what would be my best option? I am looking at long term (20 years plus) because I won't need to access the money. I won't need to draw any income, I'm just after growth. I have been reading up but there are so many options I don't know where to start. At the moment I get the impression I should start up an S&S ISA and invest in some kind of growth fund but I have no confidence that this would be the best option for me.

So in my shoes what would people in here do? and how do you go about it?

eskbanker

S&S ISAs aren't the only show in town - LISAs are worthwhile if you're under 40 and are happy to commit funds until 60+, or personal pensions such as SIPPs are likewise tax-efficient if you're able to commit until 55+.  These are all wrappers of one form or another though, so there is still the issue of exactly what to buy within them, but if you really are "extremely risk adverse" and see investing as gambling then you'll need to read up much more in order to convince yourself that investing is appropriate at all!

Alexland

I think the first step is to understand you have greater risk in not investing (as your savings are being eroded by inflation) than making a sensible diversified investment which is highly likely to go up more over the long term (with some ups and downs and occasional crashes along the way - none of which matter if you are not withdrawing for a long time).

Eco_Miser

Your best option is the one that suits you best. Read through the first dozen articles linked from https://monevator.com/highlights/  to get an idea of what that may be.

My suggestion would be a low-cost global multi-asset fund in one or more of the tax wrappers mentioned by eskbanker, fed by standing order or direct debit just after payday.

thor

Alex, I am well aware about the effects of inflation on savings, it's just that I don't regard past performance(even hundreds of years) as being any indicator of the future for shares. Look at banks for example. Before 2007 did anyone seriously think that they would tank so spectacularly? This is why I regard investing as a gamble and I don't expect anyone to be able to say hand on heart that stocks and shares will 100% be able to out perform cash even with inflation taken in to account. Having said that I am willing to risk 200 quid a month as I can afford to lose it and will read up on the suggestions offered. Thanks.

Albermarle

thor said:

Alex, I am well aware about the effects of inflation on savings, it's just that I don't regard past performance(even hundreds of years) as being any indicator of the future for shares. Look at banks for example. Before 2007 did anyone seriously think that they would tank so spectacularly? This is why I regard investing as a gamble and I don't expect anyone to be able to say hand on heart that stocks and shares will 100% be able to out perform cash even with inflation taken in to account. Having said that I am willing to risk 200 quid a month as I can afford to lose it and will read up on the suggestions offered. Thanks.

The whole of the personal investment/pensions sector is based on the hope that long term growth above inflation/ cash savings rates  is a given.
All the regular posters on here will sincerely  hope you are wrong in your extremely pessimistic outlook .

barnstar2077

thor said:

Alex, I am well aware about the effects of inflation on savings, it's just that I don't regard past performance(even hundreds of years) as being any indicator of the future for shares. Look at banks for example. Before 2007 did anyone seriously think that they would tank so spectacularly? This is why I regard investing as a gamble and I don't expect anyone to be able to say hand on heart that stocks and shares will 100% be able to out perform cash even with inflation taken in to account. Having said that I am willing to risk 200 quid a month as I can afford to lose it and will read up on the suggestions offered. Thanks.

This is why you invest in a globally diversified tracker fund that incorporates hundreds or even thousands of companies.

Alexland

thor said:

I don't regard past performance(even hundreds of years) as being any indicator of the future for shares. 

Its important to remember that banks are only part of a diversified portfolio and were always expected to be economically sensitive. By spreading your risk across thousands of different assets you are highly likely to get a significantly better return than cash. Better odds than most things in life. Its just worth getting comfortable with that so you have confidence and don't sell low next time markets crash as they inevitably will.

Another_Saver

Extremely risk averse investing is an oxymoron.

Over the long term, stocks - or rather a diverse portfolio of stocks, ideally an index fund but that's just me being on the index side of the index/selective debate (or active passive) - are the only investable asset that we know can beat inflation over the long term.

In a stock index like the FTSE 100 in the UK or S&P 500 in the US, or a global index, company earnings/dividends/stock prices are all linked and correlated over the long run, and linked and correlated with the GDP of the economy the index is in (FTSE 100 with UK GDP, S&P 500 with US GDP) companies tend to be able to grow their earnings, and thus their dividends and stock prices, by at least inflation.

With cash and bonds you get whatever the interest is, with gold no-one knows, with property too many other factors come into play about specific properties to make a generic Statement.

With stocks you get a combination of growth - earnings growth reflected in higher prices - and dividends. The price tends to at least keep up with inflation over the long run, and ontop of that you get dividends, which also tend to at least keep up with inflation.

grumiofoundation

Another_Saver said:

Extremely risk averse investing is an oxymoron.

Is it?

Does that not depend on what is meant by 'risk'.
As is often stated on these forums (and by yourself below) holding cash is a 'risk' since over the long term cash will lose money to inflation and stocks are likely to beat/keep inflation?

Over the long term, stocks - or rather a diverse portfolio of stocks, ideally an index fund but that's just me being on the index side of the index/selective debate (or active passive) - are the only investable asset that we know can beat inflation over the long term.

Thrugelmir

barnstar2077 said:

thor said:

Alex, I am well aware about the effects of inflation on savings, it's just that I don't regard past performance(even hundreds of years) as being any indicator of the future for shares. Look at banks for example. Before 2007 did anyone seriously think that they would tank so spectacularly? This is why I regard investing as a gamble and I don't expect anyone to be able to say hand on heart that stocks and shares will 100% be able to out perform cash even with inflation taken in to account. Having said that I am willing to risk 200 quid a month as I can afford to lose it and will read up on the suggestions offered. Thanks.

This is why you invest in a globally diversified tracker fund that incorporates hundreds or even thousands of companies.

Which by itself is a highly correlated investment.