Stocks & Shares ISA

Esoteric_2

Hi Guys & Happy New Year.
I was wondering on what peoples thoughts are, is a Stocks & Shares ISA the way forward to make any interest on your money?
I am thinking of opening one and maybe depositing £50 a month into one. I don't have a savings goal but simply wanting to put money aside and hopefully grow.

Moe_The_Bartender

You don’t earn interest on a stocks and shares ISA. The fact that you think that suggests that it may not be for you.

Whether such an ISA is suitable for you depends on many things including how quickly you might need the money. An S&S ISA should always be seen as a long term investment.

sevenhills

The costs of buying shares is around £10/£15 so you would need to buy several hundreds worth in order to cover your costs.

I am trying to get my holdings to a thousand each share, or more.

grumiofoundation

sevenhills said:

The costs of buying shares is around £10/£15 so you would need to buy several hundreds worth in order to cover your costs.

I am trying to get my holdings to a thousand each share, or more.

You don't have to buy shares in a Stocks and Shares ISA. You can buy funds (normally free to deal), ETFs, investment trusts....

A diversified multi-assest fund is often 'suggested' as a good place to start.
https://monevator.com/passive-fund-of-funds-the-rivals/

Esoteric_2 said:

Hi Guys & Happy New Year.
I was wondering on what peoples thoughts are, is a Stocks & Shares ISA the way forward to make any interest on your money?
I am thinking of opening one and maybe depositing £50 a month into one. I don't have a savings goal but simply wanting to put money aside and hopefully grow.

As with the poster above you don't earn interest. 
Are you happy to see the money drop in value in the short term, depending on what you choose to invest in could be 40%+?

For £50 a month you may want to consider looking at a provider that offers a decent cashback amount to start investing (e.g. through sites such as topcashback/quidco or refer a friend offers). These generally have drawbacks e.g. higher fees, more restricted offerings but the cashback often more than makes up for this.
You then transfer out once the minimum tie in period expires to a 'better' platform. (Obviously make sure this is something you would be happy investing in without the cashback). 

DireEmblem

Uninvested cash in a HL ISA would currently earn you 0%
https://www.hl.co.uk/charges-and-interest-rates

If you are happy to leave your money for 5-10 years, then look to invest in a cheap global equity tracker.  That, or check out the signup offers from MoneyFarm, Nutmeg and Wealthify.  They on occasion have offered £100 bonus for accounts that deposit X, and monthly Y.  Look at it as essentially a head start in 'investesting', and once you have your bonus, review your options to see if it is still the best place to keep your money.

Similarly, if you have not yet bought your first home, you could look at a LISA, and get 25% bonus from the government.

Alexland

DireEmblem said:

Similarly, if you have not yet bought your first home, you could look at a LISA, and get 25% bonus from the government.

It's the same 25% bonus even if you do already own a home and keep the money invested for age 60+

jimjames

sevenhills said:

The costs of buying shares is around £10/£15 so you would need to buy several hundreds worth in order to cover your costs.

I am trying to get my holdings to a thousand each share, or more.

Surely it's better to use funds rather than individual shares if you have to wait to get to £1000 as then you still only have 1 shares and the risk that brings?

Esoteric_2

Moe_The_Bartender said:

You don’t earn interest on a stocks and shares ISA. The fact that you think that suggests that it may not be for you.

Whether such an ISA is suitable for you depends on many things including how quickly you might need the money. An S&S ISA should always be seen as a long term investment.

Sorry I didn't mean interest, I meant increasing the value of my investment

steampowered

If you do not have any immediate need for the money, a S&S ISA is a good idea. As others have said you would need to invest into a fund with no dealing charges.

I completely disagree with all of the people who are saying stocks are only suitable for 5-10 year investments.  Investing in stocks & shares over a 1 or 2 year period is a perfectly sensible thing to do if you understand the risk. Short term investments are higher risk than longer term investments, but they also offer higher rewards, so you have to make a decision as to what level of risk you are happy with in your individual circumstances. Yes it is a risk - but it is a risk where the dice are weighted in the investor's favour.

The Op should be willing to take a lot more risk on his £50pm investment, than a pensioner would want to take on his or her life savings. 

After you have been invested for about 2 years in a stock market tracker fund, the statistics are that you have a 80% chance of making a profit and a 20% chance of making a loss. The chance of making a profit increases further the longer you are invested. The statistic average returns generated by the major stock markets are about 7-8% per year, though some years make more than that and some years make a loss. See https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/. 

Eco_Miser

Contrary to the opinion of several of the previous posters, your can get interest in a Stocks and Shares ISA. You can buy fixed interest securities, known as bonds (or Gilts if issued by HM Treasury), or bond funds, or multi-asset funds with over 60% bonds.  However the effective interest rates are worse than bank interest, and there is a very real possibility of getting less back than you put in.

With shares, and funds of shares, part of your return is in the form of dividends - your share of the surplus profit of the companies, and part is a growth in the value of the shares - your share of the retained profits of the companies, plus (or minus) the expectations of the 'market' - all the investors and potential investors in those companies. If market expectations are low share prices can easily fall below what you paid for them, and halving, and halving again is not unknown. Plus individual companies can just go broke, and then your shares in that company are worth nothing, and shares in related companies fall too.

That said, investing in a widely diversified fund or funds of shares gives me a nice extra income I wouldn't get by putting the money in savings accounts.  Just don't think S&S ISAs are as safe as bank accounts, and don't invest money you'll need in the next five to ten years.

thegentleway

steampowered said:

If you do not have any immediate need for the money, a S&S ISA is a good idea. As others have said you would need to invest into a fund with no dealing charges.

I completely disagree with all of the people who are saying stocks are only suitable for 5-10 year investments. That's hog-wash - investing in stocks & shares over a 1 or 2 year period is a perfectly sensible thing to do if you understand the risk. Short term investments are higher risk than longer term investments, but they also offer higher rewards, so you have to make a decision as to what level of risk you are happy with in your individual circumstances. Yes it is a risk - but it is a risk where the dice are weighted in the investor's favour.

Obviously, the Op should be willing to take a lot more risk on his £50pm investment, than a pensioner would want to take on his or her life savings. 

After you have been invested for about 2 years - on a stock market tracker fund, the statistics are that you have a 80% chance of making a profit and a 20% chance of making a loss. The chance of making a profit increases further the longer you are invested. The statistic average returns generated by the major stock markets are about 7-8% per year, though some years make more than that and some years make a loss. See https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/. 

Might be suitable for an experienced investor that knows what they are doing but it's very bad advice for inexperienced/new investors. 1 in 5 people that follow your advice are going to have less money that they started with when they need it after two years.