Investment Beginner

Cptralls

Hi All,

I've been reading up on investing, I'm completely new to it.To begin with I want to invest £1k and perhaps add to this over time. I've a number of initial questions.

1. The platform is obviously key, I'm unsure of what to go with or even how to pick one. What are my options here?

2. Everything I've read advises that I'll need to invest for a minimum of five years. However, what happens if after one year my investment does well and I want to bank this? Apologies if this is a silly question.

Thanks in advance. 

grumiofoundation

1. No what you invest in is key.

The wrapper you invest via (e. g. pension vs stocks and shares isa vs lifetime ISA) is also more important than the platform.

The platform (and associated costs) are important but should be looked at after the above. 

There are various comparisons online e. g. https://monevator.com/find-the-best-online-broker/

2. Longer timescales are suggested so you can ride out any major drops. You would be able to sell all/part of an investment after say one year and (assuming you use the appropriate tax wrapper e. g. not pension) transfer proceeds to bank account. 

Question might be why would you sell after 1 year if it has done well (depending on what “well” is - 5%, 10%? ) if you are aiming to invest for longer timescales? If you are not aiming to invest for longer then 1+ year then you run the risk of getting back less than what you paid in.  

jimjames

For Q2, there is no reason why you can't sell at any point if you need the money. But if you are investing long term and no specific date in mind if you sell up what will you do with the money at that point?

dunstonh

1. The platform is obviously key, I'm unsure of what to go with or even how to pick one. What are my options here?

Actually, it's low down the decision-making process.  Where you want to invest is primary.  When you have selected that, then you look at how to achieve that purchase.

2. Everything I've read advises that I'll need to invest for a minimum of five years. However, what happens if after one year my investment does well and I want to bank this? Apologies if this is a silly question.

An economic cycle is a little over 10 years nowadays.  That is the ideal minimum.   5 years is often quoted as its statistically unlikely to have made a loss in that timescale in most periods.  You could be in profit in 2 days time, 2 months time or 2 years time.   

Investing is not gambling.  You don't pocket winnings.  You continue your objectives.

maxsteam

Platforms to investigate include x-o.co.uk and degiro. There are many to choose from but you need to find one that you are comfortable with.

Eco_Miser

For q2, if you have bought a share, fund or Investment Trust that has done fantastically well, as Tesla did recently, there is no harm in thinking that it won't be doing as well in the future, so selling it to lock in the gains. The resultant money will still be in your investment account (ISA, pension etc) and you would normally invest in something else for the rest of your planned investment period. (If it's a pension or LISA you have little choice, you can't get at the money until a specified age).

However trying to pick investments that do fantastically well is normally considered speculation/gambling, not investing, as such investments have a habit of dropping as quickly as they rise.

Cptralls

dunstonh said:

1. The platform is obviously key, I'm unsure of what to go with or even how to pick one. What are my options here?

Actually, it's low down the decision-making process.  Where you want to invest is primary.  When you have selected that, then you look at how to achieve that purchase.

2. Everything I've read advises that I'll need to invest for a minimum of five years. However, what happens if after one year my investment does well and I want to bank this? Apologies if this is a silly question.

An economic cycle is a little over 10 years nowadays.  That is the ideal minimum.   5 years is often quoted as its statistically unlikely to have made a loss in that timescale in most periods.  You could be in profit in 2 days time, 2 months time or 2 years time.   

Investing is not gambling.  You don't pocket winnings.  You continue your objectives.

OK so if the platform is of secondary importance then how do I know what to invest it? 

dunstonh

Cptralls said:

dunstonh said:

1. The platform is obviously key, I'm unsure of what to go with or even how to pick one. What are my options here?

Actually, it's low down the decision-making process.  Where you want to invest is primary.  When you have selected that, then you look at how to achieve that purchase.

2. Everything I've read advises that I'll need to invest for a minimum of five years. However, what happens if after one year my investment does well and I want to bank this? Apologies if this is a silly question.

An economic cycle is a little over 10 years nowadays.  That is the ideal minimum.   5 years is often quoted as its statistically unlikely to have made a loss in that timescale in most periods.  You could be in profit in 2 days time, 2 months time or 2 years time.   

Investing is not gambling.  You don't pocket winnings.  You continue your objectives.

OK so if the platform is of secondary importance then how do I know what to invest it? 

Most modern platforms are whole of market.  So, you have the 30,000 odd options to select from.   So filtering by platform first won't help you filter the investment options.

Effectively, you look at your objective and decide the tax wrapper(s) to fit that objective.   Then you research the investments you want to hold in that wrapper.  Then you look at the platforms or providers that offer that investment and wrapper.

Your investment is small.  So, either a multi-asset fund if you dont want 100% stockmarket exposure or a global tracker fund if you want to go 100% stockmarket.

Eyeful

Cptralls said:

OK so if the platform is of secondary importance then how do I know what to invest it? 

1. Watch this
https://www.kroijer.com/

2. Then read this
https://monevator.com/passive-fund-of-funds-the-rivals/

helpyhelper

1. I'd use internet brokers as they are by far the cheapest. I use IG who make their money through spreadbetting so don't need to make much through stockbroking
2. Invest with a long term horizon, basically don't speculate who is going to go up this year. If you do well early you can always cash out early, but base it on what the price of the company is vs how much you think it should be worth.

jimjames

helpyhelper said:

2. Invest with a long term horizon, basically don't speculate who is going to go up this year. If you do well early you can always cash out early, but base it on what the price of the company is vs how much you think it should be worth.

But if you "cash out" you still need a home for the money, so unless you have a use in mind for the cash it might not be worth it. Obviously if single company that could be different but for a beginner I wouldn't be suggesting putting money into single company shares