Stocks & Shares ISA / Index Tracker Fund

blacksteel

Hi everyone,

I am looking to begin investing, but I am new to the concept and have limited knowledge. I have done some research and am feeling a little overwhelmed.

Rather than a lump sum, I'd like to start small, paying in around £50 - £100 per month, and build gradually. Given my inexperience, I'd also like to start simple. I've looked at a Stocks & Shares ISA, or investing in a fund which tracks the FTSE100 (or 250), but I don't know what would be best for me. 

As a beginner investor, what would you recommend to get started?

Thanks!

 

Mark_d

When I was a beginner investor, I researched industry sectors and read up on the companies I thought had best prospects.  If/when prices were what I considered "good", I invested £10k in each of 4 or 5 companies that I had identified.

If you're less interested in investing but are simply looking to grow your wealth, then there are a number of companies such as Wealthify or Vangouard, that can find you a fund which matches your vision and your attitude to risk.  Investing in a fund lowers your risk because you are indirectly invested in lots of companies and instruments.  Paying in £100 a month reduces your exposure to stock market movements.

eskbanker

blacksteel said:

I am looking to begin investing, but I am new to the concept and have limited knowledge. I have done some research and am feeling a little overwhelmed.

Rather than a lump sum, I'd like to start small, paying in around £50 - £100 per month, and build gradually. Given my inexperience, I'd also like to start simple. I've looked at a Stocks & Shares ISA, or investing in a fund which tracks the FTSE100 (or 250), but I don't know what would be best for me. 

As a beginner investor, what would you recommend to get started?

My go-to copypasta for newbie investor threads is the reading material at sites such as:
https://www.moneysavingexpert.com/savings/investment-beginners/
https://www.moneyhelper.org.uk/en/savings/investing/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 MyMap 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 (or perhaps a SIPP) as a tax-efficient wrapper to avoid liability for income and capital gains tax.

Sam_666

Nevermind ISA, invest in your workplace pension, in passive global tracking fund.
Investing £100 a month is only good if you are 20ish y old.

eskbanker

Sam_666 said:

Nevermind ISA, invest in your workplace pension, in passive global tracking fund.

That may be appropriate if it's money that OP is happy to tie up until they're 57+, but no such indication was given.

Sam_666 said:

Investing £100 a month is only good if you are 20ish y old.

Eh?  Why do you assert that there's some sort of correlation between monthly investing 'budget' and age?

Eco_Miser

blacksteel said:

 Given my inexperience, I'd also like to start simple. I've looked at a Stocks & Shares ISA, or investing in a fund which tracks the FTSE100 (or 250), but I don't know what would be best for me. 

Replying specifically to this point, these are NOT alternatives.

• A Stocks & Shares ISA is a wrapper which exempts its contents from UK income tax and capital gains tax (CGT). This is a good thing and there is rarely a reason not to use one, except if you use a SIPP or workplace pension instead (also tax exempt, gets income tax refund on contributions (so more invested at same cost to you), but you can't get the money back before 57 (or whatever age the Government has raised it to by the time you get that old).
• A fund which tracks the FTSE100 (or 250) is an actual investment, you pay the fund company money, and they buy shares in the companies making up the index, in proportion to their weightings in the index, and allocate them to you (as units in their fund, which is now a little bit bigger than it was before). Those companies grow and pay dividends (or not) which are either passed on to you as cash or remain in the fund and buy yet more shares in the underlying companies. Their valuation changes constantly, you hope upwards, but it is possible to lose 50% or more. Individual companies can lose all their value.
  
• You can hold a fund within an ISA, or outside it (in what is known as a General Investment Account (GIA)), or in a pension.
  
• The FTSE 100 and 250 are not particularly good indexes for a stand-alone investment, as they only cover companies traded on the London Stock Exchange (about 4% of the world's investable shares). Look for a fund covering the whole world.

Read the links and principles in eskbanker's copypasta above, it's all good advice.

Eyeful

1. Clear all high interest debt first
2. Have an emergency savings account for things like a broken boiler & not selling investments in market crashes.
3. Use tax shelters whenever possible
(a) Pensions: For very long term investing, you get free money & it is untaxed at least until you with draw it.
(b) Stocks & shares ISA: For long term  investing lets say a minimum of 10 years.
(c) Cash ISA: Any money needed within 5 years should be in a savings account.
4. Do not "jump ship" just because the market crashes (classic newbie reaction). 

Watch this:  https://www.kroijer.com/
Now consider
Passive low cost Global Multi Asset Fund with a share/bond split you are happy with,
Example:  https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/#balanced
https://monevator.com/passive-fund-of-funds-the-rivals/
Passive low cost Global Index Fund or ETF
Example:  VWRP
https://monevator.com/best-global-tracker-funds/

dales1

Yes, VWRP if using an S&S ISA as recommended.

Otherwise VWRL (or VEVE) in a GIA.