2k investment

pafpcg

wmb194 said:

pafpcg said:

DasTechniker said:

eskbanker said:

DasTechniker said:

But for what it’s worth- and you shouldn’t take this as a recommendation- I used to use the O’ Higgins system mostly. Buying the top ten shares in the FTSE, holding for a year, collecting the dividends as they came along and after the twelve months, reviewing which shares had dropped out of the top ten and then the new ones that had entered. As ever, there is still a danger that a company can go bust!

Except for those with the time, capacity and willingness to conduct detailed due diligence on individual companies, diversification has to be the best approach for investors, especially inexperienced ones.  It's often pointed out on here that the FTSE100 itself isn't particularly well diversified, and obviously that's even more true for a small subset of it, so, while ten equities are likely to be better than one, and a hundred better than ten, the usual recommendation is to diversify globally, to minimise risks from underperforming sectors or markets.

There are many options, including global equity funds and multi-asset funds, available to today's investor (far more so than 35 years ago!), so OP is likely to be better served by using such collective products rather than individual shares.

Exactly. My mistake as I should have said Highest Dividend paying shares in the FTSE. In that scenario you tend to get shares that have dropped in price while the dividend yield rises and can lead to a bunching of companies such as the banks in 2007 - 2008. The upshot of all this is how far you want to go when investing. Personally, I enjoyed studying the various companies and could be an anorak when asked to comment by friends. 😁  In my case, I would have found ETF’s or trackers a bit boring. It all depends how deep you want to get with stock market investing. I certainly treated it as a hobby in the hope of making a few bucks and wouldn’t have made my future finances dependent on it as some do. 

There are costs involved in making and holding investments in stocks & shares.  If the individual investment is small, then the costs or charges for making that investment may wipe out any potential gains! 

As things stand with commission free brokers like Trading212, Robinhood UK, Freetrade and CMC Invest this is a non-issue. Apart from Robinhood, these brokers also offer ETFs and Investment Trusts so collective investments are cheap to own via them as well.

Oh dear, what have I done!  I've opened up the Pandora's Box of platform risks!  The poor OP will be getting really overwhelmed by the multiplicity of choices and risks...

wmb194

pafpcg said:

wmb194 said:

pafpcg said:

DasTechniker said:

eskbanker said:

DasTechniker said:

But for what it’s worth- and you shouldn’t take this as a recommendation- I used to use the O’ Higgins system mostly. Buying the top ten shares in the FTSE, holding for a year, collecting the dividends as they came along and after the twelve months, reviewing which shares had dropped out of the top ten and then the new ones that had entered. As ever, there is still a danger that a company can go bust!

Except for those with the time, capacity and willingness to conduct detailed due diligence on individual companies, diversification has to be the best approach for investors, especially inexperienced ones.  It's often pointed out on here that the FTSE100 itself isn't particularly well diversified, and obviously that's even more true for a small subset of it, so, while ten equities are likely to be better than one, and a hundred better than ten, the usual recommendation is to diversify globally, to minimise risks from underperforming sectors or markets.

There are many options, including global equity funds and multi-asset funds, available to today's investor (far more so than 35 years ago!), so OP is likely to be better served by using such collective products rather than individual shares.

Exactly. My mistake as I should have said Highest Dividend paying shares in the FTSE. In that scenario you tend to get shares that have dropped in price while the dividend yield rises and can lead to a bunching of companies such as the banks in 2007 - 2008. The upshot of all this is how far you want to go when investing. Personally, I enjoyed studying the various companies and could be an anorak when asked to comment by friends. 😁  In my case, I would have found ETF’s or trackers a bit boring. It all depends how deep you want to get with stock market investing. I certainly treated it as a hobby in the hope of making a few bucks and wouldn’t have made my future finances dependent on it as some do. 

There are costs involved in making and holding investments in stocks & shares.  If the individual investment is small, then the costs or charges for making that investment may wipe out any potential gains! 

As things stand with commission free brokers like Trading212, Robinhood UK, Freetrade and CMC Invest this is a non-issue. Apart from Robinhood, these brokers also offer ETFs and Investment Trusts so collective investments are cheap to own via them as well.

Oh dear, what have I done!  I've opened up the Pandora's Box of platform risks!  The poor OP will be getting really overwhelmed by the multiplicity of choices and risks...

pafpcg said:

wmb194 said:

pafpcg said:

DasTechniker said:

eskbanker said:

DasTechniker said:

But for what it’s worth- and you shouldn’t take this as a recommendation- I used to use the O’ Higgins system mostly. Buying the top ten shares in the FTSE, holding for a year, collecting the dividends as they came along and after the twelve months, reviewing which shares had dropped out of the top ten and then the new ones that had entered. As ever, there is still a danger that a company can go bust!

Except for those with the time, capacity and willingness to conduct detailed due diligence on individual companies, diversification has to be the best approach for investors, especially inexperienced ones.  It's often pointed out on here that the FTSE100 itself isn't particularly well diversified, and obviously that's even more true for a small subset of it, so, while ten equities are likely to be better than one, and a hundred better than ten, the usual recommendation is to diversify globally, to minimise risks from underperforming sectors or markets.

There are many options, including global equity funds and multi-asset funds, available to today's investor (far more so than 35 years ago!), so OP is likely to be better served by using such collective products rather than individual shares.

Exactly. My mistake as I should have said Highest Dividend paying shares in the FTSE. In that scenario you tend to get shares that have dropped in price while the dividend yield rises and can lead to a bunching of companies such as the banks in 2007 - 2008. The upshot of all this is how far you want to go when investing. Personally, I enjoyed studying the various companies and could be an anorak when asked to comment by friends. 😁  In my case, I would have found ETF’s or trackers a bit boring. It all depends how deep you want to get with stock market investing. I certainly treated it as a hobby in the hope of making a few bucks and wouldn’t have made my future finances dependent on it as some do. 

There are costs involved in making and holding investments in stocks & shares.  If the individual investment is small, then the costs or charges for making that investment may wipe out any potential gains! 

As things stand with commission free brokers like Trading212, Robinhood UK, Freetrade and CMC Invest this is a non-issue. Apart from Robinhood, these brokers also offer ETFs and Investment Trusts so collective investments are cheap to own via them as well.

Oh dear, what have I done!  I've opened up the Pandora's Box of platform risks!  The poor OP will be getting really overwhelmed by the multiplicity of choices and risks...

What are you worrying about? Worst case they're covered by the FSCS. 

rockchick113

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

eskbanker

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

Granted there was quite a digression into the minutiae of a very specific share selection methodology that was never likely to be relevant to you, but before that, there were a number of links to articles about how to get started on investing, have you read those and do you have any questions arising from them?

AlanP_2

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

Unfortunately the discussion went down a bit of a rabbit hole that covered topics which TBH are not relevant for an inexperienced investor looking to dip their toes in the water with a small amount.

For general info have a look at https://monevator.com/tag/investing-lessons/ for a short series of relatively easily read and understood articles on basic principles around investing.

That should help you to clarify a few terms that are bandied about and hopefully make it clear that your best and easiest option is a Global Multi Asset Fund (select appropriate "risk" level) or a Global Equity Fund if you want 100% equities / shares and no bonds.

I would strongly suggest that you go nowhere near individual shares, most people never, ever  get involved with these.

Examples of Global Multi Asset Funds are:

1. Vanguard Lifestrategy Series - offers a choice of 20% to 100% equity with bonds to balance
2. HSBC Global Strategy Series - uses words rather than percentages to describe the options but broadly similar to above

An example of Global Equity Funds is Vanguard FTSE Global All Cap which invests in c6000 companies across the globe on your behalf.

For each fund you will have a choice of ACC or INC units.

ACC units automatically reinvest any dividends that the companies they hold pay out back into the fund for you.

INC units put the dividends to one side for you to either reinvest yourself or withdraw to your bank account.

If you are looking to build up a pot over time and don't need the income then ACC is the best choice as everything happens behind the scenes.

if you are NOT going to use an ISA or Pension as the "wrapper" then use INC units as dividends are taxable and you need to track how much you get in each tax year.

NOTE - Use ISA or Pension if at all possible.

Once you have a clear idea on "what" you want to invest in choose a platform to administer the process.

Vanguard have a platform that only deals with Vanguard funds (low cost at 0.15% pa). Broader platforms that offer access to a much wider range of funds are the likes of Fidelity (at 0.35% pa).

Any queries or confusion come back and ask. 

Beddie

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

Read the link in the 2nd comment for a good starting point.

But don't over complicate it. Far too much detail in some of the posts above, for a novice.

Open a S&S ISA with a provider, I suggest Vanguard. Look here  and you can see they offer a choice of funds, or can even choose a fund for you after answering some questions. Try it out, see how you get on. Vanguard Lifestrategy 60 is a popular choice, but there others with higher or lower risk. You can put some money straight in, or start a monthly savings plan, or both!

It's not a forever choice - as you learn more you can change your investments, move provider, whatever you like. Good luck!

Eyeful

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

May be watching this video will help & make things easier to understand.

1. First watch:    https://www.kroijer.com/

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

allegro120

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

Is there any reason why you prefer to invest instead of make your money grow in FSCS protected savings accounts? Savings accounts are much more simple, you get what is promised, no gamble, no loss and less confusing.

eskbanker

allegro120 said:

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

Is there any reason why you prefer to invest instead of make your money grow in FSCS protected savings accounts? Savings accounts are much more simple, you get what is promised, no gamble, no loss and less confusing.

OP does mention that it's money for the long term, over which investing will generally outperform saving (which rarely keeps pace with inflation for a sustained period), albeit with some more complexity involved.

allegro120

eskbanker said:

allegro120 said:

rockchick113 said:

Thank you all for all your comments,I’m none the wiser but more confused lol. 😊

Is there any reason why you prefer to invest instead of make your money grow in FSCS protected savings accounts? Savings accounts are much more simple, you get what is promised, no gamble, no loss and less confusing.

OP does mention that it's money for the long term, over which investing will generally outperform saving (which rarely keeps pace with inflation for a sustained period), albeit with some more complexity involved.

Complexity and risk. Investments generally outperform, but one can also loose some of their capital (or all of it if they are extremely uncareful).

Long term is a loose definition, for some 5 years is a short term and for some 1 year is long.  OP didn't specify the time. Overall over a period of about 30 years my "long term" savings kept me above the inflation. 

It all depends on personal circumstances and attitudes, but I think in case of £2k (assuming this is the only spare cash to play with) to invest without any prior knowledge/experience is not the wisest decision to be made.  Even if S&S outperforms savings in 20 year's time the profit won't be significantly larger than from savings accounts.