Investing Funds or Shares - £500
Damper132
Posts: 28 Forumite
My first thread so please go easy on me,
I've recently opened a Hargreaves Lansdowne ISA with £500 and am looking to make monthly investments going forwards.
Ive looked at the pros and cons of funds and shares, i guess its all about risk and reward.
the gains/losses with funds tend to be smaller due to the diversity of funds and as such with shares the gains/losses tend to be far greater as all your eggs are in one basket.
Would just be interested to see which route any other first time investors went down and what lessons were learnt, what advice you would give and if knowing what you now know would have taken the other route?
Thanks alot Damper132
I've recently opened a Hargreaves Lansdowne ISA with £500 and am looking to make monthly investments going forwards.
Ive looked at the pros and cons of funds and shares, i guess its all about risk and reward.
the gains/losses with funds tend to be smaller due to the diversity of funds and as such with shares the gains/losses tend to be far greater as all your eggs are in one basket.
Would just be interested to see which route any other first time investors went down and what lessons were learnt, what advice you would give and if knowing what you now know would have taken the other route?
Thanks alot Damper132
0
Comments
-
Funds spread your risk across usually 20-1000s of companies for an annual % fee whereas shares are one company with share comission fees.
With £500 I would go for funds. The £12 fee for both buying and selling shares will make share gains an uphill struggle for you.
On HL you can go for funds that rely on a professional manager to pick a small selection of shares that should do well and may beat the average, or go with funds that automatically buy a tiny part of every top company in the world and return the average. The choice is yours.0 -
At that value funds are a no-brainer to avoid trade fees.
On HL, if you are investing long term in mostly volatile global equities, it is worth looking at discounted funds such as Lindsell Train Global Equity, Blackrock Consensus 85/100 and L&G International - might as well salvage some value from the high 0.45% platform fee.
Alex0 -
I am a novice investor and have dabbled in both. My individual shares were fortunately (relatively) profitable and were a good learning process, although I have since come to appreciate the pros and cons of both. I've both felt frustrated over missing huge gains on stock picks I almost went for, but didn't, and relief at not making big losses on stock picks I almost went for, but didn't.
As a new investor I would absolutely recommend that you stick with funds. It may well be that as your knowledge and investable funds grow, you may want to diversify and have a play around with individual shares but until that point I would suggest it was too risky. That being said, we all have different preferences when it comes to risk.
However, the first point of call should be creating a plan. What are your short and long term financial goals? If they are short term, i.e. less than 5-10 years, then investing in the stock market is probably not the right option for you. If you have longer term goals then read up on asset allocation and establish the appropriate strategy to meet your objectives.
With the amount of money you are investing, I would also suggest steering clear of multiple funds and just investing in a single, global, multi-asset fund such as the Vanguard LifeStrategy funds. This will allow you to remain diversified across multiple markets/industries/companies etc until such a time as you are experienced/knowledgeable enough/have enough capital to start allocating to multiple funds in line with the strategy identified above.
Just my $0.02...
0 -
My first thread so please go easy on me,
I've recently opened a Hargreaves Lansdowne ISA with £500 and am looking to make monthly investments going forwards.
Ive looked at the pros and cons of funds and shares, i guess its all about risk and reward.
the gains/losses with funds tend to be smaller due to the diversity of funds and as such with shares the gains/losses tend to be far greater as all your eggs are in one basket.
Would just be interested to see which route any other first time investors went down and what lessons were learnt, what advice you would give and if knowing what you now know would have taken the other route?
Thanks alot Damper132
I started out buying a couple of funds in a small amount to see how it all worked and it was a waste of money as I spent more on transactions fees and inevitably moving it all across to a Stocks & Shares ISA once I got past the novelty stage.
For starting out you cannot go wrong picking a well respected global index fund and letting it build up over time.0 -
I am a novice investor and have dabbled in both. My individual shares were fortunately (relatively) profitable and were a good learning process, although I have since come to appreciate the pros and cons of both. I've both felt frustrated over missing huge gains on stock picks I almost went for, but didn't, and relief at not making big losses on stock picks I almost went for, but didn't.
As a new investor I would absolutely recommend that you stick with funds. It may well be that as your knowledge and investable funds grow, you may want to diversify and have a play around with individual shares but until that point I would suggest it was too risky. That being said, we all have different preferences when it comes to risk.
However, the first point of call should be creating a plan. What are your short and long term financial goals? If they are short term, i.e. less than 5-10 years, then investing in the stock market is probably not the right option for you. If you have longer term goals then read up on asset allocation and establish the appropriate strategy to meet your objectives.
With the amount of money you are investing, I would also suggest steering clear of multiple funds and just investing in a single, global, multi-asset fund such as the Vanguard LifeStrategy funds. This will allow you to remain diversified across multiple markets/industries/companies etc until such a time as you are experienced/knowledgeable enough/have enough capital to start allocating to multiple funds in line with the strategy identified above.
Just my $0.02...
I think I'm definitely going to swerve shares for now at least until i get a lot further down the line and build up a solid understanding an amount that isn't going to mean i have to battle just to make a return past the fees already incurred.
I dont really have a plan as such at the moment was just looking to make a start but i guess it would be long term growth definatley in excess of 5 years.
will definately give the above funds some consideration, seems like a bit of a mine field to begin with but hopefully will see at least some returns, seems a Global fund is a good place to start too :beer: and thanks alot for the help0 -
For simple low cost passive funds that provide a decent return you can look at Vanguard Lifestrategy Funds which are simple to set up as you just choose the VLS fund with the percentage mix of bonds and shares you want depending on your risk tolerance (the more shares the higher the risk but also the possibility of higher returns), pay your money and let Vanguard rebalance as required. VLS also have extremely low fees and you can buy direct in the UK. Vanguard also offer stocks and shares ISA as well.On HL you can go for funds that rely on a professional manager to pick a small selection of shares that should do well and may beat the average, or go with funds that automatically buy a tiny part of every top company in the world and return the average. The choice is yours.
No manager has ever beaten an index fund over the long term. Even Warren Buffet advocates going with index funds with a mix of bonds.0 -
Although the Vanguard LifeStrategy series has been mentioned twice remember that Blackrock Consensus 85 or 100 are very similar (slightly less UK bias) and discounted to less that half the ongoing charge on HL.0
-
No manager has ever beaten an index fund over the long term. Even Warren Buffet advocates going with index funds with a mix of bonds.
I am all for passive investing but that statement is simply not true. Many managers have beaten their benchmark (the index) over the long and short term. And many have not. No index funds have ever beaten their benchmark over the long term, but equally don't typically underperform by much.0 -
On HL fees for the isa and fund holding fees mount up and can so be pretty expensive in the longer term.
At 500 quid it would only be marginally worth buying one shares from one company but the spread, stamp tax and trading cost will add up to a good percentage in year 1. Much to risky IMHO
An alternative collective investment may be investment trusts buy and sell as per shares but with out the fund holding fees HL charge.0 -
Jackthedog wrote: »On HL fees for the isa and fund holding fees mount up and can so be pretty expensive in the longer term.
At 500 quid it would only be marginally worth buying one shares from one company but the spread, stamp tax and trading cost will add up to a good percentage in year 1. Much to risky IMHO
An alternative collective investment may be investment trusts buy and sell as per shares but with out the fund holding fees HL charge.
would you suggest maybe moving away from HL then as too expensive?
i will definitely look into the investment trusts, its a minefield to figure or what to and what not to do0
This discussion has been closed.
Categories
- All Categories
- 343.1K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.2K Work, Benefits & Business
- 607.9K Mortgages, Homes & Bills
- 173K Life & Family
- 247.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards