paulr

Say £50 a month with the option to add lump sums.

ISA or just plain FTSE tracker.

dpb

Not sure its a good time to invest at all, iv certainly missed out in the last week an half
but its difficult to believe its just going to resume heading north again

EddScott

I would ignore the movement of the FTSE unless you are directly buying shares. Worrying about it going up or down suggests you are gambling with the money. Don't try to pick tops and bottoms - the only thing you'll get if you pick a bottom is a handful of ****.

An ISA is a tax free wrapper around certain eligible investments - unit trusts, OEIC, ETFs investments trusts and direct shares to name a few. You can have a FTSE tracker type fund in an ISA.

As you are going to invest £50 movement in the market will mean you'll benefit from the fluctuating price - sometimes you'll get more for your £50 sometimes you'll get less.

For £50 in an ISA you might like to look at tracker or passive type funds. They track particular indicies at a low cost - actively managed funds are usually more expensive as you're paying for the fund managers expertise. An active fund doesn't always guarantee outperformance compared to passive funds - theres alot of debate on this.

At £50 watch the costs too. You'll have a fund charge, probably a charge from wherever the fund resides (directly or on a platform) and possible an adviser charge. You can do it directly and miss out the adviser - this can go one of two ways and is not always better value.

J4CKO

iTrader: (1)

Is it not worth him getting a share dealing account and picking a few companies to research and buying a few shares each month, I do think it takes real skill to make big money like that, some wing it and do ok and some lose their shirt but if you treat it sensibly and accept it is effectively gambling there is money to be made. I think anyone, like the housing boom when everybody became property developers can make money in an ascendant market but it takes real skill and nerve to ride the choppy waters we have now, that or insider trading.

I have some shares but bought mainly the cowards way through a company scheme where you get three years to ponder, mine matured ont he 2nd of January and I made some decent money, watching share prices, knowing when to hit the sell button becomes a fixation, the you realise you are selling three grands worth and an extra few pence isnt going to make that much difference, its like playing a fruit machine trying to hit the button when its right at one end to get the respin.

I am under no illusion I know much but it could be a really interesting hobby, people can and do make a living out of trading modest amounts of shares, my advice is to not get too greedy and assume things will keep going up and up, always look to take a profit if it is available and you have rode a wave of good luck, set a price and then when it passes it sell or have it set up on a "Limit Order" which will sell when it hits your price. Be prepared to leave the money where it is for quite a while if things take a tumble for a while.

GlesgaKiss

Buy a copy of "The Intelligent Investor" by Benjamin Graham. Repays its cost many, many times over.

GlesgaKiss

http://www.amazon.co.uk/gp/aw/d/0060...7014917&sr=8-1

EddScott

I've never bought and sold individual shares. In all honesty I don't have the confidence or the time to run a share portfolio.

By investing in Unit Trusts you are investing in a fund that has several company shares inside the fund. By doing this your level of risk is reduced. In most cases, you are relying on the fund manager.

However there is a cost as mentioned above. Simple tracker or passive type funds do nothing but track certain indicies so you are not betting on a single company or betting on the skills of a fund manager. These types of funds are also very cheap.

I work for an IFA practice and we have developed a range of risk based portfolios made up mostly of passives and have managed to get the cost down to about 0.5% a year. We put this on a platform which charges 0.5% a year and we charge 0.5% for our advisory service a total of 1.5% a year.

To put this into context, theres a rumour that the next ill conceived government run pension scheme NEST will end up costing more than twice that a year just to run it (By TATA worryingly to the tune of £600m)

billythekid

I use Iweb. £10 per deal. HTH.

EddScott

Are there any others available?

Funnily enough, I've been asked this morning to research various online share dealing facilities.

SPEN555

http://www.tddirectinvesting.co.uk/

SiPie

Investment trust savings plan or similar vehicle

Leslie

Isn't it simpler and less hassle to just put it into a savings account?

Les

EddScott

The returns on savings accounts is very low at the moment and likely to continue for some time. If you are a tax payer, your savings account will have tax to pay (whereas an ISA is tax free) The longer you leave money in a savings account earning very little whilst inflation is more than double the return on the savings account over time inflation will eat into the returns from the savings account.

Leslie

Thanks for the explanation. I am not in the least bit knowlegeable in such financial affairs. I have to say I have always found it boring

I understand the points you are making of course.

Les

alloy

no point in investing £50 a month, the minimum fixed cost of dealing is prohibitive to playing with such small amounts. I'd suggest you need at least £1k to make it worthwhile....

EddScott

It can be boring but it pays the bills.

If you felt that there is just no way you could tolerate your money going down in value due to market forces then a savings account maybe the most suitable. You'll probably have a bit of tax to pay depending on your tax rate and over time high inflation will erode your ability to purchase goods.

For example, I have £100 and you have an item I want to buy and you have it for sale at £100. I decide not to buy.

A year later I still have my £100 but its grown in the savings account to £102. You still have the item I want to buy but due to inflation it is now £105. I could offer £102 and you might accept.

5 years later I have £110 but the item you have might now be £130. You may not want to lose £20 selling the item to me.

Thus, my buying power has reduced because my savings have not grown faster than inflation.


I spoke to someone today complaining that he wanted to buy RBS shares when they were 20p and now they are 28p but he didn't set up a share dealing account. With £10K he was complaining that he missed out on £4K. From a risk POV, investing £10K into a single company is quite high risk. For all the gentleman knew the share could have dropped from 20p to 16p over the same period.

You can invest directly in Unit Trusts, OEIC (similar to Unit Trusts), ETFs (odd cheap investment vehicles but some can be real stinkers, I tend to avoid) Investment Trusts (not dissimilar to Unit Trusts but one you buy Units one you buy Shares in very simple terms) These will all go into an ISA.

Investing in a Unit Trust you buy units. The units have a price depending on the number of units available and the performance at the time of investing. When the performance is low, you buy more units, when the performance is high you buy less (for the same amount of money)

Buying the units over months means that you may benefit from negative movement in the fund - it is unlikely to keep going up and up every month. The more units you have the more potential for growth (depending on price at purchase)

Some funds are passive and just track indicies, some are active and a fund manager picks and chooses shares from companies that he can invest in. If the fund is a UK equity fund he buys shares in UK companies, if the fund is US equity then he buys shares in US companies. The US fund might contain Apple, Amazon etc etc. So in effect rather than you buying individual company shares you are spreading the risk by buying a bit of each company. Naturally, the bigger the risk, the bigger the reward.

I'm starting to come around to the idea that passives might be the way forward. Why put money on a fund manager getting it right against his peers or outperforming the stock market? Is he always going to deliver? What if he moves to a different fund and the new manager makes a hash of it? I have to keep abreast of every single issue within that fund - it will get worse in 2013 with the introduction of the Retail Distribution Review (the FSA gave the reason why they missed RBS was because they were too busy with RDR. Utter joke. RDR: the answer to a question nobody asked)

If I accept that my money will go up and down, if I accept that I may not see 10% price movement on a daily or weekly basis and make £1000s in a day or two then why not just go cheap with these passive funds. Bare in mind that if the active fund manager gets it wrong, the fund will still charge you say 1.5% before any platform charge and before an adviser charge (if any - you can do this direct to client with say Hargreaves Lansdown). The active path isn't a guarantee to outperformance but is a guarantee to expense (ETFs are very cheap but care needs to be taken when choosing them. I don't fully understand them so I don't use them - I will take some time out this year to study them) The passive path isn't very exciting but isn't very expensive.

Dr Hu

I have been recommended these people - Octopus Investments.

Looking at a OEIC - they seem to perform fairly well....

http://www.octopusinvestments.com/pr.../absolute.html

But to me their fund fees seems very high:

5% Initial Fee
Management Fee 1.5%
Performance Fee 20% of 3M LIBOR with a high watermark

That all seems a big chunk of my cash!
I'm thinking of a very sizeable 2figure investment....

Any comments good or bad?

JTaylor

Show off.

EddScott

Used Octopus for their EIS and VCT products but I didn't (and would be unlikely to) use the Absolute OEIC. It's been a bit of a mixed bag and not much fun if you invested in it mid 2009.

Have a look on trustnet or fundslibrary. Trustnet lets you build portfolios and compare them against different indicies. Fundslibrary is a bit more basic but I is useful for "just the facts"

Chip

Well yes it is Les but it's not as much fun as seeing your portfolio rising and falling by a few grand a day.

Chip

^OPM^

I'm thinking of a very sizeable 2figure investment....


is it worth it-even the highest 2 figure investment is only £99 - for that amount just stick it in bank

p.s i'll only charge you 1% for that info as well

Dr Hu

Lol @ OPM.... Only 1%... bargain....

Thanks for the input.... I'm not showing off its an inheritance my wife has from her late father... Trust me she'd much rather have her dad back, But sometimes having cash like that is a burden, its a worry what to do with it! But a nice one i guess!
But you need to keep an eye on it or you end up losing big chunks of it thru inflation.

EddScott

One thing to consider is time horizon for this money. If you plan on spending some or all of it then savings deposit might be better than investing. No point incurring charges on investing the money if you pull it out in a year or two. Some two year term deposit type savings maybe.

If its medium to long term then you should consider your tax position and consider investments that suit. ISAs and the like.

If its a fair amount lobbing it into one fund might not be the best solution unless its one of the newer multi-asset funds that are monitored and regularly rebalanced to suit your risk profile. You may visit an adviser, they give you a selection of funds that suit your risk profile but over time the risk of the portfolio will shift depending on which funds do well and which don't - maybe one of the riskier funds does very well and the overall risk of the portfolio shifts higher. By rebalancing the portfolio you're taking the gains out of the higher risk fund and moving it into one of the lower risk funds thus keeping the portfolio in tune with your attitude to risk and hopefully protecting those gains in the lower risk/lower movement funds.

A good adviser providing a good portfolio suggestion should be able to give you an idea of expected growth rate and be able to demonstrate the potential losses in poor years - i.e. how much of a loss the portfolio would have suffered in 2008. You should also consider your capacity to absorb losses. If all you have to save is £10K then its probably not the best idea to do something too racey with it.

GlesgaKiss

Time horizon is a good point. Short-term, the stock market is very high risk. Long-term, depending on your goals, it may be a worthwhile investment.

Dr Hu

Thx... Its currently in a Halifax PIP (personal investment plan), but its just stagnant, the fall of 2008 was brutal, it lost £20k within a week, its recouped all that back since with the rebalance of the markets but it just not growing at all as it mostly seems to track the ftse which is pretty flat at the moment and i can't see it going thru the roof anytime soon... Its a longish term thing, we call it my wifes pension... ( she doesnt work). Id like to see it it actually earn some money, its a fair amount it should be able to grow..... Should'nt it?

Dr Hu

I also have a slight distrust of financial advisors.... They always seem to suggest whats best for them.... Not me! Is that misplaced?

EddScott

I've tried to defend their use on here and got called mercilessly for it.

If you use an adviser, pay them for their advice as you would an accountant or solicitor it makes no difference if you choose to take up the investment. You've paid for the advice, not been flogged a product.

Its the product floggers the industry is trying to get rid off in favour of being seen in a similar light to accountants and solicitors. You don't need either but their expertise is accepted as being invaluable. This is the goal of a good adviser.

I see no point doing all the exams we are required to do (I don't advise but am level 4 qualified and will be level 6 or "chartered" in a year or so) and 35 hours structured CPD if the end result is to stuff someone into something they don't want for a commission. Commission in its traditional form will be more or less gone in 12 months anyway. RDR is going to be a big shakeup although unfortunatly badly handled by the FSA and horrifically expensive. The FSA really is a bit of an unmentioned scandal - its just not fit for purpose and full of nose in the trough types with questionable agendas (I digress slightly )

As for the investment currently it wouldn't be proper to comment on its suitabilty for you but 2008 was a poor year. 2009/10 was the year of the corporate bond fund and great gains were seen. 2011/12 was always going to stagnate so you would probably struggle to see exciting growth no matter where it was. Index linked gilt funds have done pretty well but not sure that will continue with inflation going off the boil.

You are probably better off making sure its being looked after properly where it is before thinking about moving it

Hope all this helps.

Dr Hu

Thx EddScott.... I really appreciate the advice. Its funny how i am prepared to trust someone on the internet who i've never met rather than some shiny suited guy in a mercedes that you just know is lifting your leg or selling what he has been told to sell irrespective of wether its best or not.....
( u dont have a mercedes do you?) lol

molko

Do these guys have an annual charge ? I am with www.selftrade.co.uk and they charge me around £50ish a year....

I should have moved to a different online trading account sometime ago...but apathy took over..

This thread (and a few others) others has spurred me on.

jonc

I've been using www.iii.co.uk for a few years now, they charge £10 a trade. I did some share trading in the AIM markets, got burned quite a few times, but also made a nice profit at times too. Don't do it now as I don't have the time researching and watching the markets all the time, plus I had to notify my compliance and legal department on every trade I made. Too much hassle and too much stress just to make a few bob!!

I just invest in an funds ISA now and put in a regular amount and forget about it. Takes the stress out of shares and if you pick the right funds, can give you good returns. Was getting around 35% but the turbulent year has it now down to 13%, not too bad considering the state of the global economy. But I stress this is a long term investment.