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New to the game

Investment discussion for beginners. Why you should invest your money, get help getting started
JosephM
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New to the game

#219868

Postby JosephM » May 6th, 2019, 11:44 pm

Hi I have just signed up and started consuming the content. So far very useful. I am 22 and have only ever invested in gold. My gold investment has now got to a decent figure and I class this as my fall back and safety money if all else fails.

I have opened a Hargreaves and Lansdown account and I understand that index funds are better than actively managed funds in the long term. I've seen some disagree but why add that extra risk and the added fees. So to my question to start out I just want to accumulate, I have opened a stocks and shares isa on the platform and i have put in a regular savings amount of £50 right now for the vanguard fund: Vanguard FTSE Global All Cap Index Accumulation.

So my question is
: is this a good place to start owning just one I see it is heavily US but I just want to start off and get an understanding. I don't feel individual stock picking is best for me, maybe in time but for now would like this way. I have also seen the strategy of having 3 funds in a portfolio, i like this idea and maybe once i understand more i can go down this route. thank you for any responses.

Pendrainllwyn
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Re: New to the game

#219872

Postby Pendrainllwyn » May 7th, 2019, 12:19 am

Welcome,

For me putting a monthly sum into a low cost global index fund is a very good start for someone of your age. Plenty of time to research your next move.

Pendrainllwyn

BobGe
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Re: New to the game

#219876

Postby BobGe » May 7th, 2019, 4:14 am

Quite so, do that and spend the rest of your time enjoying yourself. You can worry when you have lots more to invest later in life.

JohnB
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Re: New to the game

#219877

Postby JohnB » May 7th, 2019, 5:20 am

A sensible start. If your first use for the money is buying a house, consider a LISA to get extra government cash

nmdhqbc
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Re: New to the game

#219883

Postby nmdhqbc » May 7th, 2019, 6:57 am

JosephM wrote:Hargreaves and Lansdown account


Global index tracker is great but Hargreaves Lansdown charge 0.45% for holding open ended funds. That gets your total costs for holding Vanguard FTSE Global All Cap Index to 0.69% which is very high for a tracker. There's broker comparison tables / articles on the web but I would suggest for you do the sums on Vanguard (0.15% fee) and iWeb (£5 per transaction). It might be cheaper to use Vanguard initially and then when your portfolio grows to a certain level spending £5 a month or quarter perhaps may be cheaper. It seems like exit fees are being banned so should not cost anything to move from Vanguard when the time comes.

nmdhqbc
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Re: New to the game

#219886

Postby nmdhqbc » May 7th, 2019, 7:25 am

nmdhqbc wrote:should not cost anything to move from Vanguard when the time comes.


Sorry, that's not quite right. iWeb charge £25 to open the account.

Alaric
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Re: New to the game

#219900

Postby Alaric » May 7th, 2019, 9:01 am

nmdhqbc wrote:
Global index tracker is great but Hargreaves Lansdown charge 0.45% for holding open ended funds.


Somone investing relatively small sums monthly gets caught either way. There are Brokers who don't have custody charges on OIECs, but charge a dealing commission that can be a high percentage on small amounts. Someone using a commission charging Broker may find it cheaper to accumulate a larger sum before investing. That doesn't stop the accumulation taking place inside an ISA.

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Re: New to the game

#219905

Postby richfool » May 7th, 2019, 9:14 am

I would be wary of buying a tracker at a time when the market is nearing the top and is likely to fall. I would prefer to have an active manager to protect against the downside, rather than simply track the market all the way down. Thus I would favour a small collection of broadly based investment trusts.

nmdhqbc
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Re: New to the game

#219906

Postby nmdhqbc » May 7th, 2019, 9:15 am

Alaric wrote:Somone investing relatively small sums monthly gets caught either way. There are Brokers who don't have custody charges on OIECs, but charge a dealing commission that can be a high percentage on small amounts.


Yeah, so you can get caught to the tune of 0.45% with HL or to 0.15% with Vanguard to begin with. Since the OP is interested in a Vanguard product anyway it seems to make sense.

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Re: New to the game

#219909

Postby Urbandreamer » May 7th, 2019, 9:26 am

JosephM wrote:.... and I understand that index funds are better than actively managed funds in the long term. I've seen some disagree but why add that extra risk and the added fees.


I think that it could be said that the passive V active debate is a bit contentious.

As has been said HL is expensive for funds. Indeed I have a stockbroking account that charge hefty commisions to buy and sell as well as significant fees to just keep track of ownership that would be cheaper than HL, were I to invest in funds. Both of course provide outstanding service.

With respect to your choice of Vangard global, you should be aware of a few things. It has a significant UK FTSE 100 component. Not a problem, just something that you need to be aware of. As you say, it also has very significant US exposure. It is difficult for active investers to outperform the index in either market, but that is a feature of the amount of information publicly available about companies traded on those markets.

Your gold holding should provide good diversification in the event of a market crash.

Ps re active V passive, performance and fees. I suggest that you look at the performance and fees of the actively managed investment trust, SMT. The subject is NOT as simple as the loudest voices claim it to be. Indeed over the long term investment trusts tend to do better than unit trusts (funds). This is normally attributed to their ability to borrow money to invest. That said, there is nothing wrong in liking the simplicity of index tracking. Just don't assume that passive HAS to mean low fees. It can do so, Vangard are not expensive. However some others are expensive.
https://www.wealthmanagement.com/mutual ... ndex-funds

tjh290633
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Re: New to the game

#219946

Postby tjh290633 » May 7th, 2019, 11:23 am

You have made a good start. However tracker funds do just that. Knowing what I do after 60 years investing, my choice would be one of the big global investment trusts, either F&C or Witan. Both outperform the market over a long time. Both widely diversified and include some private equity. Dividends have increased annually for many years. H&L is a suitable home for them. You may find it better to let contributions accumulate before you invest, to reduce cost.

Both have just had their AGMs and it would be worth looking at their annual reports.

TJH

JosephM
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Re: New to the game

#220284

Postby JosephM » May 9th, 2019, 12:08 am

Thank you for all the advice. I will take it all on board and try to learn more. I just have one more question if i were to pick an individual stock can you only buy uk shares in a stocks and shares isa?

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Re: New to the game

#220285

Postby Alaric » May 9th, 2019, 12:16 am

JosephM wrote:I just have one more question if i were to pick an individual stock can you only buy uk shares in a stocks and shares isa?


There's a restriction that you aren't allowed to hold foreign currencies as cash or deposits in an ISA. Most Brokers will allow their ISA clients to invest in stocks listed in markets outside the UK, sometimes with an exchange rate that appears highly profitable to them.

Urbandreamer
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Re: New to the game

#220305

Postby Urbandreamer » May 9th, 2019, 7:17 am

JosephM wrote:Thank you for all the advice. I will take it all on board and try to learn more. I just have one more question if i were to pick an individual stock can you only buy uk shares in a stocks and shares isa?


In addition to Alaric's info, the answer is, it depends. You should have little problem buying the likes of Apple, however very small foriegn companies or companies in some countries may be beyond the reach of the likes of us. China in particular has restrictions of foriegn share ownership.

Also HMRC restricts the markets that you can buy shares destined for an ISA. In practice that is not much of a problem today (main markets as Alaric said), but it is something to be aware of. It use to be that they prevented ownership in an ISA of the likes of Vimto maker Nichols because it's listed on the UK AIM market, rather than the main market. The government has since added AIM to the list.

A word of warning, foreign shares can cause problems. It's my understanding that using an ISA overcomes many of these. However as I understand it people often find it easier to pay the full dividend "withholding" tax on the likes of Nestle because the Swiss paperwork is so difficult.

In simple terms research on your choice of company and jurisdiction is required.

tjh290633
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Re: New to the game

#220339

Postby tjh290633 » May 9th, 2019, 9:30 am

JosephM wrote:Thank you for all the advice. I will take it all on board and try to learn more. I just have one more question if i were to pick an individual stock can you only buy uk shares in a stocks and shares isa?

The rules for ISAs say that shares must be quoted on a recognised Stock Exchange. Originally this excluded the AIM shares, but they have since been permitted.

What the ISA provider will let you do is up to them. Some are restrictive in what they allow. You can find the complete regulations on the gov.uk website.

TJH

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Re: New to the game

#220517

Postby JohnB » May 9th, 2019, 7:33 pm

With Investment Trusts, or any active fund, be wary of funds named by people. Hindsight is a wonderful thing picking winners, and there is a survivor bias. Read Lars Krojer’s Or Tim Hale’s books to understand the active/passive debate and who has an ‘edge’

Hindsight is also great at telling which index you should have followed too....

Urbandreamer
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Re: New to the game

#220540

Postby Urbandreamer » May 9th, 2019, 9:09 pm

JohnB wrote:With Investment Trusts, or any active fund, be wary of funds named by people. Hindsight is a wonderful thing picking winners, and there is a survivor bias. Read Lars Krojer’s Or Tim Hale’s books to understand the active/passive debate and who has an ‘edge’

Hindsight is also great at telling which index you should have followed too....


Sorry, but you have totally lost me here.

Anything with a "name", ie buttercup, was named by people. There are a whole host of IT's that carry the name Henderson, who probably was a real person back in the day. Bankers IT is called that because it was set up by some bankers. J P Morgon, you can't get a name that more obviously relates to a person. Lidsell Train is named after it's founders and hindsight would seem to indicate that historically they have been a good investment, though Mr Train is not a young man and when he retires things may change.

Personally I would be more interested in the philosophy, ideology or methadology used to choose investments and to manage them than the fact that the likes of Scottish Mortgage is not named (by?) or after a person. Does that make it low risk?

FWIW, Scottish Mortgage IT no longer invests in Mortgages any more. The manages advise investors that we should expect a volatile ride, because of their high conviction investment style. It's run by Ballie Gifford, named after Mr Ballie and Mr Gifford, who must now be long dead as they founded their company in 1908. I understand that they named this IT.

https://en.wikipedia.org/wiki/Scottish_ ... ment_Trust

hiriskpaul
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Re: New to the game

#220616

Postby hiriskpaul » May 10th, 2019, 10:28 am

JohnB wrote:With Investment Trusts, or any active fund, be wary of funds named by people. Hindsight is a wonderful thing picking winners, and there is a survivor bias. Read Lars Krojer’s Or Tim Hale’s books to understand the active/passive debate and who has an ‘edge’

Hindsight is also great at telling which index you should have followed too....

Not only survivor bias. People here and in the media in general tend to tip investments with recent good records more than they do those with recent poor performance. For example, Woodford's funds don't get tipped much any more.


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