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Advice Sought: Where to start? Is investing for me?

Investment discussion for beginners. Why you should invest your money, get help getting started
Snook
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Advice Sought: Where to start? Is investing for me?

#188872

Postby Snook » December 22nd, 2018, 9:11 pm

Hi,

I'm looking to start investing and I've been reading various threads/articles to gain an understanding of the best approach to take but I'm still finding it pretty confusing :? and I'd be grateful if people could give me some advice.

I'll try to lay out as much as I can about myself and what I'm seeking to achieve and hopefully you can give me a pointer in the right direction.

I'm from the UK (36) and I have a couple of hundred £'s to spare at the end of each month which is doing nothing other than increasing my current account. I'm a relatively long time listener to the Motley Fool podcasts (~2 years) and with the markets dipping recently figured it may be the right time to jump on board? I've been making a note of various companies to research that have been spoken about on the podcasts and therefore would like to start with US stocks. This is where my conundrum starts...

From what I've read so far it makes sense to invest via a trading platform that offers multiple currency options so I don't get stung on the exchange rate. It also seems to make sense to invest via a SIPP so that it is more tax efficient but I'm concerned that the associated costs (annual admin fee + quarterly fees) would wipe out/negate any potential returns given the relatively low amount I have available to invest. I'll summarise my main concerns/queries as follows:

1. Do I need to worry about the exchange rates if I'm a buy and hold investor?
2. Is a SIPP the optimal play or would a regular trading account that has lower fees but obviously doesn't have the associated tax efficiencies make more sense?
3. Do you need to commit £x/mth in order to make investing worthwhile, i.e. obtain returns that overcome the associated costs? TML seems to make it sound like investing as and when you have a bit of spare cash is an acceptable investment strategy but from my research so far I'm yet to be convinced.
4. Given my relatively low monthly surplus would I be better using the money elsewhere instead, e.g. in a long term savings account to put towards paying off my mortgage? NB - I'm already making the maximum over payments.
5. Which trading platform would best suit my situation?

Just in case someone mentions it I'm not overly keen on going down the ETF route, mainly because I don't find it as interesting as investing in an actual company that I can research/follow. Although if it makes the most financial sense for my situation I'm obviously open to being talked around.

I'm also open to investing in UK stocks but given that the majority of my investing knowledge to date has come via TML podcasts I know nothing about the UK stock market.

Overall my main concern is that 20/25 years down the line when this hopefully bears fruit I don't look back and find out that if I'd just done a bit of research/taken advice I could have implemented an alternative, more efficient strategy that would have generated greater returns.

Some of the answers to my queries may be contained in other threads (I've tried to read as many as possible) so feel free to point me elsewhere.

If you require any more info just give me a shout. I'm a keen reader so if people have any book/blog/magazine (or podcast) recommendations they would be gratefully received.

Thanks in advance. :)

Snook

TUK020
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Re: Advice Sought: Where to start? Is investing for me?

#188882

Postby TUK020 » December 22nd, 2018, 9:44 pm

Hey Snook,
some pointers to think about:

a) debt vs investing. By and large, it pays to resolve all debt first before worrying about investing. A key point to remember is that you can be liable for tax in interest/dividend earned, but not get relief on interest paid. Sounds like you already have this figured in you are max repaying your mortgage.

b) investment time horizon. when do you think you need the money? If you are saving for your retirement, and will not need the money before then, pensions are a good route. However, aged 36, you are a couple of decades from being able to access the money, and the government changes the rules of you all of the time. Also, at this age, your life situatiuon can change radically in ways that you cannot predict prior to reaching retirement age. However, if you are earning between 100-123k p.a.your marginal tax rate may be 62% (withdrawal of allowances), and then pensions become a very attractive route.

c) If you may need the money before then (i.e to access when you want to remortgage), then ISAs might be more attractive than pensions.

d) To read up on the type of broker account, charges etc, then a really good site to peruse is monevator: https://monevator.com/two-ways-to-help- ... -platform/

e) In general, you can access a lot of the world investment opportunities in the UK, in sterling terms from a UK S&S ISA. 70% of the earnings of the FTSE100 firms are earned overseas, so the stock exchange is much more global than UK specific. In addition there are plenty of quoted firms called Investment Trusts, some of which are focused on specific parts of the world.

f) Much of this site is devoted to investing in individual stocks and shares, and creating a portfolio. For safety reasons, a minimum portfolio size of 15 is recommended, many of the posters here run portfolios of at least double that number of shares. Given average trading costs, it doesn't make sense to make purchases below £1000, and maybe less than £2000. If you are not sure of getting to £20k portfolio fairly quickly, it probably makes more sense to start with collective investments - either Index tracker ETFs (Exchange Traded Funds) or I.T.s (Investment Trusts).

I do not know your personal situation in detail, and I am not qualified to offer investment advice, so the following is volunteered as a possibility for your to consider and examine only:
Start by
1. choosing a S&S ISA for online dealing and low cost
2. getting max funds into this ISA wrapper every year (current limit 20k/yr)
3. choose a selection of ITs, see the IT board - a popular one if is the 'basket of 7'. A good starting point is the City of London Investment Trust (the first one I bought in my kids' ISAs, saving for a future house deposit).

Hope this gets you started
tuk020

staffordian
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Re: Advice Sought: Where to start? Is investing for me?

#188885

Postby staffordian » December 22nd, 2018, 10:01 pm

Firstly, welcome to the Lemon Fool!

I'll start the thread off by suggesting something different to what you ask :)

If you only have a couple of hundred a month, and this is likely to be the case for a while, I would look at using a broker such as Halifax Share Dealing who have a Sharebuilder or regular investment scheme which allows low cost dealing on specific days each month, just £2 commission plus stamp duty if applicable.

Secondly, I know nothing about US shares, so feel free to disregard all of this...

Firstly, if you're not already using an ISA I'd seriously consider using one as it simplifies (by eliminating!) any tax issues which will seem insignificant with small portfolios but with any luck, will become an issue sooner than you think.

And I'm not sure if foreign shares can be held in ISAs. Others will no doubt advise. And holding US stocks brings additional paperwork, if what I've read is correct.

Further, when investing relatively small amounts, it is hard to build up a diversified portfolio, so the risk of a major hit to your finances rises until you manage to accumulate a variety of shares.

So my instinct would be to first, look to the UK and second, start by researching investment trusts, which will give you instant diversification, and even if you stick to just one, or two you will have trouble free investing.

I'll not be in the least offended if you totaly disagree with this, but it's just my two penneth as a starter.

Staffordian

Edit. Just seen I've been beaten to it whilst typing. Glad to see some of my thoughts are replicated in the far more detailed and useful post above ...

tikunetih
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Re: Advice Sought: Where to start? Is investing for me?

#188887

Postby tikunetih » December 22nd, 2018, 10:30 pm

Snook wrote:Overall my main concern is that 20/25 years down the line ... I don't look back and find out that if I'd just done a bit of research/taken advice I could have implemented an alternative, more efficient strategy that would have generated greater returns


    "A little learning is a dangerous thing;
    drink deep, or taste not the Pierian spring:
    there shallow draughts intoxicate the brain,
    and drinking largely sobers us again."

You've every right to be concerned (so a thumbs up for that at least!) because what you've described in your post suggests you're primed to commit some very major fundamental mistakes for someone just starting out in investment.

Really, you need to go away and learn some basics about the investment approaches suitable for someone in your position with your goals. What you've "learned" so far is not it.

JohnB
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Re: Advice Sought: Where to start? Is investing for me?

#188889

Postby JohnB » December 22nd, 2018, 10:55 pm

If you are a higher rate tax payer, SIPPs are more attractive than ISAs. For basic rate, the benefit is slim, especially if you might want it early.

Start with a percentage fee broker, and note that ETFs/shares are cheaper (sometimes free) to hold than funds, but have higher transaction costs.

Go to monevator.com and read all the articles there, and buy Lars Kroijer's "Investing Demistified", and consider whether your researching and buying individual shares really gives you the "edge" he talks about.

Alaric
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Re: Advice Sought: Where to start? Is investing for me?

#188891

Postby Alaric » December 22nd, 2018, 11:22 pm

Snook wrote:I'm from the UK (36) and I have a couple of hundred £'s to spare at the end of each month which is doing nothing other than increasing my current account.


If you are earning more than you spend, you can increase your net worth more rapidly if you can get more than the 0% to 1% available on current and savings account. Equally you have to have enough risk tolerance to accept that share prices don't always increase.

I think caution is advised in taking too much notice of articles aimed at an American audience. Inevitably there are likely to be implicit tax and cultural assumptions only applicable to US residents and taxpayers.

In terms of amounts invested, it's quite normal to pay a flat fee of £10 to £ 20. This isn't particularly onerous if you are putting in £ 5,000 a time, but is when it's only £ 200. There are various platforms which can accommodate the regular investor of smaller sums.

tjh290633
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Re: Advice Sought: Where to start? Is investing for me?

#188892

Postby tjh290633 » December 22nd, 2018, 11:41 pm

By the time I was your age, I had already been investigating for 10 years. Only £3 a month in a unit trust saving scheme and the same amount in a life assurance policy. At that time you got tax relief on life assurance premiums. Without that, using them as a savings medium does not make sense. It was about 10% of my take home pay initially.

The important thing is to start investing. With tax in mind, the pension approach is worth considering, and starting a SIPP is a good idea. Cash saving is also worthwhile, with rainy days in mind. My thoughts would be along the lines of using an investment trust in the SIPP and maybe a cash ISA for the other. The ISA would be useful for replacing a car or saving for holidays, for example.

After a few years you may be ready to start saving into a share ISA alongside the others. Whether you continue with ITs or move into individual shares is up to you. I am not a fan of ETFs, but a lot are. Foreign shares can be held in a SIPP or ISA, but watch out for unexpected charges. I suggest that you keep things simple for a while.

The important thing is to start now and to carry on through thick and thin. You are looking at 30 or more years. Ignore market ups and downs. Just keep saving.

TJH

Snook
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Re: Advice Sought: Where to start? Is investing for me?

#188896

Postby Snook » December 23rd, 2018, 1:25 am

Hi all,

I just wanted to drop a quick note to say thanks for all the responses. I was expecting a couple of one liner replies at best so to receive so many considered responses is absolutely fantastic.

I'm travelling back home for xmas later on today but once I've settled I'll reread your responses :geek: and read up on various things you've mentioned so I can give a considered response to each of you.

Thanks again, it's massively appreciated! :D

Snook

Itsallaguess
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Re: Advice Sought: Where to start? Is investing for me?

#188898

Postby Itsallaguess » December 23rd, 2018, 5:28 am

Snook wrote:
Overall my main concern is that 20/25 years down the line when this hopefully bears fruit I don't look back and find out that if I'd just done a bit of research/taken advice I could have implemented an alternative, more efficient strategy that would have generated greater returns.


That will always be the case, no matter what you do now - so I think the main thing to do is to simply accept that, and just try to do something initially that will get you going, get you investing, and start yourself off down the investment path.

I've been investing for many years, and I agree with some of the other posters on this thread when they suggest that Investment Trusts are likely to give you the most bang-for-your-buck in terms of initial 'instant-diversification'. This is important, because if you don't diversify sufficiently as soon as you can, it can cause problems that may well put you off investing for life, and you really do want to avoid that situation at all costs if possible.

Of course, in the stock market, even a well-diversified approach can have real performance issues if the general market goes through one of it's prolonged downturns, so you should also be prepared for that too, and not put off if that occurs.

You have a long investment-path ahead of you, and you will see a number of periods like that, so just make sure you're diversified and that you stick to a regular investment plan through all market conditions. This is difficult, as everything may well be screaming for you to sell and run away at these points, but stick with it and you will look back and realise that it was absolutely the right thing to do when things eventually turn around....

Here's a link to Luni's 2018 'Basket of Seven' review -

https://www.lemonfool.co.uk/viewtopic.php?t=12192

Have a read of that and see what you think - you won't go far wrong with that, and in 20/25 years, you'll not regret it.

Yes, you may be able to look back in 25 years time and point at another long-term approach possibly gaining more for you, but that might not fully explain the risks that might need to be taken to do that.....do try to understand that this is the case....

I'd also suggest putting at least some capital into a long-term Vanguard Lifestyle fund - perhaps the 80/20 stocks/bonds one. Steady ballast over the long-term is important, and that's likely to provide this in a very cost-efficient manner.

Also, the advice to get as much as you can each year into an ISA is *very* important. These are time-limited opportunities, and with a long-term plan ahead of you, it's really quite surprising how funds can grow over many years. Start now...

You're doing the right thing regarding your mortgage. I paid mine off many years ago now, and the relief to know that you've seen the back of that large debt cannot be understated, especially when still working and also investing capital into the stock market.

To get my mortgage paid off was one of the best decisions I have ever made, and whilst a low-interest environment might make such a move look less attractive from a purely financial aspect, I'm a great believer that not everything can be 'measured' in a purely financial way, and I believe that our emotional well-being is just as important whilst we carry out these long-term plans. The long-term benefits of being mortgage-free is one of these situations - the benefits go well-beyond something that can be worked out with a calculator....

Good luck with your investing journey. I'm sure I won't be the only one here who will be very interested to hear how you get on, so please do stick around and let us know.

Cheers,

Itsallaguess

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Re: Advice Sought: Where to start? Is investing for me?

#188919

Postby gryffron » December 23rd, 2018, 10:45 am

Does your employer offer a Pension scheme? Can't see you have mentioned it. Paying the minimum necessary to get the employer top-up is free money and is almost certainly the best way to start retirement saving. Although, once you get beyond the limits of employer top-up, the benefits of the employer scheme vs SIPP/ISA may be minimal. And nowhere near so much fun.

I concur with the earlier posters that
A) Starting with US shares is not the simplest way to start investing.
B) The flexibility of ISAs makes them generally much more appealling than the rigid lockin of Pensions. Especially for someone with >30 years to retirement.

However note, ISA rules do not allow foreign currency cash. So whilst you can hold US shares in an ISA, all transactions will be converted to UKP immediately.
Still worth doing however, despite this small additional currency cost, as tax returns for non-protected holdings of foreign divis are time consuming and complex. Different rules for different countries, every transaction has to be converted to UKP at the rate on that day. I hold all my foreign shares in ISAs to (quite legally) avoid tax reporting.

Although foreign cash IS allowed in SIPPs, very few SIPP providers actually permit it. Try Interactive Investor??

Gryff

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Re: Advice Sought: Where to start? Is investing for me?

#188988

Postby runnygum » December 23rd, 2018, 6:06 pm

To keep things super simple I would also consider something like VWRL ETF from Vanguard. Its a global ETF so you have optimal diversification all in a single product which is fire and forget.

Just dribble into the same ETF over the years (BTW its £58 now, was £67 at one point recently)
It also pays a dividend for income once you get near retirement, so you may not even have to think about selling anything, just live off the dividends..

A passive solution with minimal cost that can often be held fee free on various broker platforms. Halifax Share Dealing etc.

Ive been investing for near on 35 years and Im rapidly closing in on simple passive investments as the best solution. I retired early (45) and live off natural yield from a capital sum north of 7 figures accrued over 20 years of hard graft.

Investing should be mandatory for everyone IMO. I can't see why you would not invest unless you like working until you drop.

andyalan10
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Re: Advice Sought: Where to start? Is investing for me?

#188995

Postby andyalan10 » December 23rd, 2018, 7:15 pm

To contradict some of the posters above:-

You say our not too keen on ETFs as they are less interesting. That makes me think you might like to choose individual shares. And that is absolutely fine. As others have said the important thing is to start, and if you do go down the individual share route be ready for your performance to vary more than if you go down the fund or ETF route. From my perspective you have quite a large monthly amount free and a long investment timescale so if you are comfortable with the greater risk then go for it.

Save up a few hundred pounds, as others have said use cheap dealing days to start, perhaps go for larger companies with a less volatile share price to start and have fun :-)

If you are not enjoying seeing red when you wanted green after a year or so then you can reconsider whether individual shares are for you.

BTW this time of year will see loads of share tips in the press, see which ones you think are worth investigating further, even if you reject all of them, it's a great way of seeing why others like particular shares and developing the techniques of researching and deciding on shares.

Good luck

Andy

andyalan10
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Re: Advice Sought: Where to start? Is investing for me?

#188997

Postby andyalan10 » December 23rd, 2018, 7:23 pm

Also a quick question. Are you currently working abroad?

One valuable way of researching companies is to see them in action, if you use their services, or see their outlets you can form your own opinion on their prospects.

That could also influence your decisions between national and international companies, and US, European or other domiciled ones.

Andy

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Re: Advice Sought: Where to start? Is investing for me?

#189037

Postby Urbandreamer » December 24th, 2018, 7:57 am

Andy seems to have said what I was going to. When investing the important thing is to do what you are comfortable with. I started by investing in individual shares and it was quite some time before I bought either a unit trust or investment trust. What others have said about ETF's, Investment trusts etc is RIGHT, but says nothing about you and indeed is not compliet.

For example, as has been pointed out both by yourself and others, the market in general seems to be dropping. Many funds are that large that they more or less HAVE to buy the market. Individual stock picking could provide better returns, if you pick the right stocks.

That said, I am trying to reduce my holdings in individual shares and increase it in collectives.

I would certainly argue that collectives are the best way to invest outside the UK. Withholding tax can vary between irritating paperwork that means you only pay 15% extra to fendish complexity such that you end up paying 20-30%. I'm not advising you to buy the following, but do advise that you check them out while thinking about overseas investing.
https://www.trustnet.com/factsheets/t/b ... mtg-it-plc Scottish Mortgage (expect high volatility) people buy for capital growth.
https://www.trustnet.com/factsheets/t/j ... income-ltd Henderson Far East Income (expect low growth) people buy for its income.

If you follow the links I hope that you may see how easiy the likes of these make investing overseas.

On the subject of UK investment, can I recommend some podcasts (they will likely sugest some magazeens to subscribe to).
https://www.investorschronicle.co.uk/podcasts/ (podcast id free).
https://www.ft.com/podcasts FT money
https://www.sharesmagazine.co.uk/podcasts Shares (A J Bell)

The UK is looking cheaper and cheaper. Again, I'm not suggesting that you buy the following, but how about this company that provides insurance, group and personal pension schemes?
https://www.fool.co.uk/investing/2018/1 ... -to-crash/
The article doesn't look at fundimentals, just the share price. The fundimentals may give a different picture.
https://www.sharesmagazine.co.uk/shares/share/AV.
The JOY of individual share selection is finding companies, evaluating their prospects, then backing your opinion with money.

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Re: Advice Sought: Where to start? Is investing for me?

#205586

Postby JessicaKing » March 5th, 2019, 8:15 am

Hi, I am also a beginner investor and I had the same questions. I found that the best approach to take is to reduce risks as much as possible, at least to the point when I have more experience in real estate. I chose property crowdfunding platform [DELETED] to begin with because they offer properties all over Europe and their investment starts from [LOW] euros. I just liked the idea of diversification in different countries.

Moderator Message:
deleted some things that looked a tad like advertising, ta, dspp

monabri
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Re: Advice Sought: Where to start? Is investing for me?

#205743

Postby monabri » March 5th, 2019, 5:59 pm

JessicaKing wrote:Hi, I am also a beginner investor and I had the same questions. I found that the best approach to take is to reduce risks as much as possible, at least to the point when I have more experience in real estate. I chose property crowdfunding platform [DELETED] to begin with because they offer properties all over Europe and their investment starts from [LOW] euros. I just liked the idea of diversification in different countries.

Moderator Message:
deleted some things that looked a tad like advertising, ta, dspp


I'm always on the look out for ways to diverisfy my portfolio and reduce risk ... I'd be interested in hearing about your approach (not specifics such as how much is invested) but perhaps general - such as x% in crowdfunding, y% in investment trusts, z% in ......

SentimentRules
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Re: Advice Sought: Where to start? Is investing for me?

#234400

Postby SentimentRules » July 6th, 2019, 12:39 pm

Key things to probably learn are :

1. Risk control / Position control.
2. Listen to nobody else
3. Realism in return expectations
4. Learn the shorters game. Vital. Need to see them coming after you buy.
5. Fundamentals....
Interesting to note how most fundamentalists say charting is hocus pocus. It's all stuff based on past data. Well tell me a fundamental that Isn't? At least the charts are real-time. Most known fundamentals are not. And are not , 10 seconds after release. So what your really trying to do is invest in the future unknowns. Technical has an edge there. Should be used with some fundamentals. But try to think of the chart as real-time fundamentals. Not technical.
6. Listen to yhe money. Doesn't matter what your view or others is. If the money aint agreeing, it ain't happening. Remember, there are a million things in markets to convince you of something. But only one thing drives SP. Money backing it. And I don't mean price is rising. Many rises are a bad rise. Shorters ready. Learn a way to see money in action when price is flat.
7. Well there are 50 more points. But that's a start

And don't get wrapped up in learning every nuance of a sector. It's time wasted. I've seen guys in forums with more knowledge of a company and sector, than the CEO's running them. Still lost money.

An old adage...

When your opinion makes you a profit.. .It was only coincidental.. .Don't invest in opinions. Invest in the money.
Last edited by SentimentRules on July 6th, 2019, 12:42 pm, edited 1 time in total.

AleisterCrowley
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Re: Advice Sought: Where to start? Is investing for me?

#234406

Postby AleisterCrowley » July 6th, 2019, 1:31 pm

I got to point 2 ,took it literally, and stopped reading.

SentimentRules
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Re: Advice Sought: Where to start? Is investing for me?

#234445

Postby SentimentRules » July 6th, 2019, 6:06 pm

You passed the test then haha


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