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Recommendations for New Investor

Investment discussion for beginners. Why you should invest your money, get help getting started
Daffers
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Recommendations for New Investor

#370852

Postby Daffers » December 29th, 2020, 3:21 pm

I am completely new to investing and I am looking for some advice on stock brokers. My plan is to manage my own portfolio so my understanding is I need a stock broker to buy them for me. Any advice on where I should look, and what are the important factors when selecting a stock broker would be greatly appreciated! Thank you!

Alaric
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Re: Recommendations for New Investor

#370855

Postby Alaric » December 29th, 2020, 3:28 pm

Daffers wrote: My plan is to manage my own portfolio so my understanding is I need a stock broker to buy them for me.


The world has moved on. Arguably they are technically "stockbrokers", but these days those managing a portfolio on their own account are more likely to use what would be referred to as an "online platform". There are a number of established names, the "Brokers" board on this site may give some idea, otherwise a Google search will identify the bigger names. As to which is best, it can depend how much you have to invest, what you want to invest in and how frequently you wish to buy and sell.

Urbandreamer
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Re: Recommendations for New Investor

#370863

Postby Urbandreamer » December 29th, 2020, 3:55 pm

There are many "brokers" out there. If you want the DIY route then you should consider "platforms" as well as stock brokers.

Stock brokers are the traditional route and provide fantastic service and a great range of services... at a not insignificant price.
Platforms offer a more cut down approach, often quite cheaply.

I use eqi, A J Bell (platforms) and Pillings (a traditional broker). While I don't wish to avail myself of the service, Pillings would be willing to select investments for me and manage my portfolio. A platform will not, though they may offer guidance on things that they consider possible investments. The platform Hargreaves Lansdown was recommending Mr Woodfords fund shortly before it closed and began winding up.

You really need to think about what services you want. For example some provide a mobile phone app that you can monitor your portfolio and trade with. Others (ie Pillings) only provide yesterdays portfolio value on the internet and will only deal by phone. Some will deal foreign shares, some will only deal in a modest subset of the market. Charging structures vary a lot. Some are fairly expensive if you seldom trade but cheap if you trade often. Both Hargreaves Lansdown and A J Bell had serious issues dealing with customers the day that a Covid vaccine was found, I doubt that I'd have had any issue with Pillings as they attract people who trade seldom.

I understand that some even have seperate currency accounts reducing the FX costs if you regularly trade in a given overseas market, while most do not.

Some, like Vanguard, will only trade their own funds.

How do you see yourself investing? Passive or active? Individual companies or collective funds.

dealtn
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Re: Recommendations for New Investor

#370876

Postby dealtn » December 29th, 2020, 4:22 pm

Urbandreamer wrote:The platform Hargreaves Lansdown was recommending Mr Woodfords fund shortly before it closed and began winding up.



To be fair the "platform" certainly wasn't. If what you are looking for is a platform, the activities of the advisory part of HL shouldn't be of concern. HL provide a perfectly adequate platform, with reasonable fees, for a retail investor happy to select and manage their own portfolio of individual equities.

Urbandreamer
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Re: Recommendations for New Investor

#370897

Postby Urbandreamer » December 29th, 2020, 5:23 pm

dealtn wrote:
Urbandreamer wrote:The platform Hargreaves Lansdown was recommending Mr Woodfords fund shortly before it closed and began winding up.



To be fair the "platform" certainly wasn't. If what you are looking for is a platform, the activities of the advisory part of HL shouldn't be of concern. HL provide a perfectly adequate platform, with reasonable fees, for a retail investor happy to select and manage their own portfolio of individual equities.


To be fair I was also wrong in claiming that they don't offer "ready made solutions".
https://www.hl.co.uk/funds/help-choosin ... -shortlist
NOTE, HL state
it isn’t personal advice

So, not advisory at all, but guidance. If it HAD been advice then the FCA would have become involved and possibly recompense paid.

FWIW, I understand that HL is one of the most popular platforms out there and that those in a position to compare it's service often are very happy with it.

Returning to the OP's post.
Some platforms provide a "mag" containing financial journalisem.
A J Bell provide the "Shares" Mag.
https://www.sharesmagazine.co.uk/
Interactive Investor use to provide the "Money Observer", but has decided to close it down.

However the starting point really should be, what do you want to invest in? Many are very happy with a Vanguard passive fund. If that's all that's desired then the cheapest and best platform for only that would be Vanguards own.
ie
https://www.youtube.com/watch?v=XWXL1WALUjQ
If you want more flexibility here is someone setting up an account with HL
https://www.youtube.com/watch?v=hEbmuv6skkY
He's quite good at explaining why you might choose HL over the Vanguard platform despite the fact that you may pay more.
Here is some woman talking about A J Bell, HL and Vanguard. Though mostly about A J Bell.
https://www.youtube.com/watch?v=1FU1fQCduig
She's slightly out of date on the costs though.

We haven't even considered the likes of eToro, Robinhood. We simply have not enough information about what the OP's intentions are.

JohnB
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Re: Recommendations for New Investor

#370901

Postby JohnB » December 29th, 2020, 5:42 pm

When the O/P chooses a broker/platform, they need to decide whether they will be an active trader, for whom dealing fees matter, or a buy and forget one, where the main issue is custodial fees. Some platforms charge a percentage, which is good if you have a little, bad if you have a lot (though the fees can be capped). Others charge a fixed fee, which is the reverse. Some platforms are cheaper/free if you hold ETFS and shares rather than OEICs (what used to be called unit trusts)

Monevator.com has lots of excellent articles on choosing a platform. HL has good service, but you have to be careful to avoid their fees, IWeb are cheap and good, but are about to hike their joining fee from £25 to £100 on 4th January.

Buy Lars Krojer's book Investing Demystified to see which side of the active/passive funds religious war you lie on.

EverybodyKnows
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Re: Recommendations for New Investor

#370952

Postby EverybodyKnows » December 29th, 2020, 7:45 pm

Daffers wrote:I am completely new to investing


We have all been there - some more recently than others. I find it very stimulating, dare I say, fun!

Daffers wrote: and I am looking for some advice on stock brokers.


I think stock brokers are usually used by experienced investors with larger sums of money. Most people use a platform such as vanguard, interactive investor, x-o, etc.

They all come with pros and cons but are likely to be quite a bit cheaper than a broker. Which is best for you will depend on what you want to do - buy frequently/infrequently, buy individual shares/funds, do you want a fancy interface or barebones. This site is a great resource for comparing them: https://monevator.com/choosing-a-investment-platform/

Personally I found Lemon Fool to be a great place to learn. Reading old posts and new are equally useful. There is a lot to learn - but you don't need to do it all in one night!

Many people invest through an ISA which removes any tax headaches - I would look into this.

Avantegarde
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Re: Recommendations for New Investor

#371395

Postby Avantegarde » December 30th, 2020, 6:54 pm

I recommend you read two books, both of which are very suitable for the beginner:

1) The FT guide to investment trusts: https://www.amazon.co.uk/Financial-Time ... oks&sr=1-1

and

2) "The Long and the Short of It" by Professor Jon Kay: https://www.amazon.co.uk/Long-Short-inv ... 171&sr=1-2

They both talk about the usefulness of online stockbroking "platforms" for those who wish to manage their own investments. I use the Share Centre which has recently been taken over by Interactive Investor.

johnhemming
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Re: Recommendations for New Investor

#371405

Postby johnhemming » December 30th, 2020, 7:21 pm

EverybodyKnows wrote:I think stock brokers are usually used by experienced investors with larger sums of money. Most people use a platform such as vanguard, interactive investor, x-o, etc.

The three you quote are stockbrokers. Generally for a cost effective service people need to use a website. It is also possible to trade by phoning in instructions, but that is more complex as an administrative process and may not be generally available. I don't know.

There are, however, three general types of stockbroking account
a) Execution Only - where the service is only about executing trades (agreeing a transaction) and settling it (and probably doing all sorts of regulatory things like handling an ISA or SIPP)
b) Advisory - where you get advice from the stockbroker
c) Discretionary - where the stockbroker makes the decisions

b) has tended to fade away.

If you invest larger sums you will tend to pay more, but be able to get more of a service.

TUK020
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Re: Recommendations for New Investor

#371680

Postby TUK020 » December 31st, 2020, 2:50 pm

Daffers wrote:I am completely new to investing and I am looking for some advice on stock brokers. My plan is to manage my own portfolio so my understanding is I need a stock broker to buy them for me. Any advice on where I should look, and what are the important factors when selecting a stock broker would be greatly appreciated! Thank you!


Monevator has already been suggested; I would second this suggestion as a starting point.

Link:
https://monevator.com/compare-uk-cheape ... e-brokers/

I would advise that you also have a thorough read of the items listed in "Essential Reading"

Sinc
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Re: Recommendations for New Investor

#373146

Postby Sinc » January 4th, 2021, 8:13 pm

Just a quick question.re Interactive investor.. is ii a good platform for a first time newby, wonting an income? I am in limbo right now.
I have good sound advice from near by.but they wish me to understand the market and make my own decisions. Fair enough, .. but if you are left an investment isa of +300k and a investment portfolio of similar., I would really appreciate any tnoughts. Ii, seem a good place to move to, but would like some genuine reflection on services , charges etc.

tjh290633
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Re: Recommendations for New Investor

#373200

Postby tjh290633 » January 4th, 2021, 11:19 pm

Sinc wrote:Just a quick question.re Interactive investor.. is ii a good platform for a first time newby, wonting an income? I am in limbo right now.
I have good sound advice from near by.but they wish me to understand the market and make my own decisions. Fair enough, .. but if you are left an investment isa of +300k and a investment portfolio of similar., I would really appreciate any tnoughts. Ii, seem a good place to move to, but would like some genuine reflection on services , charges etc.

Go to https://www.ii.co.uk/our-charges and you will see what their charges are.

https://www.halifax.co.uk/investing/sta ... arges.html gives you similar information for the Halifax accounts. You will notice a difference in the cost.

Look at the other websites, https://www.hl.co.uk/investment-service ... nd-charges is Hargreaves Lansdown.

Do a bit of research on your own and decide which you want. From what I have seen the level of service is similar on most of them for online trading.

TJH

LooseCannon101
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Re: Recommendations for New Investor

#373218

Postby LooseCannon101 » January 5th, 2021, 12:09 am

Some investment trusts e.g. F&C Investment Trust (FCIT) can be bought through a cheap ISA savings plan rather than through a traditional broker or online platform. The plan for FCIT is provided by BMO Asset Management and costs only £72 per year.

A highly diversified world equity portfolio can be obtained by choosing one or more global investment trusts. No further action need be taken for the following 20+ years. Trading into and out of trusts will reduce your returns over the long term. Buying the shares of individual companies is much too complicated for most investors and certainly for a beginner.

Whatever you buy will typically go down as well as up e.g. declines of 10% every year, 20% every 4 years and 30% every 8 years for a world equity portfolio, but on average go up by 8% per year (dividends re-invested) over 20 years. Buying monthly through these ups and downs is called pound-cost averaging and employed by many investors.

Brokers cannot be trusted. They are interested in making as much money as possible by encouraging you to trade.

I hold only FCIT through the excellent BMO savings plan - re-investing dividends and buying monthly. Investing need not be complicated!

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Re: Recommendations for New Investor

#373263

Postby 77ss » January 5th, 2021, 8:11 am

LooseCannon101 wrote:Some investment trusts e.g. F&C Investment Trust (FCIT) can be bought through a cheap ISA savings plan rather than through a traditional broker or online platform. The plan for FCIT is provided by BMO Asset Management and costs only £72 per year.

A highly diversified world equity portfolio can be obtained by choosing one or more global investment trusts. No further action need be taken for the following 20+ years. Trading into and out of trusts will reduce your returns over the long term. Buying the shares of individual companies is much too complicated for most investors and certainly for a beginner.

Whatever you buy will typically go down as well as up e.g. declines of 10% every year, 20% every 4 years and 30% every 8 years for a world equity portfolio, but on average go up by 8% per year (dividends re-invested) over 20 years. Buying monthly through these ups and downs is called pound-cost averaging and employed by many investors.

Brokers cannot be trusted. They are interested in making as much money as possible by encouraging you to trade.

I hold only FCIT through the excellent BMO savings plan - re-investing dividends and buying monthly. Investing need not be complicated!


I would echo LooseCannon. FCIT is a solid performer.

Only you can judge whether or not it meets your personal circumstances, attitude to risk, time horizon etc, but as a starting point you could do a lot worse. As you gain knowledge and experience you can always make other investments.

I have held FCIT for over 25 years now - originally as part of my pension plannings, and it still forms a good part of my overall ivestments.

For reasons that are specific to me, I looked closely at its performance 21/05/2015 to date and over that period it has delivered an Annualised Total Return of 10.48%. Good enough for me.

As others have suggested, do make use of tax-sheltered vehicles such as an ISA or a SIPP. You have until the end of this tax year to take advantage of this year's ISA allowance.

Personally I find iWeb to be a perfectly satisfactory online broker - and it is cheap!

Good luck.

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Re: Recommendations for New Investor

#373271

Postby Urbandreamer » January 5th, 2021, 8:38 am

LooseCannon101 wrote:Brokers cannot be trusted. They are interested in making as much money as possible by encouraging you to trade.


Some of us have had good experiences with more than one broker.

By the way the initials BMO, the company that runs FCIT and holds LooseCannon's account, stands for Bank of Montreal (or the French for) and we all know how much you can trust banks.
look at the following links if you don't believe me.
https://www.bmo.com/main/personal
https://www.bmo.com/ir/files/F14%20File ... istory.pdf

Note the same domain.

The above is satirical, while true. I am NOT claiming that either BMO or FCIT are untrustworthy. Indeed I hold FCIT and have recommended it in the past. I'm just pointing out that LooseCannon is a bit free with his insults.

FWIW, Vanguard do a cheap account that you can buy Vanguard funds in as well.

BOTH options limit you.

I hold FCIT in an A J Bell account, which will cost me £42pa (you pay depending upon the size of your account). The same account holds Scottish Mortgage, Pacific Horizons and Henderson's Far east income, which would not be possible with the BMO or Vanguard account.

Mr Bell (A J Bell) published a book on INVESTING, not trading and gave a large number of copies to account holders (I was one).
Mr Bogal, before his death the man behind Vanguard, also encouraged investing rather than trading. Indeed he created the passive index tracker. Trading is only required by the fund manager when the index changes, unlike FCIT who employ people to seek good trades.

Like I say, a bit free on the insults.

tjh290633
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Re: Recommendations for New Investor

#373358

Postby tjh290633 » January 5th, 2021, 10:35 am

The problem with BMO is that you can only invest in their own products. Not much use if you want an ISA and more than one IT from different managers.

TJH

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Re: Recommendations for New Investor

#373607

Postby LooseCannon101 » January 5th, 2021, 9:07 pm

Urbandreamer -

Looking at AJ Bell's fees for holding an ISA I see that they charge 0.2% of assets. BMO Asset Manager savings plan only charges me £72 per year. If I were to use AJ Bell I would be paying over £1k per year.

I understand that having multiple investment trusts in a world equity portfolio might give someone a greater sense of security, but I doubt if someone could achieve a more diverse portfolio than that of F&C Investment Trust with about 450 companies.

BMO Asset Management uses JP Morgan Chase as its custodian bank to safeguard customer securities. JP Morgan Chase is one of the top 5 biggest custodian banks in the world.

Hargreaves Lansdown were recommending Neil Woodford's Equity Income Fund - one of the worst performing funds. The charging structure of online platforms may be transparent for the investor, but the charging structure for the funds on a platform can give perverse incentives.

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Re: Recommendations for New Investor

#373645

Postby jonesa1 » January 5th, 2021, 11:39 pm

LooseCannon101 wrote:Urbandreamer -

Looking at AJ Bell's fees for holding an ISA I see that they charge 0.2% of assets. BMO Asset Manager savings plan only charges me £72 per year. If I were to use AJ Bell I would be paying over £1k per year.

I understand that having multiple investment trusts in a world equity portfolio might give someone a greater sense of security, but I doubt if someone could achieve a more diverse portfolio than that of F&C Investment Trust with about 450 companies.

BMO Asset Management uses JP Morgan Chase as its custodian bank to safeguard customer securities. JP Morgan Chase is one of the top 5 biggest custodian banks in the world.

Hargreaves Lansdown were recommending Neil Woodford's Equity Income Fund - one of the worst performing funds. The charging structure of online platforms may be transparent for the investor, but the charging structure for the funds on a platform can give perverse incentives.


AJ Bell charge 0.25% for funds on valuations up to £250k (a reduced charge for amounts above that), but cap the charges for ITS, ETFS and shares. The cap is now £42 pa each for ISAs & dealing accounts and £120 for a SIPP. So holding FCIT in an AJ Bell ISA would incur a lower holding fee than with BMO. HL and Fidelity cap their ISA fees for ITs etc at £45.

Andrew

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Re: Recommendations for New Investor

#374509

Postby LooseCannon101 » January 7th, 2021, 8:26 pm

jonesa1 wrote:
LooseCannon101 wrote:Urbandreamer -

Looking at AJ Bell's fees for holding an ISA I see that they charge 0.2% of assets. BMO Asset Manager savings plan only charges me £72 per year. If I were to use AJ Bell I would be paying over £1k per year.

I understand that having multiple investment trusts in a world equity portfolio might give someone a greater sense of security, but I doubt if someone could achieve a more diverse portfolio than that of F&C Investment Trust with about 450 companies.

BMO Asset Management uses JP Morgan Chase as its custodian bank to safeguard customer securities. JP Morgan Chase is one of the top 5 biggest custodian banks in the world.

Hargreaves Lansdown were recommending Neil Woodford's Equity Income Fund - one of the worst performing funds. The charging structure of online platforms may be transparent for the investor, but the charging structure for the funds on a platform can give perverse incentives.


AJ Bell charge 0.25% for funds on valuations up to £250k (a reduced charge for amounts above that), but cap the charges for ITS, ETFS and shares. The cap is now £42 pa each for ISAs & dealing accounts and £120 for a SIPP. So holding FCIT in an AJ Bell ISA would incur a lower holding fee than with BMO. HL and Fidelity cap their ISA fees for ITs etc at £45.

Andrew


Sorry about saying that AJ Bell fees are 0.2% of assets. I was looking at AJ Bell Investcentre charges where a private investor has advice from a financial advisor. Where a private investor is investing directly, the upper charge is £42 as stated above.

https://www.investcentre.co.uk/sites/de ... _rates.pdf

https://www.youinvest.co.uk/isa/charges-and-rates

SalvorHardin
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Re: Recommendations for New Investor

#374567

Postby SalvorHardin » January 7th, 2021, 10:23 pm

Urbandreamer wrote:By the way the initials BMO, the company that runs FCIT and holds LooseCannon's account, stands for Bank of Montreal (or the French for) and we all know how much you can trust banks.
look at the following links if you don't believe me.
https://www.bmo.com/main/personal
https://www.bmo.com/ir/files/F14%20File ... istory.pdf

Note the same domain.

The above is satirical, while true. I am NOT claiming that either BMO or FCIT are untrustworthy. Indeed I hold FCIT and have recommended it in the past. I'm just pointing out that LooseCannon is a bit free with his insults.

Two good things about Bank of Montreal.

1) It is a Canadian bank. These are much, much better run than British banks, those institutions where competence at the top is optional, fleecing customers often seems to be standard operating procedure (how many misselling scandals in recent years?) and for whom paying dividends in the 21st century has been a bit of an afterthought :D

2) Bank of Montreal has paid a dividend in every year since 1829, longer than any other quoted Canadian company. No Canadian "big five" bank has cut its dividend since 1940, not even in 2020. In contrast relying on a British bank to pay a dividend in recent years has become a case of relying on hope over experience.

https://financialpost.com/investing/why-canadas-big-banks-defend-dividends-in-coronavirus-market-rout-and-at-all-other-times

I hold my Foreign & Colonial shares solely through BMO's monthly savings plan. I'm also a Bank of Montreal shareholder :D


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