£1000 to invest newbie

[Mattygm]

Hi all,

I’m an NHS worker in the UK and have received £1000 back pay I would like to invest long term for the future. Please can someone point me at any funds/stocks to put this towards or split between? I currently have an AJ Bell account with a little invested in their Balanced Fund but that’s all so far.

Many thanks in advance
Matt

[monabri]

I'll throw a curve ball in here...

I would make enquiries about topping up your NHS pension if that is possible (additional voluntary contributions, A.V.Cs) - at least explore the options and spend time getting to really understand the NHS pension scheme.

https://www.nhsbsa.nhs.uk/member-hub/in ... dded-years

[Urbandreamer]

Why do you want to invest and what do you seek to achieve?

Monabri makes a good point about the NHS pension, if it's as simple as putting money aside for your old age.

Of course if you seek to directly own a stake in something productive, then possibly shares in Astrazeneca or International Biotechnology Trust might float your boat. Then again possibly renewable energy is your thing. Or bitcoin. Or................

Sorry, the starting point is my first sentence. Why and what?

I personally own AZK, IBT, TRIG, bitcoin and a wide range of other things that interest me. How can I judge if my reasons to own them would match you or if you might desire to avoid them?

[kempiejon]

Mattgym, First post? Welcome.

Before you decide where to put a windfall there are many questions to think about the answers to.
Might you be planning on doing anything with that amount in the next few years? Might something unexpected come along that takes it
Other things to wonder do you have any debts, or kids or partner(s) or a mortgage. Or are you expecting getting some? What prospects in your career, how much longer do you have in the work place. How's your health and those around you.
Will there be more such lucky events, do you already have a steady savings/investment plan. Have you got an emergency cash fund ? What do you feel about risk to your cash, how would you feel if your £1k was worth less some months/years down the line?

Do you know where your AJB fund is invested, do you know how risky that might be and how much does it cost you?

Sorry, no helpful answers but it's a bigger question, I've been asked it a few times quite recently so had a stock answer ready to re-run.

[Mattygm]

Thanks for the replies guys. I’ve just turned 40 and have been paying into my NHS pension for 23 years now so got a good bit In there. Not really looking to save this for old age but happy to leave it as long as need/required where ever it goes.

I’ve always been interested in investing and owning a share in a company and have dabbled In the past. Ideally want to put it into something to grow over the next 5-10 years but like I say am happy to split this up into shorter term investments and some longer term.

Not expecting any unforeseen issues and all health is good and no debts other than a mortgage which we are fixed for another 3 years and 20yr left in total.

Hope this helps and thanks so far.

[Urbandreamer]

Sounds like you are interested in following company performance, rather than the market in general.

In addition to AZK, I hold the likes of RIO (mining), KWS (gaming, picks & shovels), DGE (booze), HILS (galvanizing), ULVR (soap & foods), RNWH (infrastructure maintenance).

Alternatively you might be interested in Investment Trusts. For example SMT invest in technology stocks. Cheap at the moment as they are out of favor. RICA have a very negative opinion of the future and are desperately looking for things that won't lose money. MYI seek international companies that pay decent dividends.

I should wand you that I'm fairly sure that I under perform global index trackers so my recommendations may not be great.

I subscribe to the Investors Chronicle for ideas and listen to a number of podcasts. A J Bell have "Shares" available to download and have a podcast (as does the IC). The Money Makers podcast is also worth listening to if you have an interest in Investment trusts.

[Mattygm]

Thanks again for your latest reply Urbandreamer, I’ll do some further investigation and read up some more.

What are your thoughts on FTSE100, 250 and S&P 500 etc?

Cheers

[MickR]

Thanks again for your latest reply Urbandreamer, I’ll do some further investigation and read up some more.

What are your thoughts on FTSE100, 250 and S&P 500 etc?

Cheers

if your looking at trackers then

FTSE 100 is a dead duck, but you can invest in a dividend focused etf that will pay over 4 or 5% I think.(not something I follow)

FTSE 250 won't go going anywhere whilst interest rates are this high, but you may want to invest now whilst it's low, for the longer term

Ditto S&P500, NASDAQ, they are low and seem to make small recoveries but not sustained. I would wait for a general feeling of confidence before investing. There again, invest today as they will probably shoot up Monday morning given what's happening in Russia this weekend

[Urbandreamer]

Thanks again for your latest reply Urbandreamer, I’ll do some further investigation and read up some more.

What are your thoughts on FTSE100, 250 and S&P 500 etc?

Cheers

Ok, you are talking macro stuff here. The FTSE 100 is full of big old multinational companies. It's actually very narrow in outlook. While I might buy some of those companies, I would be cautious about buying the index.
The 250 is more broad, but very UK based. Again I'd suggest caution as an index. UK shares are cheap, and have been getting cheaper for years.
The S&P 500. Well 500 companies is more than 250 isn't it. Many of the companies in this index are expensive, but have been getting more so for the last few years.

Were I to recommend an index, I'd probably pick something like VWRP.
https://www.ajbell.co.uk/market-research/LSE:VWRP
Costs are cheap and it's well diversified. Sure, like all global trackers, it's highly slanted towards the US.

That's if I were to recommend a index tracker. The only ones that I own are in my Aviva pension, where I have limited choice.

Were I to decide to switch horses, VWRP isn't the one I'd pick, but VWRL. It's the same thing, but I'm now not earning so the distribution would fit me better.

[doolally]

My first thought is for £1000, don't split it. What are your views on risk? Don't care if it's a flutter and you lose the lot? Or you want it to be reasonably safe?
I would either go for something like VWRL, an all-world tracker ETF. Being all-world, it won't set the heart racing with mighty gains, but will gradually just chunter upwards over time. But even that can fall over a shorter period, imagine what might happen if Putin went nuclear, no market would be safe.
FTSE100 or all-share tracker..... more volatile than all-world. Might go up if Brexit benefits are realised, might just trundle along, neither up nor down.
OR maybe a world sector-driven approach. Maybe a technology fund or ETF? Or a world pharma fund or ETF.
Bottom line is few or none of us really knows if SP500 is more likely to rise than FTSE100, or what world event might hit the markets
doolally (a world fund devotee since I'm not smart enough to be more specialised)

[wanderer]

I'd suggest opening an account with dodl which is owned by AJ Bell. Stick your 1000 into the "On top of the world" themed investment in the "around the world" themed investment section, which is a cheap global tracker run by HSBC. Do it quarterly, 250 each time, so it doesnt all go in at once. Then next year see if you can do it again with another 1000.

The dodl platform is pretty much as cheap as it could get for this level of investing and very simple to use. Use the investment isa if you haven't used your isa allowance or the general investment isa if you dont have any isa allowance left.

Good luck.

[Mattygm]

Thanks again all, much appreciated

[tjh290633]

From what you have said, you could be interested in putting it all in the shares of a single company. You could lose the lot of it could come good. No guarantees either way.

A collective investment is a lot safer, but performance could be pedestrian, and tracker funds cannot improve on the performance of the index being tracked.

Many, many years ago my first venture was investing in a unit trust which invested in Investment Trusts. It no longer exists, but I think that a single global IT would have served me better.

A few years later my mother left me a few shares, ICI, M&S and Brooke Bond Liebig. BBL got taken over soon after, ICI was a steady performer but did spin off IMI and Zeneca, now AZN. MKS at that time had frequent scrip issues and was one of my best performers in the last century. My own investing leant towards unit trusts specializing in commodities, which had fairly high yields at the time. Eventually this led me to looking at individual shares with yields higher than the market average.

I think that your best plan is to develop your own style of investing, using your lump sum as a start, then looking at regular savings which you can use to look at alternatives. My first plan was saving £3 a month into that unit trust, when my salary was £800 per year. I think that you will learn more that way than reading about what others have done, or fancy doing.

TJH

[Mattygm]

Thanks TJH for the advice

[LooseCannon101]

From what you have said, you could be interested in putting it all in the shares of a single company. You could lose the lot of it could come good. No guarantees either way.

A collective investment is a lot safer, but performance could be pedestrian, and tracker funds cannot improve on the performance of the index being tracked.

Many, many years ago my first venture was investing in a unit trust which invested in Investment Trusts. It no longer exists, but I think that a single global IT would have served me better.

A few years later my mother left me a few shares, ICI, M&S and Brooke Bond Liebig. BBL got taken over soon after, ICI was a steady performer but did spin off IMI and Zeneca, now AZN. MKS at that time had frequent scrip issues and was one of my best performers in the last century. My own investing leant towards unit trusts specializing in commodities, which had fairly high yields at the time. Eventually this led me to looking at individual shares with yields higher than the market average.

I think that your best plan is to develop your own style of investing, using your lump sum as a start, then looking at regular savings which you can use to look at alternatives. My first plan was saving £3 a month into that unit trust, when my salary was £800 per year. I think that you will learn more that way than reading about what others have done, or fancy doing.

TJH

TJH mentioned investing in a single global investment trust. The oldest is F&C Investment Trust (FCIT) which has been going for over 150 years. You could do a lot worse than putting the £1,000 into this trust via their ISA savings scheme, re-investing dividends and setting up a monthly direct debit. A sum of £1,000 invested 20 years ago has risen to about £8,000.

'Pound-cost averaging' and understanding compound interest e.g. 'Rule of 72' are essential for the beginner investor. Most private investors make far less than the world equity benchmark due to over-trading and following the herd.

[DrFfybes]

My first suggestion is not to split it. £1k is not a large sum, and at a tenner a time to buy and sell shares you'll soon need very good returns simply to cover the dealing charges.

Second question - I presume the AJB account is an ISA? If not, and you have ISA allowance left, then convert it. Whilst you might not think you'll ever earn enough divis to be taxed of get enough for CGT to become a problem, the lowering of allowances can easily make this an issue for someone who stuck £5k in a tracker a decade ago. If you are moving it, be careful not to realise a profit over the CGT allowance.

Back to the investment - picking a single company or invetment is not going to make you rich. But the risk is there to lose the lot. Trust me, I spent a lot of money learning this over the years.

But you don't say what other savings you have, if you have regular savings plan, children, etc. The fact that you are regarding this £1k backpay as a windfall to tuck away suggests you don't have much in reserve, so you might be as well off opening a savings account.

Paul

[Urbandreamer]

Back to the investment - picking a single company or invetment is not going to make you rich. But the risk is there to lose the lot. Trust me, I spent a lot of money learning this over the years.
...
Paul

I'd not make such claims. While over the years I have lost a lot of punts, I've also done very well out of some.

The very first thing that I bought, shares in Next, doubled within six months. After which I sold them. I was also fortunate enough to own ARM, but had to sell them sooner than I would have chosen. I bought HILS in 2011, and they are now worth 10 times what I paid. A capital return in excess of 17% ignoring the dividends between. I still own some of that initial investment in HILS.

Picking single companies to invest in is certainly more risky. You should be willing to not only lose and lose big, but put significant effort in to choosing what to invest in and reviewing when to get rid. However there are a number of well known individuals who have got rich investing in such a manner. It's not quick or easy, but over the years people have done it.

Re FCIT, it would be a good choice. I've owned them for a decade. I started investing in such IT's when I decided to put less effort into hunting for investments.