iambic wrote:Yep we're in (the very early!) stages of accumulation & I'm not sure if a HYP is right for us yet, but I'm interested in learning more & like the idea of generating some income from dividends. I'm taking it slowly though as preserving capital & understanding what we're investing in is our main aim right now, so have only gone as far as passive funds so far
Forgive me if this sounds daft advice, but I wouldn’t worry too much about costs at the beginning of your investment journey. And reading books about investment can cause confusion as there are so many “experts” giving different advice - perhaps including me!
However, from my experience, if you are investing for the long term, you have to accept that there are no low-risk strategies apart from keeping your cash in a bank savings account. Assuming you are going to end up investing, say £50,000 in your two ISAs as you see fit over the next few years. I wouldn’t bother with individual investments of less than £2,000 at a time. The reason for this is that if you invest say £500 in a share in a £50,000 portfolio and it is a brilliant investment and trebles in value, you have only gained £1,000 and it will have very little effect on your overall portfolio. So you have to take a few risks. After about 5 years of investing gradually, building a diversified portfolio, and reading opinions on this forum, you are going to know a lot more about your own investing preferences and you will have learnt from some good and bad personal experiences. This will be far more valuable than reading lots of books about theoretical investment processes.
Individual experiences are not statistically valid, but 25 years ago I started by investing in some companies which I thought were good quality and collective investments to give me diversification. I found it very interesting and picked up ideas for additional investments from the business media. Looking back, I wouldn’t have done it any other way. I “lost” a fortune in the crash of 2000 but learnt a lot so my portfolio suffered much less in 2008 and overall the portfolio has gained around 8% a year, so it’s worth 7 times the original investment and is generating significant retirement income.
After you have been investing for some years, it is worth concentrating on the costs as they tend to be more in absolute terms as your portfolio grows. However, my largest investment is in Fundsmith. They charge quite a lot, but to us early investors they have given a return of close to 19% growth per year over the last five years, so we can forgive them a small percentage charge each year.
Very best wishes for success in your investing. If you are sensible and gradually develop a diversified range of investments you will almost certainly not regret starting now. And the Lemon Fool has some brilliant posters who can teach us more than most “experts”.
regards
Howard