Investing for complete beginners
Discussion
I am probably one of these people that Rachel Reeves is talking about. I currently have around £65k sat in a normal cash ISA that I obtained through inheritance a few years ago. I have never had savings before.
I've tried reading a few threads on PH, but they very quickly descend into financial terms and acronyms that experienced investors understand and complete novices (me) don't.
I've had some in premium bonds, but I reckon the payback has been less than 2% which is frankly crap.
What should I be doing with it? Every friend I talk to has a different opinion, based on what they did 20 years ago before housing prices increased.
My eldest is currently 14 so I may need some of it in around 5 years for university fees.
Should I just leave it in a cash ISA?
I've tried reading a few threads on PH, but they very quickly descend into financial terms and acronyms that experienced investors understand and complete novices (me) don't.
I've had some in premium bonds, but I reckon the payback has been less than 2% which is frankly crap.
What should I be doing with it? Every friend I talk to has a different opinion, based on what they did 20 years ago before housing prices increased.
My eldest is currently 14 so I may need some of it in around 5 years for university fees.
Should I just leave it in a cash ISA?
lancslad58 said:
Speak to a professional financial advisor.
He'll likely fall into the same pot that I did - could benefit from it but not worth their time. There's only 28,000 financial advisers in the UK - assuming each of them spends 2-3 days per year on each client, that means they could realistically look after around 100 clients. I know that if that were the case for me, I'd be focusing on the most valuable (and potentially valuable) clients I could. That's probably not people like the OP (or me).OP - I started a similar topic here which may or may not contain info you find helpful: https://www.pistonheads.com/gassing/topic.asp?h=0&...
The upshot of it seemed to be to just invest in a global ETF such as Vanguard FTSE All-World (Acc) and leave it to cook.
Funk said:
He'll likely fall into the same pot that I did - could benefit from it but not worth their time. There's only 28,000 financial advisers in the UK - assuming each of them spends 2-3 days per year on each client, that means they could realistically look after around 100 clients. I know that if that were the case for me, I'd be focusing on the most valuable (and potentially valuable) clients I could. That's probably not people like the OP (or me).
OP - I started a similar topic here which may or may not contain info you find helpful: https://www.pistonheads.com/gassing/topic.asp?h=0&...
The upshot of it seemed to be to just invest in a global ETF such as Vanguard FTSE All-World (Acc) and leave it to cook.
Hi Funk,OP - I started a similar topic here which may or may not contain info you find helpful: https://www.pistonheads.com/gassing/topic.asp?h=0&...
The upshot of it seemed to be to just invest in a global ETF such as Vanguard FTSE All-World (Acc) and leave it to cook.
Yours was actually the thread I was referring to
I was hoping it might answer some questions, but it rapidly descended into acronyms.I have no idea what an ETF is or what a FTSE All-World Acc is.
Anything you think you might need within the next five years, keep in cash. Otherwise, read "Investing Demystified" https://www.amazon.co.uk/Investing-Demystified-inv... (The author also has a series of videos online but I prefer a book)
ThunderSpook said:
Hi Funk,
Yours was actually the thread I was referring to I was hoping it might answer some questions, but it rapidly descended into acronyms.
I have no idea what an ETF is or what a FTSE All-World Acc is.
When I red the OP I was going to direct you to Funk's thread. Yours was actually the thread I was referring to
I was hoping it might answer some questions, but it rapidly descended into acronyms.I have no idea what an ETF is or what a FTSE All-World Acc is.
I hate to be that guy but the internet will tell you what these acronyms are in a fraction of a second.
Anyone who will tell you directly what to do with your money probably aren't worth listening to.
You will need to understand your options and make decisions.
ThunderSpook said:
Funk said:
He'll likely fall into the same pot that I did - could benefit from it but not worth their time. There's only 28,000 financial advisers in the UK - assuming each of them spends 2-3 days per year on each client, that means they could realistically look after around 100 clients. I know that if that were the case for me, I'd be focusing on the most valuable (and potentially valuable) clients I could. That's probably not people like the OP (or me).
OP - I started a similar topic here which may or may not contain info you find helpful: https://www.pistonheads.com/gassing/topic.asp?h=0&...
The upshot of it seemed to be to just invest in a global ETF such as Vanguard FTSE All-World (Acc) and leave it to cook.
Hi Funk,OP - I started a similar topic here which may or may not contain info you find helpful: https://www.pistonheads.com/gassing/topic.asp?h=0&...
The upshot of it seemed to be to just invest in a global ETF such as Vanguard FTSE All-World (Acc) and leave it to cook.
Yours was actually the thread I was referring to
I was hoping it might answer some questions, but it rapidly descended into acronyms.I have no idea what an ETF is or what a FTSE All-World Acc is.
Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
ThunderSpook said:
I am probably one of these people that Rachel Reeves is talking about. I currently have around £65k sat in a normal cash ISA that I obtained through inheritance a few years ago. I have never had savings before.
....
Should I just leave it in a cash ISA?
I'm screaming "no" - the cash ISA or Premium bonds (whilst both tax free savings) is not really what I would call investing.......It's really "managed decline" - i.e. you might beat inflation "just" but you aren't ever making anything over this. The only real guarantee is that you won't lose too much money from tyour starting amount... c.f. if you'd had the 65K in a S&S ISA (perhaps in one of the global / US funds), you'd have made ~50% over the last ~5 years......... ....
Should I just leave it in a cash ISA?
I've got lots of advice as to what I'd do (based mostly on what I've learnt over the years and what I'm doing) but I'd probably recommend binging on some of the finance / investing for beginners channels that are out there.
https://www.youtube.com/watch?v=NeWGBmXCJy4
Damien talks a lot of sense and has several "for beginners" videos that go into "how to start" etc.
Work out what your goal is, workout what your timescale is, and get stuck in...It's never too late to start...
Hustle_ said:
When I red the OP I was going to direct you to Funk's thread.
I hate to be that guy but the internet will tell you what these acronyms are in a fraction of a second.
Anyone who will tell you directly what to do with your money probably aren't worth listening to.
You will need to understand your options and make decisions.
Isn't this one of the problems that Rachel Reeves is talking about? That you need to have quite an intrinsic understanding of investing before you do anything out of the ordinary.I hate to be that guy but the internet will tell you what these acronyms are in a fraction of a second.
Anyone who will tell you directly what to do with your money probably aren't worth listening to.
You will need to understand your options and make decisions.
98elise said:
ETF is an exchange traded fund (collection of shares managed by a Fund manager) that you can buy and sell like an individual share.
Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
Thanks, this is useful and understandable Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
What's your rough timeline for needing to access some or all of the money?
What's the rough value of that money to you i.e. small part of the overall picture or that's all your savings?
Do you have any idea at all of your appetite for risk? i.e. right now you wake up tomorrow and you know there will always be at least £65K there.
Everyone like seeing things go up. Think if it went down. What sort of number would make you start to feel nervous?
Be honest about that
What's the rough value of that money to you i.e. small part of the overall picture or that's all your savings?
Do you have any idea at all of your appetite for risk? i.e. right now you wake up tomorrow and you know there will always be at least £65K there.
Everyone like seeing things go up. Think if it went down. What sort of number would make you start to feel nervous?
Be honest about that
quote=lancslad58]Speak to a professional financial advisor.
[/quote]
^ that is sensible advice. Just make sure they're independent and don't go to St James Place (based on other threads on here!)
There is nothing wrong with doing your own research as well. I personally think that the problem with these kind of threads is that they tend to leap straight to what to invest in rather than what you are trying to achieve. E.g. you will prob make different decisions depending on whether you need the sum in a years time, or if it's a long term retirement pot, or if you're a millionaire already, etc. etc.
I've found the books The Millionaire Teacher by Andrew Hallam and Just Keep Buying by Nick Maggiuli really good. As is the 'Investing for Beginners' series on Monevator: https://monevator.com/tag/investing-lessons/
[/quote]
^ that is sensible advice. Just make sure they're independent and don't go to St James Place (based on other threads on here!)
There is nothing wrong with doing your own research as well. I personally think that the problem with these kind of threads is that they tend to leap straight to what to invest in rather than what you are trying to achieve. E.g. you will prob make different decisions depending on whether you need the sum in a years time, or if it's a long term retirement pot, or if you're a millionaire already, etc. etc.
I've found the books The Millionaire Teacher by Andrew Hallam and Just Keep Buying by Nick Maggiuli really good. As is the 'Investing for Beginners' series on Monevator: https://monevator.com/tag/investing-lessons/
ThunderSpook said:
Isn't this one of the problems that Rachel Reeves is talking about? That you need to have quite an intrinsic understanding of investing before you do anything out of the ordinary.
I'm sure she would give you a scornful look for implying that investing is in any way 'out of the ordinary' You're already doing it. Pretty much every adult is. Maybe a useful first step would be to start with the biggest pot of money that you already have invested which is your pension. How is it invested and why? I'm pretty sure that's what started me off...
ThunderSpook said:
98elise said:
ETF is an exchange traded fund (collection of shares managed by a Fund manager) that you can buy and sell like an individual share.
Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
Thanks, this is useful and understandable Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
As an example this is the Vanguard Life Strategy 100% Equity fund, which is quite popular.
As you can see it has a buy and sell price for the units (like a share) but at the bottom of the screen its showing the main shares its invested in (in % order).
Buying into the fund is as simple as buying shares. The main difference is share trades happen immediately, funds are actioned once a day, so there's a delay.
Edited to add...
I also realise I stuck my own acronym in my original reply. I mentioned the H&L platform. H&L are Hargreaves & Lansdown who are one of the big UK financial services companies that do equities ISA and Pension accounts.
I have my Pension and ISAs with them and obviously use them to trade, as do many others on here.
Edited by 98elise on Monday 21st July 15:02
98elise said:
ThunderSpook said:
98elise said:
ETF is an exchange traded fund (collection of shares managed by a Fund manager) that you can buy and sell like an individual share.
Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
Thanks, this is useful and understandable Instead of say investing in Microsoft shares, you could invest in a technology fund that has Microsoft, Apple, Tesla and a whole bunch of other tech shares in it. You're spreading your risk without having to make an individual investment decisions.
You can spread your risk even further by investing in multiple funds
A FTSE All World Acc is just one type of fund thats based on the FTSE.
You can use platforms like H&L to filter and compare funds, and they have their own recommended funds as well. There are also threads on here about what funds people buy into.
Personally all of my Pension and most of my ISA's are in ETF's. Over the years the returns have been great. I generally hold about 10 different funds.
As an example this is the Vanguard Life Strategy 100% Equity fund, which is quite popular.
As you can see it has a buy and sell price for the units (like a share) but at the bottom of the screen its showing the main shares its invested in (in % order).
Buying into the fund is as simple as buying shares. The main difference is share trades happen immediately, funds are actioned once a day, so there's a delay.
Edited to add...
I also realise I stuck my own acronym in my original reply. I mentioned the H&L platform. H&L are Hargreaves & Lansdown who are one of the big UK financial services companies that do equities ISA and Pension accounts.
I have my Pension and ISAs with them and obviously use them to trade, as do many others on here.
My advice is the same advice I give anyone wanting to start investing, without knowing the intricacies of their personal situation, and as long as they don’t need the money within the next 4-5 years.
Echoing same advice as 98 Elise, keep it simple.
Buy what’s called an “index fund” that invests a little bit in thousands of the top companies around the world. This will basically track the general health of financial markets and spreads your money around.
Vanguard All World (VWRP) is my go to choice. Vanguard prides itself on being low fee as possible for their clients, which is good.
You can buy this investment through vanguard themselves (https://www.vanguardinvestor.co.uk/) or you can buy that investment from one of the many other big name investment companies (Hargreaves Lansdown/ aviva/ iWeb etc)
Start there, and see how you like it. Once you get the hang of it and feel comfortable you can start looking at all the complexities of ETFs vs mutual funds etc.
Happy to answer any questions.
Echoing same advice as 98 Elise, keep it simple.
Buy what’s called an “index fund” that invests a little bit in thousands of the top companies around the world. This will basically track the general health of financial markets and spreads your money around.
Vanguard All World (VWRP) is my go to choice. Vanguard prides itself on being low fee as possible for their clients, which is good.
You can buy this investment through vanguard themselves (https://www.vanguardinvestor.co.uk/) or you can buy that investment from one of the many other big name investment companies (Hargreaves Lansdown/ aviva/ iWeb etc)
Start there, and see how you like it. Once you get the hang of it and feel comfortable you can start looking at all the complexities of ETFs vs mutual funds etc.
Happy to answer any questions.
I mean no disrespect here, but can I recommend:
https://www.amazon.co.uk/Investing-Dummies-UK-Tony...
or if the 'dummies' offends, then I have a much older version of this which was useful when I started out.
https://www.amazon.co.uk/dp/1292214074/ref=sspa_dk...
If nothing else it will mean you can ask the right questions, and more importantly understand the answers.
https://www.amazon.co.uk/Investing-Dummies-UK-Tony...
or if the 'dummies' offends, then I have a much older version of this which was useful when I started out.
https://www.amazon.co.uk/dp/1292214074/ref=sspa_dk...
If nothing else it will mean you can ask the right questions, and more importantly understand the answers.
I was in a similar position a few years back, didn't know where to start.
You need to determine how much risk you are comfortable with, and also consider keeping your short term money (uni fees etc..) separate.
I did some reading then decided to open a Vanguard account and put my money into their life strategy fund (60% equity and 40% bonds).
The app interface is good and you can see what is going on.
Once my knowledge and confidence grew, I moved into 100% equities as my long term view became clearer.
There are many ETFs out there, but keeping it simple with a global tracker gets you invested in the world, spread over the top few thousand companies.
An additional benefit from investing is that you also get a better insight into where your pension can be invested, rather than default funds as you understand more.
You need to determine how much risk you are comfortable with, and also consider keeping your short term money (uni fees etc..) separate.
I did some reading then decided to open a Vanguard account and put my money into their life strategy fund (60% equity and 40% bonds).
The app interface is good and you can see what is going on.
Once my knowledge and confidence grew, I moved into 100% equities as my long term view became clearer.
There are many ETFs out there, but keeping it simple with a global tracker gets you invested in the world, spread over the top few thousand companies.
An additional benefit from investing is that you also get a better insight into where your pension can be invested, rather than default funds as you understand more.
Edited by superpp on Monday 21st July 16:30
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