Picking shares to go in ISA. Help please

[timidviper]

DH puts money in an ISA for each of us each year and has set up a Stocks and Shares ISA for me. Apparently I just have to pick a few companies whose shares will go in it. I don't know where to start!

I have been told that most shares are overvalued at the moment and may fall so a high dividend may be a good idea but this is a long term investment so if it falls it could recover too.

I have Googled FTSE 100 High Dividend and names I recognise are National Grid, Centrica, BAE, Unilever, Sage Group, Rio Tinto, Anglo-American and several drug companies and supermarkets. Has anyone got any suggestions please? What should I look for?

What? Nobody got any ideas?

Please?
Bumping

Picking individual shares is always going to be high risk while you don't have enough to be diversified. While those in FTSE should be relatively stable, you're still likely to have a volatile portfolio.

Have you considered funds? This could be OEICs, such as the Invesco Perpetual High Income fund (why do you want high income rather than growth?), or if you want something stock market tradable, then there are a number of investment trusts that could be suitable.

I remember reading a book by Warren Buffet about how to pick stocks - something like buy stocks whose business you understand. Let me find out the name of the book and post again

I have to say vodaphone would be good for yield as it reports one of the highest dividends. And probably is undervalued currently.

As a novice it might be worth investing in funds rather than shares as they are not as risky. On the other hand the rewards could be less. If you do want to buy individual shares then I would look at the recommended reading section on valueshare.co.uk

I have a stocks and shares isa and I spent time researching penny stocks on the alternative investment market (aim). Not many can be invested in an isa from aim but it's worth finding those that can and doing a bit of research. Plus, the aim market is at a low (unlike the other markets) so it's a good time to find a few gems. I have only been using my isa for 2 years, and in that time with some good research I've gained £5,310 on a 11,200 investment. I needed my 11,000 out recently but left the £5000 in to carry on investing.

Have a look at LSE (London south east) to do some very basic research, and then when you see a company you like the look of, go to their official website to find out more about them. Be careful in aim though, do your research as it's quite a volatile market, but there is money to be made in the volatility.

Don't buy until you've really studied though. It's a great hobby if you have some spare time and is quite an addictive pastime, but be careful if that's where you choose to invest. You could choose some 'safer' shares from the ftse and then throw in a wildcard from the aim market if you don't want too much risk.

Go for US shares. Stratasys, 3D systems, IPG photonics, Amazon, Under armour, intuitive Surgical, salesforce.

I would agree with those who suggest it may be safer to go for a fund, for example one that tracks FTSE 100. Any one company could go bust, even one we've all heard of.
Plus, the characteristics of companies change, and there can be a lot of misleading information out there, eg:
Vodafone does have a high yield, but a large chunk of that came from Verizon which they have now sold
Utilities are at the mercy of government regulation, so will have less money with which to pay dividends if eg the politicians crack down on energy bills
AIM's all share index is at 3-year highs
LSE is London Stock Exchange
Value (undervalued/overvalued) is a very subjective concept - for any given share you could probably find a way of valuing that would show that it's expensive, while another commonly accepted valuation method shows it's cheap.
Yes, there is money to be made (potentially lots), but it's probably not advisable to invest anything that you can't afford to lose in single stocks. The biggest rewards come with the biggest risks (penny stocks).

Agreed. Go for funds (low cost investment trusts or ETFs). I picked the City of London investment trust, which invests in big FTSE companies. You can get ETFs to track different indices if you want to invest in Europe, the US etc.

This might help. We've made a film about all you need to know about investing in three minutes. We think it's funny as well, but we would!
Hope it helps

Buy funds, not shares. I have found best invest a good source of info.

Shares are always high risk...and funds are high risk with high fees that eat into your returns (if any). Shares are expensive at the moment and will probably lose some value soon.....

If you must buy shares look for dividend yield (that has been increasing preferably for a few years) and just reinvest the dividend each year.

You really need to read a book like shares made simple by Rodney Hobson to get some basic understanding before you start.

OTOH you can get to 3-5% from bank accounts before tax and have protection for your capital...

Be very careful taking advice about buying shares!

The stock market is posh gambling! No one can predict what will happen and sometimes it makes no sense at all. Like a company will release incredible results and everyone will sell, you would have expected it to increase.

Be wary of stock tips in newspapers etc, the writer normally has an interest! I got burned that way many a time in the beginning.

AIM shares that can now go in ISAs are very unpredictable! You can make huge gains but also huge loses! I have some that are 80% down and some that are 700% up!

If you want a punt, then choose a share involved with fracking. Igas or Egdon, both low price at the moment, have been much higher and have most potential for actual mining.

The best thing I can advise is a mix of funds and follow my Grandfather's investment strategy, which is:

SHARES

Buy only FTSE 100 shares, until you are comfortable with investing and losses! FTSE 100 aren't hit as badly as other markets.

Set up your account so it automatically reinvests dividends or uses SCRIP or DRIP schemes. Your investment will grow much bigger this way. Be aware you have to pay tax on dividends whether you take them as cash or reinvest them!

Buy only shares that have a high dividend yield, at least 3%

Buy from different fields, don't just buy all one type! Pharmaceuticals, Utilities, Supermarkets, Consumer Goods, Mining and Banking are the big ones.

Don't just buy once you have chosen your shares! Watch the price, look over the last 3 months at least, set up a buy limit, so when the price drops it automatically buys for you at that price.

Keep some money back and wait for a big price fall from a FTSE 100 company, happens at least once a year, wait till bottoms out and then when price just starts to rise again buy. I did this when Aviva had a profit warning, currently 55% up.

Be careful about buying new listing, while Royal Mail soared most don't! quite a few are 25-50% below listing price! I got burned that way several times!

Don't check your shares every day. It will just upset you. They go up and down!

I love this website for dividends yields, will help you choose shares.
www.topyields.nl/Top-dividend-yields-of-FTSE100.php

FUNDS

Buy accumulation funds, your dividend is automatically reinvested.

I like these 3 funds for a beginner:

HL Multi-Manager Income & Growth Trust - Accumulation
This fund buys into many different funds so it spreads the risk

Legal & General UK Index Class C - Accumulation
This is a tracker fund so has low costs

CF Woodford Equity Income Class Z - Accumulation
Woodford has an amazing track record and has made a lot of people a lot of money, this is his new fund.

Depends if you can afford to lose your money, remember shares can go down as well as up

Collectives are your best bet either unit or investment trusts.
You have several choices: a pin, get reading up or get some professional advice. My advice is the latter but watch out for fees everyone charges differently.

Unless you have ££££ to invest, I wouldn't go near a financial advisor - they don't have a crystal ball and neither does anyone else.

However, if you read up on how to build a portfolio, you will see that the general principle is to have a mix of assets, depending upon the risk you are prepared to take, across different geographies, industry sectors etc.

You have to weigh up risk v reward to start with, if you are a cautious investor it may not be practical to invest in shares but a portfolio of funds for diversity which gives some potential for growth, if you are new to the investment market you need some clear financial advice, don't invest until you get some advice, seems like you are not sure what you need. Cash Isas are safe but most are only paying rates around 1% now, for higher rate cash Isas you have to tie you're money up for longer periods of time, please please please get some advice from a fully qualified advisor first otherwise you could lose much more than you bargained for, a good advisor will also be happy to review your investments once or twice a year and give face to face advice, I urge you not to invest in anything unless you 100% understand the risks involved

I don't bother trying to "pick" shares or funds. There are experts out there who can do it all for you.

For example, look at www.wealthhorizon.com/

Read Smarter Investing by Tim Hale - he presents sound arguments for investing in index tracker funds. I've followed his advice.

I also suggest investing in funds rather than shares unless you have the time and knowledge to manage your own portfolio.
The funds you choose should be based on the level of risk you wish to take. Are you cautious or willing to take some risk in the hope of getting a better return? Based on this you should select a mixture of equities and fixed interest with a higher proportion in equity depending on the risk you wish to take. The funds available depends on your ISA provider and you should also consider the fund annual management charges and any other charges levied by the ISA manager.

The companies you listed are very stable but that means they may not make a great yield or it could be around the same as a cash isa. Look into a tracker that matches the ftse100

Marking place, as I have found this thread useful, especially the posts by CosmicForce and Rufus, as well as some of the suggestions for readings.

I especially liked this on the fallacy that we can all beat the average.

In fact, the average mug punter with no special knowledge and skill can expect to do worse, especially if he is being looted by professionals skimming off charges. There's a lot to be said for low cost trackers.

I am curious why your DH has set up a self invest ISA for you if you nor him (presumably) have experience or appetite for investing.

FTSE Exchange Traded Fund tracker - have a look at VUKE.L. It is not the only one, but I think that it is the cheapest. You can put 100% of the ISA into it and it will track the UK main market.

If you would like a bit more risk - MIDD.L tracks the FTSE250. This has historically outperformed the FTSE100 but these are smaller companies and you bear more risk (the price tends to move more). Once again, shop around, there are other trackers.

Single stocks I have bought recently: Xcite Energy, Enquest, Shire, Land Securities. These are very, very high risk and are not recommendations !!! - you should do your own research and reach your own independent conclusion depending on your own financial circumstances, appetite for risk and ability to suffer losses in short and long term.

Don't chase hot stocks. Don't chase tips. Don't chase star fund managers. Relying on yesterday's winners is a recipe for failure.

Get a fund - to spread your risks across different stocks.

Get a multi-asset fund - to spread your risks across different asset classes.

Good luck!