Talk to me about investing please!

[Enigmasaurus]

I’m clueless

Some context:
We’re mid 30s, 4 small children. Own our own home (mortgaged). Have good professional incomes, though I am currently part time. Household income puts us in the top 5%. We have good public sector pensions.

I read a lot about needing to ‘invest’ and am not sure what that means / how to go about it..

I grew up in a working class family with little money. ‘Saving’ was impressed upon us - as cash in the bank. The only time ‘Investing’ was spoken about, it was in relation to property.
We are fortunate enough to have some money in savings for us and the children, (with a view to increasing over time), and own 2 additional properties.

I’ve been looking at our finances, and feel we should do more with our disposable income. Currently thinking of splitting this 3 ways (savings, mortgage overpayment and ‘investing’). But I have no idea how to go about investing! Considering stocks/shares in a whole market fund (I think...) but where? And how? And how much?? what do other people do?

I appreciate that we are in an extremely fortunate position. Any help / advice / pointers would be very welcome

The most important thing I think is to start. Even if you're just partitioning that money into another account or cash ISA, dont delay. Months and years slip by whilst our busy lives keep us well busy.

Martin Lewis and his money saving expert site have some good links on which stocks and shares ISA's are currently a good deal, motley fool website forums are a good place to look at a few newbie investor threads.

I'm no money whizz and not in your fortunate position but slow and steady investing and the effect of compound interest is quite amazing.

Thanks Ripple (your username seems very appropriate in this context )

We do regularly save into an ISA/savings accounts for the kids. Intending to change one of our ISAs into a S&S one. We can do better though!

Thanks for the recommended reading - will take a look

Anyone else with any tips / advice on where to invest (or not!)?

From my research I think stocks and shares isas are best. Its in tax wrapper and investing in the market will give better returns.

Again from my humble research I've read index trackes are best.

Google boggle. Vanguard.

However I come untsuck at which one myself.. Usually spread around different markets, have some bonds as well.... And always drip feed in so you buy more when it's low and less when High rather than chunks.

MSE is a good place to start. Never invest in anything you don't understand.

I have a Wealthify stocks and shares ISA. It's doing really well. Your money is invested in ETFs so they track an index. You could get a better return from investing in stocks and shares yourself if you knew what you were doing but your risk of losses is much, much higher. You get to choose from a risk profile.

There are other robo advisors like this. Nutmeg, Wealthsimple, Moneyfarm are a few. I went with wealthify because they were doing a deal at the time which meant there were no fees for the first year.

My interest (tax free) has consistently been between 6.5 and 9%.

Do not go on a random internet board and ask random posters what to do. That would be stupid.

How did you become so affluent.

Dark actually asking here does yield.

People usually use this research as part of wider research

Pickle sarnie that website has excellent calculator on it. Over what time period have you had the isa with those returns thanks

You can seek advice from a financial adviser. Sites like unbiased.co.uk are a good place to find one in your area but be aware they may need a sizeable investment amount to take you on as a client.

Personally I think investing in funds is better than just buying shares of a certain company because your risk is diversified and you are benefiting from the knowledge of a fund manager.

A previous poster mentioned trackers are best but that depends on your attitude to risk. As they track the benchmark they are seen as less risky than a manager who actively manages the fund and is aiming to generate an excess return. Of course that means that the higher risk comes with a potential (!) for higher rewards.

As Pickle days, robo advisers might be useful to you as they consider factors like your attitude to risk and your investment timeline but don't require you to have a large amount to invest. Of course the recommendations wouldn't be as personalised as independent financial advice though.

The Hargreaves Lansdown site is a good place to start doing some reading.

Thank you for the pointers.
Gobbo I’ve heard of the Vanguard funds... will do some research. We will probably get a S&S ISA too but want somewhere for additional funds outside the ISA allowance to go.
PickledSarnie’s ISA sounds interesting!

Dark Apologies if I’ve offended you somehow with my post. I would never make an investment solely on the basis of an unknown person’s advice. But MN has a lot of very knowledgeable posters who are much more financially literate than me and so any advice or tips they can provide will be helpful. In addition to other reading & research as opposed to in place of it.

In terms of our position - a mixture of luck and hard work. We are both fortunate enough to have had family support with deposit contributions & rent-free accommodation when needed which has undoubtedly made life much easier. We’ve also chosen to buy a less expensive property than we can afford and don’t have expensive habits or hobbies. We haven’t had a holiday for some years. We’ve worked hard through school/uni & have professional jobs in the same profession, at almost the same level despite my maternity leaves & part time working. DH works on a more freelance basis that provides a very good income and great work-life balance. We’ve been very lucky.

If you wanted to invest in stocks and shares one of the easiest ways I’ve found is with Halifax Share Dealing - you can choose to invest either in funds or individual companies (the majority of my investment is in National Grid, for example, but I have smaller amounts in other companies, some of which are whims with a bit of research behind them).

The only thing to watch is the fees - each individual trade costs £12.50 so you need to be investing a healthy sum for that to be worth it. However, once a month for a few hours (clearly advertised well in advance) they offer reduced fees of £3.99.

I've had my account for almost a year Gobbolinocat . I started with a few grand (part of a windfall) and then added a bit more when I felt more comfortable with it and drip money into it monthly.

The interest does fluctuate and there is a risk of losing money. But, since they are designed for mid to long term investments, you could just ride it out.

They've been really transparent with where my money is invested and will update me if they make any big change and the reasons why. I think nearly all of them have the options for ethical investment too.

Thanks Teakind
I think a fund is what i had in mind. But not sure about using a financial advisor - not great experience so far. Or a fund manager - don’t they take a significant cut?
Does anyone manage their own fund? Or is that not even possible?

OP one of the first things you need to think about is how you feel about risk. Any advice you take will be linked to that.

You invest in funds rather than manage your own. You could manage your own portfolio of funds and shares though.

Yes fund mangers do take a cut but its not a large percentage and when you look at a fund's past performance it should always be shown net of fees so you can see how much return investors have received. Fees will vary between different fund managers so you can look if there are any initial fees, how much the ongoing charge is and if there are any performance fees.

If you have a mortgage I'd prioritise overpaying that over saving (as not many savings accounts are paying higher interest than mortgages). Obviously you need an accessible pool of easily accessible savings (ideally 3-6 months living costs).
That said, I don't know much about investing, but I'd personally want to own my home outright before taking any risks.

Thanks Teakind - so if I did some research & in time found a fund that I wanted to invest in, I’d make that investment directly with the fund? And then can watch it (and any others I invest in) myself to see how it does?

Rosa given my childhood with not much money, I’m naturally very risk averse! Which may be why I haven’t taken the plunge so far DH less so. I’m keen however to change my mindset and whatever we would invest would be in addition to cash savings and savings for the kids.

I started investing at Christmas, and think its something we can and should all do to build a more secure financial future. I wish people talked about it more - if my friends discussed funds to the same extent we talk about clothes and beauty, we'd all be much richer!

Not recommendation, but what I've learnt is;

Start with a platform - I use Hargreaves Lansdown, or look at AJ Bell or others.

If you invest in stocks and shares you will permanently have to monitor markets. A fund means you have a fund manager who does all that for you - find one who seems to have a good strategy and then let them do the hard work (for a fee)

Fees vary considerably, which is worth checking as you might find a similar fund that is cheaper from a fee point of view.

Trackers are the cheapest fund, but they just replicate markets and ideally I would think you want to beat the market. Also, trackers invest in every company so if you wanted to exclude certain companies of sectors (eg weapons or tobacco) you can't really.

So, some thoughts:
--Yes to ISA, and because gains in there are protected, that's where you'd perhaps have the higher-risk, higher-returning investments. i.e. not a money market fund that's dripping out half a percent a year.
--You might consider opening a SIPP account if your work pension contributions aren't using your whole pension allowance. Gains also protected, although they're locked up til retirement.
--Tracker funds can be better than active, partly because the savings in fees mount up over time.
--That said, a good active fund can beat the market on both return and risk. Also, in the less efficient markets (e.g. emerging markets) it can be worth using an active manager, who can duck and weave.
--Look outside of the UK to get global diversification
--Maybe read a bit of Money Week or Investors Chronicle to get ideas
Good luck!

Some great podcasts to listen out there

Meaningful money
And
Money to the Masses are two of my favourites.

This is money has good finance podcasts and one for beginners I listened to recently. Even Warren buffet recommended index trackers.

They said have 70% safe in trackers and some bonds and 30% higher risk.

Isas a and a and cash iasas are different. Cash isa return is dismal 1.%? But stocks and shares seem to average out much higher returns over time.

Re fund mangers Google Neil Woodford and beware! Never have all eggs in one basket unless it's a basket fund like tracker which tracks whole market.

I would recommend the website monevator. It’s very informative. The main things you need to consider is if you are investing this is not for short term so at least 5 years; look at how much you are being charged in fees this will eat in to your growth and diversify so don’t put all your money into one thing. Vanguard is a very good place to start you can invest directly with them into an ISA and you might want to look at the life strategy funds which invest all over the world at a low cost.

Yep, you can invest through a platform like Hargreaves Lansdown. I'd recommend having a look at their website as you can see lots of different funds past performance. If you decide to manage your own portfolio then my main advice would be to diversify and not put all your eggs in once basket. For example, don't just focus on funds that invest in one country or region.

Also have a look at behavioural finance to help understand your attitude to risk and how it can effect your investment decisions.

Vanguard is tops. Great company that is actually owned by the investors and dedicated to low costs and good service. Start with a balanced fund that holds a mix of stocks and bonds and do a regular monthly transfer into it.

www.vanguardinvestor.co.uk/

I've been with them for many years in the US and they're brilliant.