How do I educate myself about stocks and shares?

[Illstartexercisingtomorrow]

Hi
I don’t currently have much to invest, but am working on saving up and in that time I want to become savvy about what to invest in.

Having watched my inlaws live - and die - in relative poverty I really want to do what I can to better my situation, there are days when I get really anxious about what my retirement days will look like.

I would like to be in a situation where a decade from now I have a portfolio of stocks and shares, but have no financial background and I find it overwhelming when I do start researching online - mostly a feeling that I don’t really understand what I’m doing, or any ability to understand market trends.

I realise with any investing there is risk but at least if I understand what I’m doing I can understand the risk.

Any advice would be gratefully received.

I read the financial sections of the broadsheet newspapers to get an overview of what's going on. I'd say that's a good place to start before investing.

We've just started with a stocks and shares ISA.
Have you looked into those?

If you are inexperienced and only have relatively small sums to invest, your best option will be a Vanguard index fund. Do this while you start reading up on shares,nequities, investment trusts and the like. Chances are though that direct investing will always be a relatively small part of your portfolio.

And definitely use an ISA wrapper. That's a no-brainer.

The most useful book I read is "The simple path to wealth" by J Collins. This is very much from the FIRE (Financial Independence, Retire Early) community and there are some blogs that are useful around this as well. Even if you don't buy into the frugality element of the FIRE movement, their investment plan is generally very sound and worth reading up on.

In UK terms, it is max out your 20K tax free in a stocks and share ISA. Invest the 20K in the ISA in broad passive ETFs (Exchange Traded Funds) or funds with a low fee. Don't bother with stock picking.

I personally like VWRL and SWDA as ETFs.

I thought nannynick would rush in to suggest you listen to the Meaningful Money podcast. So I’ll do it. There are 300 plus now. You can find season 1 in the archives to help you understand investing. I was like you a year ago and have learnt lots, got rid of some underperforming funds I inherited and bought done low cost funds instead.

I found the humble penny channel on youtube the best and I was a complete newb to it all.

Definitely start with a stocks and shares isa. You can only put in £20k a year, personally I will never reach that limit so is perfect for me.
I use a robo investing platform called wealthify, but there are others, nutmeg, Hargreaves lansdowne etc. You choose your attitude to risk and whether you want to invest in ethical funds and it does all the investing for you.
You pay a fee but it's a very low percentage

I second Meaningful Money and Humble Penny. Another good one is moneytothemasses.com

Don’t overthink it.

Great suggestions above to start learning about investing.

I’d also add get out of any credit cards or loans, and save up an emergency fund before investing.

You have two main investment wrappers: pension or stocks and shares ISA, you can have either both. You’re looking for low fees and a good selection of funds.

Then you have to pick a fund or funds to invest in, within either pension or ISA.

The investment learning will help you decide which ‘wrapper’ (ISA/Pension or both) and which funds will give you the income you need, when you need it. There are calculators you can play with online to see what returns you might expect.

I have one vanguard s&s isa, invested in their Lifestrategy 100 fund. The aim of that is to provide 30,000 towards my children’s university costs in about 15 years time, as that’s a long way off, I’ve chosen a higher risk/higher return fund.

I have a stakeholder pension with L&G, and that is in a different investment fund that should supplement my state pension and mean i can retire before age 70!

I also recommend Meaningful Money. There is a FiRE thread on here (FIRE starter) and people are helpful.

You need to understand:

1. your own personal life plan and goals
2. the different "wrappers" or investment account types, including pensions, Lisa's and ISAs. These have different rules amount how much the government adds, when you can withdraw, and tax treatment
3. the different things you can invest in inside these wrappers, including funds, ETFs and individual shares.

Take it slow. Make the broad brushstrokes first (eg which wrapper to put money in) and finesse later (eg finding provider with best fees). Good luck.

I feel like I mention it every time @whataboutbob though it is good book, website, youtube channel, podcast and online training courses.

Getting started is the hardest thing but once you have selected a fund to invest in, a provider of the ISA (platform) and setup automatic payments, you can just leave it to get on with it. Then review how things are going every now and then. Reading books, listening to podcasts, watching videos will help you decide on an investment strategy, you may want to keep it really simple or you may want a to have a core investment plus dabble in other things.

Podcasts I frequently listen to are:
Meaningful Money
Maven Money
Money to the Masses
Choose FI
This Is Money
The Retirement Cafe
Informed Choice Radio

And I’m glad you do nannynick as it got me on to a good thing. To quote Pete I was recklessly conservative, letting my savings sleep and emaciate in the bank. I feel I have better balance now between some calculated risk taking and a safe rainy day fund.

Wow all of these suggestions are great. Thank you everyone. I’ll go through each suggestion and start learning.

.

It's essentially posh gambling op.

Agree with those who say a stocks and shares ISA is the way to go. Due to Corona/ brexit everything is s bit volatile at the moment.

The idea is the market in general will go up if you leave the money in for years.

My pension got 30% wiped off last year... And it wasn't much to start with!

I have some money in Hargreaves Lansdowne due to an old job ( I think there are cheaper options) and I play with it.

My grandad played the stock market. He was wealthy and did make money. He had s great pension though so no real risk.

He always said never gamble with more than you are happy to lose. That is good advice IMO.

I got 50% gains in like 4 months on two things I picked because I like them :D

The'sensible' stuff is fucked.

Good luck OP?

Sorry not ? But !

Op as pp said, jl Collins, simple path to wealth, stonking book, simple, simple simple and vanguard

Jack bogle.

Buy the book :

Meaningful Money Handbook

Watch , meaningful money TV on YouTube and join the FB group

Honestly changed my life

@NiceGerbil

It's essentially posh gambling op.

Agree with those who say a stocks and shares ISA is the way to go. Due to Corona/ brexit everything is s bit volatile at the moment.

The idea is the market in general will go up if you leave the money in for years.

My pension got 30% wiped off last year... And it wasn't much to start with!

I have some money in Hargreaves Lansdowne due to an old job ( I think there are cheaper options) and I play with it.

My grandad played the stock market. He was wealthy and did make money. He had s great pension though so no real risk.

He always said never gamble with more than you are happy to lose. That is good advice IMO.

It's not posh gambling .

You can minimize your risk by global diversification .

Please check your account now, you may have had 30% wiped off but I imagine it's certainly back up now .

You could have been smart and invested when the market was 30% down ;)

My pension was down 30% last year too but soon recovered and is now up 30%.
I invest in passive funds (learnt about them via monevator.com (see the beginners posts) and other FIRE blogs).
I was nervous about starting to invest so invested a small amount in different funds first so that I could watch and get used to the ups and downs.

We have an interest only mortgage so have funds ISAs to pay off the balance (plus a SIPP for our pension). I prefer to pick my own funds rather than pay for a financial adviser. Although I have a financial background, it isn't rocket science and my teenagers pick their own funds for their ISAs.

Here's a few suggestions:

• Decide your risk appetite. Are you happy to risk losses some years for larger gains in other years? (Doesn't always follow but higher risk often means higher potential returns). Funds are a better bet than shares. There are some funds that limit your downside risk for more modest gains (they tend to be categorised by % in shares with the rest in cash/other instruments)

• What is your investment horizon? You mention a decade so do you plan to withdraw all or some of it at that point? If all, you might want to start moving from funds into more secure investments as retirement beckons to protect against a market downturn

• Would you like to pick your own funds? As others mentioned, there are ready-made funds of funds. Or companies like Hargreaves Lansdown have a "Wealth 150" of funds they like, split across the sectors. Or find a financial adviser that covers most of the market (so not St James Place etc).

If you'd like to choose, do some research online on which sectors are tipped for the next 2-3 years. For example, post Brexit, many U.K. stocks were considered to be relatively undervalued, while the US shares have had a stellar few years but there's concerns that the tech stocks may be overvalued.

After you've picked a few sectors, I find trustnet a brilliant website - you can enter any fund, and it shows you how it's performed against its peers in that sector (U.K., emerging markets, whatever) plus performance over various time scales and other info. I try to pick funds that are top quartile against their peers over 3-5 years, although you don't necessarily want to invest in the top ones over the last 12 months as you might be buying it at a high price

• Look at a low cost platform as fees can add up. For example, HL charge around 0.25-0.45% per year but no initial fees and some rebates on the annual management fees the funds charge. AJ Bell and Charles Stanley are similar.

• If you want to manage your in-price, consider investing monthly rather than as a lump sum. The downside is that you can lose out on some gains but you average the prices you buy the funds at.

In good years, my funds have increased by around 20-25% on average but there are some years where they've dropped by 10-15%.

Sorry that's so dry, it's made me feel sleepy...

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