£500 to dip toe into stocks

[JustHurt]

I have decided i want to have a dabble with a stocks and shares ISA. from
My online research I think I need a robo investor platform, there’s so many to choose from and I don’t fully understand the fees. So if I put £500 in to start with then wanted to add say £50 per month would that be classed as a trade each time therefor cost me or not?

Yes, each time you add money and invest it in something, there will be a buy event.

Why a robo? What about using something like Vanguard Investor? They have low fees, you can stick with just funds which trade once per day so no dealing fee. You pay a platform fee (0.15%) which is charged every 3 months, plus there are fund fees (vary depending on what you buy).

The robo would have platform and fund fees as well... so when looking at what provider to use (the platform is the admin system) look at the total fees you are likely to pay.

Do you like books, podcasts, videos... how do you learn best? It can help to learn about how things work at a high level, then get started doing it, whilst you learn deeper. You may then change how you do things later on, once you find your investing style.

Thank you for the response. By robo I meant a ready made portfolio I now see they are different .
So looking at the vanguard would I pay the Fund transaction costs each month on every extra payment I add in? So would I be better starting with say £1000 and not adding to if for a while? Is investing really worth it with this small amount?
I like podcasts but had never actually thought of educating myself on investments through one to be honest… any recommendations?

Podcasts:
Meaningful Money
Money to The Masses
In Her Financial Shoes

Listen to these episodes from Meaningful Money to get you started:
meaningfulmoney.tv/UG4
meaningfulmoney.tv/UG5
meaningfulmoney.tv/2017/01/18/how-to-choose-a-multi-asset-fund/

Fund and Platform fees are payable all the time. Fund fee is percentage based, so the more money you have invested the more your fees.
Platform fees are percentage based or fixed. Vanguard Investor is a percentage based platform, which is great for those starting out as it keeps the fees low. Not so good when you have £100k invested as there are fixed fee platforms such as Interactive Investor which are more suited to large amounts invested.

If you can, I would start with £500 invested and setup £50 per month (you can change this later, and I suggest you review it every few months to creep up the amount) as a monthly investment.

Adding money monthly is called Pound Cost Averaging / Dollar Cost Averaging. By buying the same fund(s) once a month you are buying units at different unit prices as the fund value rises and falls.

By the end of the year you would have paid in £1050 if starting in month1 with £500 and then doing £50 per month.

Platform fee of 0.15% would be £1.58
Fund fee (if fund Ongoing Charge Figure was 0.22%) would be £2.31

It is not quite as simple as that but I am trying to come up with an example of how the fees work. The tiny percentage is calculated every day I think, on the amount you have in the account. You are then charged every 3 months, so initially you may have a Quarterly fee of less than £1.

Does that help?

Investing small amounts is certainly worthwhile. It helps you to learn how it works without risking too much money. Learning by doing is a great way to learn and it builds confidence.

I would say though that you should be in Baby Step 4 to start investing.
If you have consumer debt, then pay that off first.

Don't know what Baby Steps are? www.ramseysolutions.com/dave-ramsey-7-baby-steps

Hi OP how did you get on? I’m in similar situation and have just set up an S&S IDA with Invest Engine. Ive gone for £1000 investment plus £50pcm. Happy to leave it for at least 5 years. Wish I’d done someone sooner as my savings are earning nothing elsewhere. I might add more. Good luck.