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Investments

Discuss investments with other users on our Investment forum. For more advice read our tips for saving for your child's future.

How to invest for DC

3 replies

JeesamPeesam · 05/11/2023 13:26

Hi all,

I'm wondering if anyone can help. I have a stocks and shares ISA open for DC (9 months) and have been paying £30pm into it which I will increase when back at work. I don't really know what I'm doing with it to be honest and have just picked a fund to invest in.

Unfortunately I'm not financially savvy when it comes to investing, I am hoping that someone will be able to point me to any resources that will help with investing for DC. I don't want them to struggle to afford things such as a house, driving lessons etc so I'm hoping that by starting now I'll be able to help financially when the time comes.

Thanks!

OP posts:
nannynick · 05/11/2023 20:06

Investing Cheatsheet (PDF sent via email) https://meaningfulmoney.tv/investing
Video - The Simplest Way To Invest: s

I am going to assume it is a Junior ISA in the child's name. You are the custodian of that account and your child will be able to do what they like with it at age 18 - try to teach them before then that the money is for helping with long term things like a home deposit... so when they are 18 move most of it to an adult ISA (combined with Lifetime ISA if that exists and if the first time buyer house limit is suitable).

Investing for children is not different to investing for yourself. Think about the timescale for when the money will be accessed. Your child is under a year old now... so they won't access the money for 17 years, so it can be invested at high risk, such as 100% in equities (companies), not kept in cash/fixed income/Gilts/bonds. Avoid trying to pick companies to invest in... you have no idea what companies around now, will still be around in 17 years time. Invest globally and across as many companies as possible. There are very simple funds which will do that for you... such as Fidelity World Index, HSBC FTSE All-World, Vanguard FTSE Global All Cap... to name a few. When you buy a unit in one of these funds, it buys a small part of many thousands of company shares.

Your ISA provider should have a system for showing you what funds are available, their fees (aim as low as possible), and provide more details about each fund. Look for words in the fund name such as World, Global. Keep cost as low as you can... when looking at funds look for the OCF (Ongoing Charge Figure). HL, AJ Bell and Fidelity have the HSBC FTSE All World Index fund available at 0.13% OCF.

Books, YouTube, Podcasts, all sorts of things are available for free or low cost, to help you learn about finance.

Book: The Simple Path To Wealth, JL Collins. This is about investing using just one fund... he suggests VTSAX (Vanguard Total Stock Market Index) as he is in the United States. For someone in the UK, use a Global fund. The principles of the book apply regardless of where you live... you want to invest as widely as possible, covering as much of the stock market as you can, at as low a cost as you can.

The key is to start early, and add on a regular basis, as you are doing. Review the amount being added and try to increase it... which you are intending to do when you are back at work. So you are already doing great. I would suggest that you look at what fund is being used... is it a global / world fund. If not, then is it very high in equities which are spread around lots of countries? If not, then look at changing the fund to something that gives a wide exposure to global equities, as the future is unknown, so you don't know where the next companies which make lots of money will be located (which stock exchange they list on).

JeesamPeesam · 06/11/2023 23:25

@nannynick Very helpful, thank you!

OP posts:
40thmonarch · 08/11/2023 22:58

@JeesamPeesam what did you choose.
I'm sure nanny covered all bases.
Ours are just in vanguard funds and funds that have 100s of companies in them. I also have vanguard s and p 500 which covered the USA stock market.

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