First time investor

[RAAavniSHI]

Hi ladies—I have money in a current account that I want to put towards investments now and was thinking of a Cash ISA (Moneybox and Plum) as I am just learning to invest. Therefore, I thought of seeking advice from your wise lot to help me understand and start my investment journey. I want to start with low-to-medium risk and gradually build up. Please let me know your thoughts. Would it be a good idea to combine a Cash ISA and market-based investments? Thanks in advance.

A cash ISA isn't really an investment. It's a savings account with tax advantages.

Without knowing your situation, or amounts, it's not possible to make any but the most general suggestions. So as a starting point I'd look at getting as much of your cash as possible into savings rather than current accounts so you get interest. Check whether the interest rate and amount in the account will put you over the tax limit. If not, you usually get a slightly better rate in a non-ISA account.

Thanks so much for your reply.I currently have £20 k which I'm thinking to start investment with.

If you want to invest, look at a stocks and shares ISA instead of a cash ISA.
We use Vanguard (but they recently increased their fees so not ideal for smaller values any more) and each fund has a risk rating associated with it so you can read up and decide if it's for you or not.
It does very much depend when you intend to use the money you're saving. S&S ISAs are better for longer term savings because if the value goes down (which it absolutely does, regularly), you are not in the position of having to sell / cash in when the value is low. You want to be in a position of not needing the money, being able to ride out the low and take the money at a higher point.

Agreed - emergency savings need to be in cash. Only invest money you won't need for at least 5 years.

What's the purpose of investing? ISA, LISA and pension are the main vehicles to look at, depending on your reasons for investing, timescale and age.

Hi, my reason is gaining financial independence and learning how to invest, as I am currently not in the best marital situation. I want to learn to make decisions for myself without spousal support, and the money I am currently considering investing is not yielding returns in my current account. I am not looking for instant withdrawals from the given amount.

Right, so not immediate but you'll probably want it before pension age. Not pension or LISA then.

So a stocks and shares ISA in a platform with a low, percentage-based platform fee is probably your starting point. You can get fixed fee ones, but they tend to be nore expensive if you only have a small.amount.

The other things to take into account are fund fees and dealing fees - you want to keep these low too.

Stay away from individual share investments. They need a lot of research. Bonds are the lowest risk, but tend also to be low growth (and if buying individual bonds, getting your head around coupons etc can be tricky).

Ready made funds are the simplest starting point. You can get bond funds and share funds, or a combined one that gives you set proportions of both.

It’s important to do lots of research first and define your investment goals and plan a way to fulfil them.

Start with something like this (but there are lots more of these):
https://meaningfulmoney.tv/2023/05/17/finance-os-intro/

https://ukpersonal.finance/flowchart/

I was going to post the personal finance flowchart that @Numberwangggg posted - it's a really good starting point for working out where you are and what you could do next.

I am by no means an expert but as you have a relatively small amount (in investment terms, it’s a massive amount to me!) and can’t afford to lose it, have you considered premium bonds? Better than a current account but no risk of losing the money, easy access and the excitement of finding out if you have won.

Premium bonds don't keep up with inflation - especially if you have less than the full £50k - so you do lose money in real terms. They are an OK place for an emergency fund, but they aren't an investment.

Thanks for the links @Numberwangggg - very useful.

Op, drip feed it into a stock and share isa, usual investments are index funds or etfs which mean huge baskets of tons of companies, so you can't loose really.
Popular ones are global funds and American based ones.
Check out what you like on morning star and trust net who rate fund.
Start off with 2 like the ones mentioned. Read jl Collins simple path to wealth.

Your money should roughly double every 7 years

I gave Psychology of Money book as a gift to my friend's daughter for her 18th birthday. Her dad works in finance. He said it's the best book on investing for a novice he had ever come across. It's about a tenner from Amazon.

I would also recommend AJBELL investment platform. They have a really useful advice on their pages for all sorts of investments and all sorts of risk levels.

If you might need money in the future- use ISA. If you are saving for a retirement you would be better off with a SIPP account as you can claim your taxes back (providing you paid them). You can claim taxes for the previous 6 years I believe. If you are a basic rate tax payer you can claim 4k back on 20k investment in the SIPP- so you will have 24k in your pension account.

AJBELL have their own funds spread over 6 levels of risks. I would start with those. Their charges are low and customer service is very good. My husband moved his pension to them a year after I opened my SIPP account

Op how old are you?
Equity are considered higher risk but like I said before if you're buying 100s the risk is lower. Look into why they are risky compared to bonds...

In these times of high inflation cash is high risk- you end up losing money. Bonds can be high risk too - just ask people who tried to retire after Liz Truss Budget. Anyone who doesn't need money in the next 5 -10 years should be in equities aka shares. There are plenty of professionally managed funds one can buy through reputable investment platforms such as AJBELL or Vanguard. Also, please do subscribe to Money Week magazine. It's £11 a month. They started talking about high inflation coming a year before it hit the UK. I told our mortgage broker in August 2021 - I want a 5 year fix. We are still on it - at the rate of 1.24%. The Money Week subscription has paid for itself many thousands of times over

Totally agree with all the points !!

Emergency cash for 6 months
Stocks and shares ISA and Pension for longer term investment.
Learn about ETF's
choose a low cost provider such as Vanguard or Investengine to begin with.

If you have an emergency fund sorted, you might think about starting to invest in a short term money market fund. It's a much more stable and less volatile investment than stocks and shares, and usually pays a dividend slightly higher than savings rates.
(It is still an investment though, so not entirely risk-free). It's an easy, low risk way to get started and park your money to get a good return, whilst you learn more about investing. You can do this within a stocks and shares ISA.

InvestEngine is a great platform with no FX or platform fees.
They offer two money market funds - one accumulating (where the dividends are automatically reinvested back into the fund, so you gain from growth of compound interest); and one distributing where profits are paid into your investment account on the platform, for you to either reinvest or withdraw. Their money market funds are paying 5.14% at the moment, and the TER fee for the fund is 0.10%.

https://investengine.com/etfs/collections/money-market-funds/

Sign up to the rebel finance school.
Teaches you all you need to know about how to invest well and it's free.
rebeldonegans.com/finance/rfs/

Agree re stocks and shares ISA if you do want to invest. Otherwise, a cash ISA is a great way to protect your money from tax (within the tax free contribution limit of course).

Try out this calculator to see how much each route might yield for you: https://optimly.co.uk/calculators/investment-growth.html