Savings accounts investments i don't understand?

[Reallyneedthosepositivevibes]

On my Plum account is has an investment option, with names of companies, that % next to them.

How does that work? You put your savings into a company and your savings fluctuate?

Sorry I sound dumb, but I dont understand it..is it the same when people say they have shares? Or where they say investments doing well..is that what it is?

Plum offers a lot of options. You may need to be more specific, or give a screenshot.

Is it an investment fund? If so then you buy a portion of the fund. The fund holds shares in multiple companies or sectors - according to the percentages shown.

Think of it as a cake. The cake is made of 60% flour, 30% sugar, 10% eggs. If you buy a 100g slice of cake you're getting 60g of flour, 30g of sugar and 10g of egg - but all mixed together in cake form.

But unlike cake the value of the shares in that fund do indeed go up and down, so the value of your 'slice' changes accordingly.

There are investment funds. But there is also a list of all companies listed separately. The percent next to them is like 5.89% then in either red or green.
So is that like if I put 500 in there, it would be 5.89 interest on that 500? And the interest is what would fluctuate? And if it was the red 5% that means 500-that %?

Think I've added screenshot 😅

Without knowing what this list is, it's really hard to answer your question.

And put £500 in where? The mysterious list? The individual company?

It sounds as if you are possibly describing a list of stock prices. In which case interest doesn't come into it.

The fluctuations will be the daily/weekly/annual/whatever change in the share price for that company.

For example if the list looks like this:

BP +5% [green]
Tesla 137% [red]

And we assume it's showing daily figures.

It means that if you bought 1 share in each company yesterday, you could now sell the BP share for 5% more than you paid for it, but if you want to sell the Tesla share you'd get 37% less than you paid.

[Edit, I see yove now posted an image - I'll have a look]

OK.

Pretty much as I thought. This is 2 lists, not 1.

The top bit is funds (global tech, etc). The one under the 'popular stocks' heading is individual companies.

But both work the same way. The perventage shown is how much the value of that item has changed.

Think of supermarket price stickers. 'Fairy LIiquid now £3.40, was £4.20'. If they showed that as a percentage 'Fairy liquid -20%' it would be the same thing as the share price changes.

So it's not a savings account, and there is no interest.

You buy a thing. The value of that thing goes up and down.

If you sell it when the price is higher than when you bought it, you make a profit.

If you sell it when the price is lower than when you bought, you make a loss.

All the changes in value between the time you buy and the time you sell are irrelevant.

Oh thank you, that makes sense.
I think with my limited knowledge I should stay clear? Or do you think it's something worth educating myself about?

If you don't understand:- Avoid.
If you want to learn:- A year of your spare time like learning to play cricket or learning dress making.

As SimpleSister says.

The first rule of investing is to never invest in anything you don't understand. At best you'll make mistakes and lose some money, and at worst you'll fail to spot a disaster or a scam and lose everything

Thank you both 🥰 where do you learn about this? Whenever I Google it, the information is either vague and easily misinterpretated, or it assumes a baseline knowledge which I don't have.

The system will be listing the investment fund which is tradable in its own right and what it has invested in

The list of companies and % will be what individual business are held and the % is the value each business as a proportion of the fund

So your £500 is you investing in a retail store fund (eg M&S Tesco and lidl)

You will buy a slice of the fund at the market value
Say at the time you bought in the total fund value is 1m
your share is £500/£1,000,000 of the fund.
If the fund has 1250000 units (shares) your buy-in of £500 will result in you owning 625 units of the fund

(I am ignoring your £500 by saying you bought existing units in the fund buy in value to do easy maths)

The holdings value of the fund is 1m with a breakdown as follows
300 shares in M&S
200 shares in Tesco
400 shares in Lidl

The total market value of 1m at 9am when trading starts
£500,000 for 300 shares in M&S
£300,000 for 200 shares in Tesco
£200,000 for 400 shares in Lidl

Or fund % is
50% (5k/1m) at £500,000 for 300 shares in M&S
30% (3k/1m) at £300,000 for 200 shares in Tesco
20% (2k/1m) at £200,000 for 400 shares in Lidl

At 11am the market values have changed
£500,000 for 300 shares in M&S
£100,000 for 200 shares in Tesco
£700,000 for 400 shares in Lidl

The total fund value has moved from 1m to 1.3m
Or fund % is
38% (5k/1.3m) at £500,000 for 300 shares in M&S
8% (1k/1.3m) at £100,000 for 200 shares in Tesco
54% (7k/1.3m) at £700,000 for 400 shares in Lidl

Green would indicate a rise in value red a fall in market value.

The fund itself can buy and sell its holdings so may sell off some of the Tesco shares to buy more Lidl shared in the "hope" Lidl shares will rise in value again
If the fund did this they lock in some or all of the the loss 200k from Tesco shares.
Overall you have gained from the market movement but you need to take your cash out (your £500 plus your share of the 0.3m ) to see real money.

You could choose to buy shares directly with M&S Tesco and Lidl but would not be able to decide if/ when it was best to lock in the loss or gain by selling while the investment fund managers have a (littlr) better understanding of the way the markets may move and how the market would value an individual business.

Just to note you are making an investment decision when you give a bank your money. You are giving them a loan and in exchnge it is providing services to manage the in/out flows and it may charge you or pay you a interest amount for the investment transaction.

As a small investor, don’t invest in individual companies and don’t buy and sell often you want to find a basic tracker and buy once then ignore it completely for a year. Then come back and have a look.

AnSolas, that's what I initially thought was being referred to, from the verbal description, but the screenshot shows it's not funds listed with a breakdown of holdings, but is actually 2 separate lists - one of funds, one of single stocks.

Had a look at the screen shots and I agree👍

I learned it first by reading the business pages of serious newspapers Sunday Times etc.
It developed from there.
It is interesting and worthwhile even if you don't actively invest.

A starting point for learning about investing would be to read some books, do an online course.

Books:
The Meaningful Money Handbook, Pete Matthew
The Simple Path To Wealth, JL Collins

Course: https://financialinterest.com/index-funds-for-beginners/

These are all about investing using funds, not buying individual stocks. A fund may contain many thousands of individual stocks, so you are spreading your money around many companies, in different geographic locations.

definitely educate yourself on investing. Less than 11% of UK adults have a S&S ISA and in my view that is absolutely criminal. For most people investing regularly over the long term is one of the best ways to build personal wealth.

It should be taught in schools, because if it was then many more people would be wealthier and be able to have financial security and retire earlier

I always thought it was a good idea to invest in something you could see was about to take off or could be in demand in the near future! I'm also going to have a look into it this week of