First time investing - any advice/experiences

[PowerthruIT]

Hi all,

My DD starts school in September, so this is going to free up nursery fees and so me and the 'other half' are thinking of investing the money in a stocks and shares ISA, probably around £300/400 a month, as we are now both in our 40s so a bit late to the investing game!

Initially, we just thought of going with one of our banks (HSBC, Barclays etc) that offer ready-made portfolios or managed funds; however, after doing a little more research via podcasts and You Tube it would appear these are just expensive options (i.e. fees) for investing you can do yourself on many free platforms where you just pick a popular EFT index fund and invest as it pretty much does the same job but for less fees and better long term returns. That said a lot of the 'folkes' on YouTube seem to be younger clued up lads on the market.

Naturally as first timers we lean towards one of our banks, but are we just falling into that trap of being easy bait for the bank to reap the fees off something we could do ourselves?

We know any investing comes with risk and that it is 'long term' i.e 10 years to see any notable returns so just after the best option or some advice.

Don't go to a high street bank, they are expensive and generally have poor investment choices.

Two good low fee platforms in my opinion would be either Trading 212 or Invest Engine. They both are very low costs, have a wide variety of investments to choose from and have easy to use interfaces (in my opinion).

T212 - you can buy ETFs and individual shares on here, I now only use if for ETFs.

Invest Engine is an ETF only platform.

Either of the above would probably be good for your circumstances. I'd suggest you keep things super simple and just invest in a global index ETF. A couple of popular options would be Vanguard All World (VWRP) and Invesgo All World (FWRG). Both are very similar funds, the Invesco one is slightly cheaper than the Vanguard.

In my opinion there is no need to make it any more complicated than have one global ETF on either T212 or Invest Engine. The potential downside to T212 is if you get tempted into buying individual shares, this can be much risker especially if you are new to investing. The upside to T212 is that you can also open a cash ISA as well which I think now pays 3.75%.

I think both platforms have some kind of special offer if you can get a referral code (all of the YouTubers seem to have one) where you will get a free share.

I would echo Hitchens advice, T212 or Invest Engine, with a global diverse ETF like FWRG or VWRP.

For more info, I would suggest YouTube (or podcasts) - Meaningful Money, Damien Talks Money, James Shack and Money to the Masses.

Suggest you look at the Rebel Finance School for a great guide to managing your money and investing .

I like Trading 212. It’s simple and cheap. As pp have said find a global tracker fund and just stick to it. I also use AJ Bell and Interactive investor which have more choice of investments but are a little bit more expensive for early stage monthly investments.
Great that you have done a bit of research before you start. Good Luck

As others have said, trading212 and I use VWRP to invest in mainly. Don’t go with your bank!

I would listen to Stephen Bartlett’s interview DOACeo with Cathie Wood - World’s no1 investing expert
I think if you get an EFT comprising of a group of shares, as you suggest, then doing it yourself could be a very fruitful way to go.

Tips:

• be in it for the long haul
• Diversify - for example, if you’re already a homeowner then you are exposed to real estate, so consider how to gain exposure to other asset classes.

Whatever platform you go with find the cheapest tracker - you can often sort by fees. And make sure you’re looking at the all-in fee (total expense ratio) and not just the management fee - additional costs can be quite high. One tracker fund is pretty much the same as another.

saying one tracker fund is pretty much the same as another is misleading. You could argue that VRRP and FWRG are pretty much identical, so to go with the FWRG because it has lower costs, but cost isn't everything. It also has less potential liquidity as the size of the fund is currently lower.

Tracker funds can cover a huge variety of different sectors and geographies. Some of them are well diversified and some aren't at all. There are ETFs with only one share in them!

I meant (and no i probably wasn’t very clear!) that once you have decided on, say, a global tracker (MSCI World or whatever) they are generally much of a muchness. Assuming they are tracking correctly and yes your point about fund size is valid too although again once a fund hits a certain size it’s investable.

Interactive Investor is probably one of the best brokers out there.
Regular investments are free.

However, check the fees carefully, because if you have a very small amount then other options can be cheaper.

Don't buy funds: with funds you quite never know at what price you are buying or selling, because orders take a few days to settle. Buy ETF. use a website like justetf to educate yourself on how ETFs work and to find ETFs to invest in.

If you want to go for global trackers, eg on the MSCI World, you'll have plenty of options.

Remember that ISAs cannot be joint accounts, but in one name only,

The main advice is very simple:

keep an emergency fund invested in super-safe things like saving accounts, cash ISAs, or short-term gilts. If you need money for an emergency (the car breaks down, you lose your job etc) you want these money to be available. This is the pot that maybe doesn't beat inflation but at least doesn't go down in nominal value. If you need access to this emergency fund, you cannot afford the risk it is maybe worth 10-15% less because you are unlucky and need it just when the markets crashed

anything that you realistically don't need for a period of 5-7 years, invest away in equities. Over these time periods, equities have tended to outperform safer investments. There is of course no ironclad guarantee they will continue to do so in the future, but there is no safe investment which yield a lot. You can have safe which yields a little, or riskier. Safe which yields a lot doesn't exist!

The idea is that your investment will go up and down in the short term, but, over 5-7 years, it is very likely to go up

Rebel Finance excellent when you have time. You could just look at their investment session in the short term.

Agree with others S&S ISA with a low cost provider Trading 212 or AJ Bell Dodl. They are fine <100k any more and interactive investor is better. Avoid banks.

Listen to the podcasts and YouTube videos of Meaningful Money...financial adviser based in Cornwall. Very good at spelling out how to cover all your personal finance pots (emergency fund, pension etc). He also has 2 simple paperback books. And it's great that he's uk based so he's talking about uk tax and products etc

Then have a look at Rebel Finance. They really are very good at the individual investing side of things.

Both have Facebook groups where you can ask questions

I started in my mid 40's and it's definitely not too late! I started with Vanguard as it had a simple easy to understand interface and low fees and the funds are really easy to understand. Don't get the funds that have retirement targets. Get the funds that are either 100% equity (life strategy) or FTSE developed world ex UK. No need to have lots of funds as they are pretty well spread amongst different companies in the funds, that's the point of funds.

Be brave and do it. It's like 'whens the best time to plant a tree...20 years ago, the 2nd best time is today'. Same with investing.

Thanks. Is there a particular reason to avoid banks? I've been looking at a few that offer portfolio funds that, according to their factsheets, have performed well inline with the market. Admitedly their costs can be higher but HSBC seems quite competitive and offers very similar funds to the Vanguard Life Strategy, in fact a little cheaper. Just wondered if there was something I needed to be more aware of with the banks?

Charges at banks are higher. You may not have access to the same range of funds.

As a first step, maximise your pensions and make sure you have enough accessible cash savings for a rainy day - but also invest in a S&S global tracker ISA via a low fee platform such as those already mentioned.

Whatever you do, don’t invest via banks.

Read Personal Finance for Dummies and a couple of basic books about investing.

There is a fund for ultra cautious investors - VT AI-FUND. It is on all the normal platforms and is invested in high yield markets (yielding 6-9%) until algorithms tell it to go off risk and it is all invested in short term money markets yielding 4%. It had performed well over the last 6 years, scarcely fell in 2022 and was out of the markets on liberation day when Trump announced his tariffs. It performs well by avoiding the sell offs.