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  1. #1

    Stocks and shares ISA - newbie

    Hi all

    I'm a newbie when it comes to savings so please go easy on me!

    I'm in my late 20s, have a mortgage which I overpay each month, a decent workplace pension scheme and some money in a cash ISA for emergencies. In the next year or two I'd like to start investing for the long term in stocks and shares and understand that the best way to do this is via a stocks and shares ISA.

    I guess my question is - how do I educate myself enough to get to a point where I fully understand what I'm investing in and why, enough so to enable me to make smart investment choices? I understand that there is always an element of risk, but having done some research over the past couple of days it seems a little overwhelming - so many different funds to choose from and no real indication of what is the most important qualities to look for when choosing (particularly as past performance doesn't give an indication of future performance).

    Any initial advice/tips for a newbie please?

  2. #2
    To be honest, you don’t need to be fully aware/up to speed with all the ins and outs of your investments. It’s better to understand the principles of investing and perhaps invest in a simple global tracker fund such as Vanguard LifeStrategy.

    You will learn a lot as you get more experienced, sometimes there is only so much people can learn from reading and researching.

    Vanguard LifeStrategy 20% - for the cautious investor
    “............................” 40% - for the medium cautious investor

  3. #3
    I've started investing just a little bit into a tracker fund (around 50 a month) which is going quite well. I want to start paying more into it once I've moved into my first house (mortgage application done!). I'd be interested in any advice you get, because it will be helpful for me too.

    I get the impression from here, and from my parents, that it is much less risky to invest in multi-"part" funds to spread risk. In addition websites like FE Trustnet will show you the riskiness of the fund, the quality of the fund manager, and historic returns. There's another website, but I can't remember it right now.

  4. #4
    Also worth looking at the Lifetime ISA where you can contribute up to 4k per year and get a 25% bonus from the government. It is intended to help you save for retirement and can be withdrawn without penalty from age 60. You can save a stocks & shares LISA with Nutmeg (simple, good performance) or explore more complicated options with AJ Bell YouInvest or Hargreaves Lansdown. There are some other S&S LISA providers but their offers are not very attractive.

  5. #5
    Yes, a globally diversified low cost multi asset fund like the Vanguard LifeStrategy funds mentioned above is a good place to start, and continue through the years. It contains passive indexes which follow the markets, and you can choose a fund to suit your risk tolerance.

    One thing to bear in mind is that risk really means the volatility of a fund. So if you invest in a fund like Vanguard LifeStrategy 100 (which means 100% equities) that is a high risk because its all equities and equities are more volatile than bonds, but if you invest in it long term it will most likely have the greater gains. But there will be equity crashes when 100% equity fund might drop 40% or 50% in value. That would be when you need to hold your nerve and don't panic and sell. In fact if you are investing monthly in the fund that is an advantage because at these times you will buy the fund at low prices which will enhance gains when the markets recover.

    I'm retired and have recently invested large lump sums in Vanguard LifeStrategy 40 and 60 versions of the fund. If I was younger and investing monthly, I would probably go for one of the versions with a higher percentage of equities to bonds.


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