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Hopefully a really simple question.

The lad has been given £2k to start him off at university but he doesn't need it and is interested in investing in shares. He is interested enough to pick which ones himself.

I assume he would be best doing this inside an ISA?

And if so, what / who is the simplest way to do this?

To add he will probably be able to add another £100 or so a month whilst at university.

TIA.

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10 hours ago, Wight Flight said:

Hopefully a really simple question.

The lad has been given £2k to start him off at university but he doesn't need it and is interested in investing in shares. He is interested enough to pick which ones himself.

I assume he would be best doing this inside an ISA?

And if so, what / who is the simplest way to do this?

To add he will probably be able to add another £100 or so a month whilst at university.

TIA.

@Wight Flight 

I would get him to set up a Hargreaves & Lansdowne account.

Download the App (or just google H&L ISA).

Assuming he is 18+ he will get a £20k allowance per year - all dividends are income tax free and profits when taken are Capital Gains Tax free.

There are some products you can ‘shield’ inside an ISA - eg. Bitcoin ETFs.

It takes about a 3-5days to set up account and have money sitting in account waiting.

Most buys are charged at £11.95 and there are FX charges (and commission)  if purchasing on foreign market. (You have to fill in an extra form for you his and ‘high risk’ shares - just ask a H&L rep if you cannot find it).

Lastly (as he is young this is less of an issue) the best time to buy is a few days/weeks/months after a crash - at the bottom of a bear market. “When people are greedy sell, when people are fearful buy”. 

If you ‘bought the Dow Jones Ind Avg. DJIA index tracker’ the day before the 1929 crash (P/E ratio was historicallY high at about 30 compared to long term average) - say invested £2000 then 25 years later it would be worth £2000 (in real terms). 

7769D4B7-8D68-4109-A84B-42670D3DAF04.thumb.jpeg.e06ad2df9bc4d80d9f285a567f64c238.jpeg
 

If you bought at the bottom in January 1932 that £2000 would be worth £20,000 in real terms by 1957.

Timing is everything my friend.

Secondly buying the right stocks for the next cycle is everything too! 

You should (or get your lad to) do the following after setting up H&L account but before buying.

Read @DurhamBorn thread right from the beginning: “Credit Inflation and Deflation cycle”.

Have a look at the P/E ratio of the market today?

Have a read of a few threads in the Basement - e.g.  “FAAAT bubble about to pop” etc....

* No one ever knows when the best time to enter market is. It could be now if you pick the right stocks or it could be in 12 months time after a collapse. The collapse may never come and the £2000 sitting in a bank may be worth a £1000 in 10 years time.

Or you might want to set up a bullionvault account and buy silver or gold....? Alternatively a Coinbase Bitcoin account. These are 2 of many other possible investments? But you don’t have a crystal ball - so who knows?

As they say the choice is ‘yours’ (or his in this case).

I’ll leave you with this.....

https://www.businessinsider.com/how-to-spot-stock-market-bubbles-2017-10?amp
 

 

B8A71787-C578-4DB8-80C0-53FABE6E8240.jpeg
 

Disclosure: I have 2 £9k ISAs set up ready to go for my kids. Best start them young. I won’t be buying until the next market crash. I also sold up 70% of my portfolio on Friday 22nd August 2020.

This post could just be me pushing my ‘confirmation bias’ - make your own choices. Good Luck. 

Edited by Vendetta
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He should consider a LISA. You get a 25p bonus for every £1 you put in. So essentially free money with no risk. You can put in up to £4k a year. 

So £2000 = £500 bonus

AJ Bell have one that allows stocks and shares investments. 

However, you can't take the money out unless you turn 60 or you are using it for your first property purchase. But I assume he may want to buy a property at some point?

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54 minutes ago, Hardhat said:

He should consider a LISA. You get a 25p bonus for every £1 you put in. So essentially free money with no risk. You can put in up to £4k a year. 

So £2000 = £500 bonus

AJ Bell have one that allows stocks and shares investments. 

However, you can't take the money out unless you turn 60 or you are using it for your first property purchase. But I assume he may want to buy a property at some point?

You can take out the money, but you have to hand 25% back to the government. So if you put in £4K and received £1k from the government and after a year it hadn’t increased In value so you still had £5k and you took the money out, you’d only get £3.75k back.

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8 hours ago, Castlevania said:

You can take out the money, but you have to hand 25% back to the government. So if you put in £4K and received £1k from the government and after a year it hadn’t increased In value so you still had £5k and you took the money out, you’d only get £3.75k back.

there is a temporary (coronavirus, obviously!) reduction of that penalty from 25% to 20% until next tax year

https://www.moneysavingexpert.com/news/2020/05/lifetime-isa-withdrawal-penalty-reduced-due-to-coronavirus/

Trading 212 for ISA (they don't do LISA) could be a low fee alternative to other suggestions above.  It allows me to buy/sell very small positions as trades are much cheaper than mainstream providers.  Used it for 6 months or so now, it's great. 

Of course, with £2k, one would be unlikely to hit capital gains/dividend annual limits, so doesn't really matter if it's an ISA or not.  Unless LISA bonus is required.

Edited by Bear Hug
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24 minutes ago, Bear Hug said:

there is a temporary (coronavirus, obviously!) reduction of that penalty from 25% to 20% until next tax year

https://www.moneysavingexpert.com/news/2020/05/lifetime-isa-withdrawal-penalty-reduced-due-to-coronavirus/

Trading 212 for ISA (they don't do LISA) could be a low fee alternative to other suggestions above.  It allows me to buy/sell very small positions as trades are much cheaper than mainstream providers.  Used it for 6 months or so now, it's great. 

Of course, with £2k, one would be unlikely to hit capital gains/dividend annual limits, so doesn't really matter if it's an ISA or not.  Unless LISA bonus is required.

Spoke to him today. He is ahead of me and already set up with trading212.

He has an interesting position that he can save through university, and then put aside about £20k per annum for his first few years of work.

If handled well he could set himself up for a tax free life (h/t @Frank Hovis

I am glad he is already thinking that way.

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20 minutes ago, Wight Flight said:

Spoke to him today. He is ahead of me and already set up with trading212.

Excellent. I have even closed my AJ Bell isa and moved everything to T212.  No such choice with Lisa unfortunately, still have to pay fees to trade. 

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