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Mere mortal

Total Novice needs some advice

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Hi,

I've had a read of some of the posts and threads about investing in stocks etc.

I'm a total novice and so not much of it makes any sense to me ! I don't hold one stock or share to my name.

I've recently come into some cash, was looking to buy a house having moved back to UK from Oz but little nervous re buying right now so feel like taking a punt on the stock market !

As I'm a nervous newbie I'm reluctant to invest too much......

Can you invest as little as say £2000 and expect to see a return ? Are there companies that i can say ok here's some money invest on my behalf ? 

I don't have a Scooby Doo so any help or advice most gratefully appreciated !

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If you're really not interested but want it to do ok, be safe and avoid charges then I have directed people in RL towards these six Hargreaves Lansdown managed funds previously; make sure you do it in an ISA so you don't get taxed on the income.

https://www.hl.co.uk/funds/leave-it-to-an-expert

There may be better managers than HL but I've been with them twenty years and they are easy to deal with and have low charges so I haven't considered moving.

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Another happy HL customer here. 

Factoring in the cost of buying and selling, £2k is about the minimum to consider investing in share and as I wouldn't recommend putting all your eggs in one basket Frank Hovis managed funds suggestion makes sense until you have gained sufficient funds (and knowledge) to build your own diversified portfolio. 

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The other caveat I would throw in is that at the moment the stock markets are looking rather high, click on the link for the FTSE 100 graph and take the five year option.

https://www.bbc.co.uk/news/topics/c9qdqqkgz27t/ftse-100

Whether to invest now despite this depends upon when you are likely to want to access the funds.  If might be within the next two years then I would maybe hold fire but if you are happy to leave it for twenty years (which is what I do) then in my opinion the effect of inflation alone will mean that it makes a far better return than keeping it on deposit.   I don't try to second guess the markets and one time lost 30% in year but it all came back in the next few years and long term has done extremely well.

 

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Thanks so much Frank &B Longtomsilver !

Great advice !  I really don't have a clue ! Done really well out of my gut feel for the property market, I am interested in the stock market but I'm totally hopeless at maths and it might as well be in Mandarin to me (which I found easier to learn when I lived in China) ! 

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I'll put this in, if anyone wants to "go it alone".

I think if you take an interest in how business makes money, and how everything that has been invented has probably come from somebody somewhere investing their money, then you could go it alone. But this will take time, dedication, and self motivation to learn. You probably won't make consistent money for 5-10 years if you learning the ropes. Nicholas Van Hoogstratten - (ok not the best example as a BTL Landlord, but the first one to come to my head), skipped school to read the Financial Times. The rest is history.

The stock market is harder than the housing market (in my opinion), because you can get a corrupt CEO or incompetent board of directors and a business can go down the pan faster than you can click sell (opens with a "gap down"). The housing market buoyed by the low interest rates, and it moves much slower, so you are less likely to get caught by a "crash". You're also covered by insurance if the house falls down. With stocks it is easy to get swept up by emotions and you can sell out of profitable position too soon, just because you read something in the news or there is a paid troll on the stock forums. But the returns can be faster and greater in the stock market if you know what you are doing. Please don't read the stock market as "easy" - it is not.

I have come across many people on the forums that have lost £10K, £50K, and even amounts to over £100K. Billionaires have lost millions, and I can remember one story in 2008/9, committing suicide from a short squeeze. If reading about this stuff interests you, then the stock market might be for you...

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I'll second what 201p said. For the first three years I was treading water; buying and selling on emotion and emotions are more changeable than the weather stock market so I found myself frantically 'day' trading and making no money, but not losing it either.

My trades are few and far between nowadays.

The only FTSE main index stock I got stung on was Carillion and that is the kind of incompetent (bordering fraudulent)  board of directors 201p is talking about. People only serve themselves and self-interest. 

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The other thing is, is your political compass. If you think the government should do everything for you, then the stock market is unlikely to interest you. 

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Thanks 201p, goodness I wouldn't go it alone.... and certainly don't think the government should do everything for anyone ! I was looking for advise on companies to invest on my behalf, and yes stock market entirely different to property. Appreciate your thoughts, thanks once again.

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1 minute ago, Mere mortal said:

Thanks 201p, goodness I wouldn't go it alone.... and certainly don't think the government should do everything for anyone ! I was looking for advise on companies to invest on my behalf, and yes stock market entirely different to property. Appreciate your thoughts, thanks once again.

Perhaps look into roboinvesting eg Moneyfarm, Nutmeg and someone mentioned in another thread  Wealthsimple. There are more out there so worth googling, they will happily take your money and invest it on your behalf. Also consider something like the vanguard lifestrategy funds or their equivlants from other funds managers. Something to consider is fees (both platform and trading costs) and ideally you want to consider where youll be in the future as what might not cost much at first can soon mount up if you have a large sum of money somewhere.

Monevator  http://monevator.com/ is a good website if you want to start delving a little deeper into passive investing.

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The first lot of 'stock picking' investments is a good place to learn about how to lose lots of money.  

Start small, then invest more as you learn how to not lose money.  At the start small stage you might like to consider investments so small that you'd wonder what the point is.

Of course, if the money is all surplus 'fun money' and you'd only otherwise spend it at the races, then by all means go for some speculative punts.

 

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Thanks Admiral Pepe & dgul !

Admiral Pepe, can you please explain the "what might not cots much at first can soon mount up if you have a large sum of money elsewhere.." do you mean trading costs ? See... this is what a total novice I am !!

dgul ... what do you mean "stock picking investments" ? 

 

thanks so much for your thoughts !

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18 minutes ago, Mere mortal said:

Thanks Admiral Pepe & dgul !

Admiral Pepe, can you please explain the "what might not cots much at first can soon mount up if you have a large sum of money elsewhere.." do you mean trading costs ? See... this is what a total novice I am !!

dgul ... what do you mean "stock picking investments" ? 

 

thanks so much for your thoughts !

I think you need to spend a bit of time yourself getting your head wrapped round the basics, there are plenty of websites/books to read for the level you're at. But in the interim go to one of the companies I mentioned. Or check otu the broker the guys above mentioned. They list their charges and they will give you an indication to what is involved. Having said that in answer to your question I mean all costs, everything from broker/platform costs, ISA/SIPP charges, investment type, on-going mangement charges etc. If you have £10k invested a precent or two might not seem a lot, however, what if you have 6 or 7 figures? Then you need to weigh up perhaps those fees are worth it on how much involvement you want/don't want.

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3 hours ago, Mere mortal said:

Thanks 201p, goodness I wouldn't go it alone.... and certainly don't think the government should do everything for anyone ! I was looking for advise on companies to invest on my behalf, and yes stock market entirely different to property. Appreciate your thoughts, thanks once again.

HL have a web based user interface for choosing your level of risk for fund buying, I checked it out the other day as I'm thinking of moving some pensions into a SIPP with them so I can use the 'Drawdown' option in a few years.

The problem with the stock markets is their ability to destroy wealth over shorter periods of time, think of 99-03 and 07-09 for the FTSE. Near on 40% drops - ouch. However if you have spare funds then investing in an ISA is a great way to build 'untaxed' wealth. But you are not going to do this quickly unless you are very lucky! You need to be playing a medium/long term game here.

I am lucky that I think I can stomach the pain when it hits, I could run with a 40% drop right now (I own lots of individual stocks in an ISA), and I am pretty sure I know what assets I would be buying if such a drop occurred. Not sure I'd actually enjoy the ride though! To give a good example of how Mr Market can flummox you, I bought Rio Tinto shares 5 years ago for about £27.50. They had a 5% dividend yield which I collected for the 3-4 years which I owned them. All good so far....

The price of Rio Tinto (RIO:LON) dropped all the way down to £17.50 ish. I hung on... The price then recovered and gradually passed my entry point of £27.50 and when it got to £31.50 I ran for cover and sold out. Basically I'd done alright, some capital appreciation and 3-4 years of 5+% dividends. They are currently sitting at £38+! The point is, I should have just hung onto them!! Rio Tinto ain't gonna go bust tomorrow, and of course in hindsight I should have bought some more at £17.50:(

The good thing is I leaned some lessons (I still am:Old:), and have applied some of them since... I think this is the point that the Admiral and Dgul are making along with this;

There will be costs, I pay £11.95 per trade, selling or buying unless I trade lots in any quarter. There is also stamp duty on UK shares (google it), and usually a platform fee.

Remember also you can have up to £2000 of dividends untaxed outside an ISA, but alway use your full ISA allowance first (currently £20,000). You can also move cash ISA's to a trading account and visa versa. I also like to keep some cash on the sidelines inside the ISA for buying opportunities!

Just make sure you know what ALL of your costs are. Be careful, and maybe diversify a small portion into some 'protection' stocks, like gold miners in case or when we get another 2008 moment!

And finally read this thread!!!!!!!!!!!

https://www.dosbods.co.uk/topic/5613-credit-deflation-and-the-reflation-cycle-to-come/

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MM I suggest your first investment is a copy of "Saving and investing for retirement" by Yoram Lustig. Despite the title it's not just for those close to retirement, but will help you understand if you want to take a passive, active, or blended approach to investing...if none of this makes sense at the moment it will once you have read the book, and it's aimed at "joe public" and so is not mathematical.

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If the money is to buy a property in the next couple of years id sit tight as if you put it in the stock market it could well dip in such a short period of time. And if gut feeling is anything to go by my guts telling me the housing market looking very unstable at the moment and could well fall.

If its an outright punt and youre willing to lose or get large gains infrastrata is the company ive recently done just that on. Bought 1500GBP at 0.35p.

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Thankyou all for your input and advice,.

MrXxx, I will read that book !

NogintheNog, great example and lots to consider thanks !

Banned, appreciate the advice, yes I think the property market may well dip or even fall, unfortunately where I am looking the estate agents over inflate, often properties sit on the market for months and months sometimes years as stubborn vendors refuse to sell... some are starting to drop though .. the money isn't to buy a house, its the money I've made from  a house sale in Oz and just thought what else can I do with some of it ! So when you say you bought into Infrastrata is that direct with them ? see this is just how bloody novice I am !!

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42 minutes ago, Mere mortal said:

Thankyou all for your input and advice,.

MrXxx, I will read that book !

NogintheNog, great example and lots to consider thanks !

Banned, appreciate the advice, yes I think the property market may well dip or even fall, unfortunately where I am looking the estate agents over inflate, often properties sit on the market for months and months sometimes years as stubborn vendors refuse to sell... some are starting to drop though .. the money isn't to buy a house, its the money I've made from  a house sale in Oz and just thought what else can I do with some of it ! So when you say you bought into Infrastrata is that direct with them ? see this is just how bloody novice I am !!

Ive an AJ Bell account, once the accounts opened which is simple just type in the name of the company and how much you want to buy then its done, as simple as opening an account on DOSBODS.

I'm a novice who does a bit of research before buying, so anything i suggest is to be taken likely.

I think DurhamBorn is going to be close to the mark as per the other thread, and have mainly cash for when the next US downturn comes.

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On 08/08/2018 at 10:29, Frank Hovis said:

The other caveat I would throw in is that at the moment the stock markets are looking rather high, click on the link for the FTSE 100 graph and take the five year option.

https://www.bbc.co.uk/news/topics/c9qdqqkgz27t/ftse-100

Whether to invest now despite this depends upon when you are likely to want to access the funds.

So for someone like myself who would be buying to hold for at least 15 years...it would make sense to use my tax free ISA allowance every year. Even if there is a dip in the market, what with re-investing dividends and (hopefully) things recovering over a 15 year period, it should still be better than 15 years sitting in cash, right?

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1 hour ago, JoeDavola said:

So for someone like myself who would be buying to hold for at least 15 years...it would make sense to use my tax free ISA allowance every year. Even if there is a dip in the market, what with re-investing dividends and (hopefully) things recovering over a 15 year period, it should still be better than 15 years sitting in cash, right?

Even if you're not investing I think it makes sense to take full advantage of your ISA allowance if you can as you're ringfencing money that won't attract tax. You're unable to retrospectively get that allowance back unlike a pension which you can go back three years. So even if you're sitting in cash all that money you have saved, I would assume, is probably earning interest over the threshold and tax needs to be paid on part of it. You can at any time transfer a cash ISA over to a broker and turn it into a S and S ISA to invest. I was slow to the game on all this, so only have two years worth of ISA contributions, doh. At least I can fill it up each year with savings though.

In regards to the 15 years, personally I wouldn't worry about it so much, it's more if you need to access any money in the immediate short term. There's no point trying to time the market. A table like this really made investing easier for me:

image.thumb.png.47f7890c5d1a159311d5026b0f2560bc.png

So I've gone with an allocation and then buy my chosen vehicles every quarter keeping my allocation the same. Therefore, buying more of the underperforming assets when they're cheaper and vice versa, less exposure to the overperforming assets. Well something like that :D

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A beginner should get their house in order. They should have a light bulb moment, and see why people have wealth and are able to hold on to their wealth. Wealth buys you options, and control. It is all about being able to have more control of your life. I realised this in my 20s.

The first step is buying things that hold or increase in value. Every day or every week we spend money on things that are used, consumed and things that we might resell later at a loss once we don't need them. E.g a car or a mobile phone. Money in a savings account may be the only passive investment that you might have.

For most people starting out on their journey, the first realisation is that houses or more specifically land, generally hold their value in the long term, historically in the Western world. But after that there can be many other things, such as antiques, collectibles etc. And then there are the financial instruments such as stocks, funds, currencies, and now crypto  which are the hardest puzzles to master.

This doesn't mean being a miser - do pay for quality things that you use each day, and do enjoy a holiday etc. But small changes can lead to big outcomes in the longer run.

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5 hours ago, JoeDavola said:

So for someone like myself who would be buying to hold for at least 15 years...it would make sense to use my tax free ISA allowance every year. Even if there is a dip in the market, what with re-investing dividends and (hopefully) things recovering over a 15 year period, it should still be better than 15 years sitting in cash, right?

Yes.

In both my opinion and my experience.

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On 10/08/2018 at 17:43, JoeDavola said:

So for someone like myself who would be buying to hold for at least 15 years...it would make sense to use my tax free ISA allowance every year. Even if there is a dip in the market, what with re-investing dividends and (hopefully) things recovering over a 15 year period, it should still be better than 15 years sitting in cash, right?

Probably.

There are occasionally massive crashes. The trick is to have an actual strategy that deals with that rather than just hoping that you'll get lucky. If you do it right, them the dips become a buying opportunity that actually leaves you better off in the long run.

You come across as a low risk type of guy, so if you're going to invest then I'd suggest that you look at "value investing". This approach assumes that a crash will happen but deals with it by having a balanced portfolio, that you rebalance in response to events, rather than a portfolio that you structure to try to anticipate events in the short to medium term. 

Read this if you want to know more about value investing:

https://www.amazon.co.uk/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661/ref=sr_1_1?s=books&ie=UTF8&qid=1534006380&sr=1-1&keywords=intelligent+investor+benjamin+graham

The other viable approach is to actually plan for what you think is going to happen, and invest accordingly in targeted shares. The boys over on Durhamborn's thread are all overall this approach, and churning out share tips like there's no tomorrow. This ways more risky - much more risky - but if it pans out for you can get you rich much quicker.

xD

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My opinion is that we aren't far away from another global financial event,  either later this year or going into 2019.

That said I am investing accordingly. My pension fund I have moved most of my capital to cash and left my allocation of treasuries (government bonds) in place. I then have a then pay 100% of my work contributions into a low fee Vanguard global mixed equity index fund. If we do have the financial downturn expected, I will increase my work contributions gradually and convert the cash capital back into equities in stages i.e. stair casing. Remember you can never catch a falling knife, but you can stab the bottom.

 In my H&L regular saver ISA, I use for my contrarian stock picks (see DB excellent deflation/inflation thread on house price section). By picking low debt, good infrastructure, out of favour, cheap bluechip stocks, they will lose the least in a financial crisis and come out very well the other side in a financial cycle. I pay a set amount by direct debit, and you don't pay the £12 stock trading fee cost, so is perfect for smaller amounts. I mainly have holdings here in Drax, Centrica, Vodafone and Hothschild gold/silver miners, but as they say DYOR.

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On 09/08/2018 at 12:55, Mere mortal said:

Thanks Admiral Pepe & dgul !

Admiral Pepe, can you please explain the "what might not cots much at first can soon mount up if you have a large sum of money elsewhere.." do you mean trading costs ? See... this is what a total novice I am !!

dgul ... what do you mean "stock picking investments" ? 

 

thanks so much for your thoughts !

Sorry, a bit delayed.

'Stock picking' just means that you look at what specific stocks are out there, read their stories and pick a select few as the ones that'll win.  If you're just starting out you're probably more likely to pick duds than success.  The normal way at the start is to buy funds or trackers, which spread the risk -- you don't get the potential massive upside of a single substantial success (eg, buyout, etc), but also don't get the same risk of a single share suddenly plummeting (eg, CEO starts releasing financially sensitive information whilst high).  Once you've got a handle on the way things work, you can start to see single shares as being worth a punt.

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