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BRH
Posted: 07 December 2017 23:16:17(UTC)
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Hello everyone

As the title says I am about to begin investment in the stock market for the first time so please forgive me if my questions or comments are not as knowledgeable as I'd like them to be.

To begin I have just over £37,900 to invest and following advice from my father I intend to put this into a variety of investment trusts.

Given my current age and occupation and again following discussion with my father I am primarily looking at investments which offer good dividend returns along with a couple of others more focused on growth. Additionally this is money which I aim to keep invested in these trusts for a number of years.

I have done quite a bit of research and gathered together a list of trusts I felt would be best suited to creating a balanced and beneficial portfolio taking into account the key aspects of on-going charges, premiums/discounts and yields.

I thought perhaps City of London and Temple Bar for income along with Witan and possibly Scottish Mortgage for growth as a starting point. However, alternatively I'm also giving thought to Edinburgh or Lowland for the former and Monks or Fidelity Special Values for the latter. How much should go into each I'm also still to make a decision on.

Upon doing further investigation I think I may have managed to make myself less certain in terms of where best to invest but that being said I'm also deliberating over putting some money into one the of UK based high income trusts such as Henderson High Income, F&C High Income, Merchants etc. I understand this potentially has a higher risk (although I'm not quite sure why) but I was wondering if anyone has experience of using these trusts and whether I should also consider doing so?

Additionally I have not had as much luck sourcing global funds (or at least non-UK) which offer a good dividend although I have seen companies like Scottish American, Henderson International Income and/or Far East Income loosely recommended. Again, however, I'm not necessarily how wise any of these investments may be.

Finally apologies for the length of this post and my thanks in advance to those who can possibly offer advice to any of the points or queries which I have raised above.
Peter59
Posted: 14 December 2017 23:04:07(UTC)
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It might be worth exploring ETF`s, iShares or Vanguard etc. Low charges, no stamp duty and they trade at NAV, so no risk of a large gap between the share price and underlying investments. Of course, IT`s are long-established vehicles for private investors ETF`s have hugely increased our universe of invest-able assets. Good luck with your investing career, it`s like being in a relationship, every day is different!
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The Spanish Inquisition on 15/12/2017(UTC), BRH on 15/12/2017(UTC)
King Lodos
Posted: 15 December 2017 00:18:57(UTC)
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What is your age, how safe is your job, and how much do you expect to be able to save annually?

When you say 'a number of years' .. have you looked at enough past market data to know how far and for how long stocks can fall?

We're in one of the longest bull markets (stocks going up) – at some point we won't be .. When holding stocks, you have to be aware they can always fall .. So the first thing I'd recommend is plan your portfolio with the money you'll put in, perhaps in a spreadsheet, and calculate how it will look with a 60% loss across every fund .. See how that feels, because if seeing £18-20k of value wiped off your portfolio feels too painful, then you might have to think about ways to make your portfolio more defensive
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BRH on 15/12/2017(UTC)
The Spanish Inquisition
Posted: 15 December 2017 08:33:44(UTC)
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Don't touch high yield right now, the pain will stay with you for a long time when everyone leaves the building while you sleep.
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BRH on 15/12/2017(UTC)
Ludditeme
Posted: 15 December 2017 08:56:58(UTC)
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King Lodos;54261 wrote:
What is your age, how safe is your job, and how much do you expect to be able to save annually?

When you say 'a number of years' .. have you looked at enough past market data to know how far and for how long stocks can fall?

We're in one of the longest bull markets (stocks going up) – at some point we won't be .. When holding stocks, you have to be aware they can always fall .. So the first thing I'd recommend is plan your portfolio with the money you'll put in, perhaps in a spreadsheet, and calculate how it will look with a 60% loss across every fund .. See how that feels, because if seeing £18-20k of value wiped off your portfolio feels too painful, then you might have to think about ways to make your portfolio more defensive


This is really good advice. Putting money into shares or funds of shares is risky at the current valuations, and you should think carefully how you would react to them dropping suddenly.

There are funds and trusts that seek out companies that are not overpriced and try to reduce the potential volatility - but still seeking growth & dividends. An example of this approach is Seneca. Please note this flexible investment sector has several really good possibilities, so you should do a lot of research prior to spending your money to find the investment approach that is aligned with your attitude to risk. This particular trust is gradually reducing risk with their underling investments at present with the expectation of troubled times coming, they also diversify beyond equities. They will then have cash to buy attractive shares after a price correction.

http://www.hl.co.uk/shar...nd-growth-trust-ord-25p

Another possibility is to keep your money in a vehicle that is effectively holding cash on your behalf. You can then go on a spending spree should the market turn for the worse in the next 18 months yourself, and not run excessive risk with your money.

I personally wouldn't overly dilute your money across several trusts/funds. Remember that a fund is already holding lots of individual shares to reduce risk.

Rereading the initial post, I would suggest you discuss this with your father. He looks like he would be able to offer guidance and has your best interests at heart. Be careful and don't jump into the latest investment fad!


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The Spanish Inquisition on 15/12/2017(UTC), BRH on 15/12/2017(UTC)
Keith Cobby
Posted: 15 December 2017 09:42:51(UTC)
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Drip the money into the market monthly over 2/3 years.
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Micawber on 15/12/2017(UTC), The Spanish Inquisition on 15/12/2017(UTC), kWIKSAVE on 15/12/2017(UTC), BRH on 15/12/2017(UTC)
The Spanish Inquisition
Posted: 15 December 2017 10:51:52(UTC)
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Time is everything not timing. If you have 30 years ahead before retirement then drip feeding is great advice but be prepared to go all in if the opportunity presents itself, many discounts will go to 15 to 25% at times of greatest fear so researching this aspect is a useful weapon to have. Also some good advice I read somewhere was that your investing future goes on into retirement meaning target funds could get your portfolio defensive when it shouldn't. Right now I'd go for one of the Vanguard Lifestrategy funds such as LS60 or 80 but really investing will only work out if you buy well run products and leave them alone, probably the hardest thing to do....
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Tim D on 15/12/2017(UTC), Mickey on 15/12/2017(UTC), Micawber on 15/12/2017(UTC), BRH on 15/12/2017(UTC)
Mickey
Posted: 15 December 2017 11:02:04(UTC)
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In your situation, I would stick with Investment Trusts for now or opt for a single Vanguard fund, either a LifeStrategy or Retirement date fund. If investing solely with Vanguard go to https://www.vanguardinvestor.co.uk/

My advice to my wife is to switch into 100% Vanguard if you do not want to do your own research.

ETF's as mentioned earlier, are numerous. I prefer Investment Trusts as the universe of choices is more limited and easier to research imho. I would worry less about a decent yield as there is an option to cash in whatever amount you need when you need it. Don't forget that re-investing the yield will cost you additional fees in most cases. Yield is of more concern if you need the income.

City of London and Temple Bar are decent funds, different in their approach so can complement one another. I hold neither of these, I prefer Finsbury Growth Trust in the UK Equity Income sector but then I do not want yield. My wife also holds Troy Income & Growth (TIGT.L) which has been a poor performer due to the managers' concerns for the stock market. but we see it as a defensive holding rather than growth.

It is important to have rainy-day money set aside, at least 6 months is recommended although I have 25% of my portfolio in cash & premium bonds whilst my wife has 50% in cash ISA's and NS&I. This allows us to be more growth orientated with the portfolios.

According to Morningstar, the best risk/reward comes from holding 7 funds, I prefer to have 10 but the likes of John Baron (well respected) prefer to hold around 22 or so. You might like to take a 7 day trial of John Baron at - http://www.johnbaronportfolios.co.uk/ - where he specialises in Investment Trust portfolios. You can get a free trial, his annual fee is currently £160 rising £170 in January, a very small percentage of your portfolio and much cheaper than an advisor. A 7-day trial will at least give you some ideas.

One of the easiest ways to set up is to go for 10 IT's, a manageable size to keep track of annual reports etc. Sample Portfolios are also on offer for free at http://www.moneyobserver.com/ Two of note for you are -
Conservative IT Portfolio @ http://www.moneyobserver.com/portfolio-ideas/conservative-investment-trust-portfolio
Adventurous IT Portfolio @ www.moneyobserver.com/portfolio-ideas/adventurous-investment-trust-portfolio

As others have said, the market may be a bit toppy just now so buying Scottish Mortgage is not without risk. It is hard to ignore the performance though, my own portfolio is some 22% in SMT but that is probably too high and will be adjusted at the next review. My other Global funds are Brunner (which has had a good run due to the discount closing) and Foreign & Colonial.

Good sources of IT information are -
The AIC
Morningstar UK and
Trustnet

Finally, I would steer clear of too much information, it gets confusing and distracting. Stick with the Citywire forum for good advice alongside the AIC, Morningstar and Trustnet sites for stats.
12 users thanked Mickey for this post.
Keith Cobby on 15/12/2017(UTC), Tim D on 15/12/2017(UTC), Micawber on 15/12/2017(UTC), BRH on 15/12/2017(UTC), Alan Selwood on 15/12/2017(UTC), k mc d on 15/12/2017(UTC), DJLW on 16/12/2017(UTC), Irish_Exile on 16/12/2017(UTC), bill xxxx on 16/12/2017(UTC), Luca Brasi on 16/12/2017(UTC), laang lee on 16/12/2017(UTC), gillyann on 24/12/2017(UTC)
Tug Boat
Posted: 15 December 2017 11:15:48(UTC)
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Buy a second hand Porsche, drive down to the south of France and spend the rest of the money on wine and girls.

When you get to my age you will regret not doing this more than anything.
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BRH on 15/12/2017(UTC)
Micawber
Posted: 15 December 2017 17:11:40(UTC)
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Tug Boat;54271 wrote:
Buy a second hand Porsche, drive down to the south of France and spend the rest of the money on wine and girls.

When you get to my age you will regret not doing this more than anything.


I used to enjoy that sort of thing in my twenties and thirties but nowadays it would be a bit of a drag!
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BRH on 15/12/2017(UTC)
Mr Helpful
Posted: 15 December 2017 17:13:09(UTC)
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Tug Boat;54271 wrote:
Buy a second hand Porsche, drive down to the south of France and spend the rest of the money on wine and girls.


Have we established whether the OP is male or female?
Still these days 'anything goes' !!!
3 users thanked Mr Helpful for this post.
Sara G on 15/12/2017(UTC), dyfed on 15/12/2017(UTC), BRH on 15/12/2017(UTC)
BRH
Posted: 15 December 2017 17:50:03(UTC)
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Thank you firstly to all those that have taken the time to reply.

However, due to some very unfortunate family circumstances and the standard process which delayed having my original post validated I have, for better or worse, already made a large proportion (but not all) of my investments into three separate trusts.

My apologies for wasting anyone's time and I fully take on board all the advice regarding the risk of high yields and potential large losses. Under better circumstances I would have waited a little while longer but sadly I had to make a decision quite quickly prior to the first reply in the thread.

Hopefully things will work out but if they don't I guess I shall just have to grin and bear it. Regardless the very helpful responses which you have offered will doubtlessly serve me well for any further investments I may make in the future.
4 users thanked BRH for this post.
Mickey on 15/12/2017(UTC), Mr Helpful on 15/12/2017(UTC), The Spanish Inquisition on 15/12/2017(UTC), Tim D on 15/12/2017(UTC)
King Lodos
Posted: 15 December 2017 18:08:25(UTC)
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Plato once wrote "the soul of a true philosopher..keeps away from pleasures and appetites and pains and fears as much as it can."

Pleasure and pain are intimately connected – so pleasure usually involves leaving some kind of pain (Friday afternoon if you work in an office), and pain involves the withdrawal of something good (e.g. a relationship ending).

So to chase one and avoid the other is to give into an illusion (perhaps best exemplified by the nihilistic hamster wheel of the drug addict or morbidly obese) .. The reality of the South of France in a Porsche is going to be 90% traffic and mosquitos – then it's herpes, a hangover and waking up to find your wallet stolen .. What you need to examine is what the desire tells you about where you are in life at the moment.

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Guest on 15/12/2017(UTC), cliff aner on 16/12/2017(UTC)
Tug Boat
Posted: 15 December 2017 18:48:47(UTC)
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Embarrassing disease, hangover and missing credit cards... those were the days.

Plato never had a bloody Porsche.
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The Spanish Inquisition on 15/12/2017(UTC)
King Lodos
Posted: 15 December 2017 19:39:36(UTC)
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I sometimes wonder if it's weird my fantasies these days involve being a major shareholder in Tencent, my dividend payments being large enough to buy Luxembourg, having my conglomerate on the FTSE 100.


Tug Boat
Posted: 15 December 2017 19:59:32(UTC)
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Its more likely you will have a 10c divi on your FTSE tracker and give it to a buck tooth girl from Luxembourg.

See who spots The Smiths ref.
King Lodos
Posted: 15 December 2017 20:16:10(UTC)
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I guess my mind's consumed by brass money!?
Alan Selwood
Posted: 15 December 2017 21:15:49(UTC)
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The sign of having 'arrived' investment-wise is that your monthly dividends are each bigger than TP's total portfolio value! (I jest - it is the weekend, after all!)
King Lodos
Posted: 15 December 2017 21:54:12(UTC)
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By my calculations that would crash the global economy every 3 months .. They already count TP's monthly IKEA visit as part of the European stimulus package
xcity
Posted: 16 December 2017 01:02:57(UTC)
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Mickey;54269 wrote:
You might like to take a 7 day trial of John Baron at - http://www.johnbaronportfolios.co.uk/ - where he specialises in Investment Trust portfolios. You can get a free trial, his annual fee is currently £160 rising £170 in January, a very small percentage of your portfolio and much cheaper than an advisor.

You do realise that this 'very small percentage' is almost exactly the 0.45% charged by HL that is usually described as outrageously high?
Unless he gets in quick, of course.
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