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A beginner starting to invest
George C
Posted: 14 February 2018 17:27:44(UTC)
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Hi all - I've been reading parts of this forum recently as well as starting to make some plans for investing, most likely focusing on my ISA allocation this financial year and next. Thought i'd share this, maybe get some useful thoughts. I'm keen to focus on my knowledge of investing over time.

Goals = long term growth (5 year plus). I'm early 30s, open to medium and high risk.

Strategy = A small selection of funds/trusts. ideally 10k going in tomorrow and another 10 invested gradually up til April. This is to take advantage of the recent drop but keep some in case there is a bigger downswing in coming weeks. Maybe another lump sum early next financial year with regular contributions onward. I have just opened a HL ISA account waiting to deal.

Knowledge = no experience of investing at all. I am gradually reading and researching as I would like to deal in a few shares down the line as a aside project but i'm in no rush to get there. My reading so far has led to me managed funds. I;m looking at global, emerging markets and small cap EU. Maybe look to have 4-5 funds at £4-5k each by end of this tax year.

I'm looking at:

Emerging JPMorgan Emerging Markets Class B - Accumulation (GBP)
BARING EUROPE SELECT CLASS I - INCOME (GBP),
F&C EUROPEAN SMALL CAP EX UK ACCUMULATION (GBP)
Maybe fundsmith/LT global equity (which i've read on forum here)
and a technology tracker - Legal & General Global Technology Index Fund

I'm not looking for anyone to decide for me (may invest part tonight, tomorrow latest anyway), but i thought it might be an interesting topic for people to contribute thoughts.

Thanks

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Guest on 17/02/2018(UTC)
dyche
Posted: 14 February 2018 19:29:03(UTC)
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Hi George, welcome to our giddy world. Maybe you're in the right places when you mention Europe small caps, global, tech etc - and you're certainly young enough to enjoy the ride - but I'd look at the wealth of good investment trusts out there rather than the managed funds you mention. Good luck!
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David 111 on 16/02/2018(UTC)
andy mac
Posted: 14 February 2018 20:05:14(UTC)
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Just a word of warning do not take anyones word as advice including things like the HL 150 list

You will find little mention of Terry Smith and Fundsmith on the HL site for whatever reason
Similarly there are other funds that are not mentioned

You mention another fall have you worked out what 20% of your starting amount looks like and are you happy to ( wrong word can you accept losing it)

I am sure others will point you in all sorts of directions

Try setting up a virtual portfolio with HL and see how things go
Keep learning and doing your own research and best of luck
George C
Posted: 14 February 2018 21:14:09(UTC)
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Thanks for your thoughts.

I need to make a decision to invest before April, but I partly felt like the timing might be good now with alot of funds still down around 5% (might not be but I guess no one knows for sure)

With regards to recommended funds, do very unexperienced investors really have the skills to pick with confidence? My approach at mo is filter my options down based on sector (Ie. Emerging markets), have a look through the types of assets and judge how I like it, then do a little research and see if I can find a few opinions dotted around online. Not saying it's perfect but Im happy to make best judgement I can, let time do its work and not worry too much.

If anything, id probably like one option in my portfolio that maybe isn't well promoted and a bit higher risk.
andy mac
Posted: 14 February 2018 21:56:57(UTC)
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You said you have opened an HL ISA you can put your money in but you do not need to invest it all now or at any time

You couuld drip your money in even into next ISA year without interfering with 18/19 ISA allowance

I put my money into my ISA at the start of the tax year but may not invest it all for several months

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Law Man on 16/02/2018(UTC)
D. Parkinson
Posted: 15 February 2018 01:51:56(UTC)
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Hi, small caps are obviously an area to look at. An interesting one may be Old Mutal UK smaller companies focus fund which I have been invested in for quite a while, took some profits though, this is a growth fund.

Good luck with your investing.
Denis.
gillyann
Posted: 15 February 2018 08:12:51(UTC)
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Be careful with opinions "dotted around online." Don't bother with Yahoo and I have my doubts about The Motley Fool. Personally I like this forum and as a beginner I have learned lots from people here. Good advice from posters here with no-one trying to flog a falling knife they have over-paid for. Also, high risk is fine if you can cope with seeing your money halved- if you can cope with that but I know I can't. Though maybe some on here can recommend high risk that might be successful. Wish you luck and let us know how you get on.
Peter59
Posted: 15 February 2018 10:37:54(UTC)
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Well George, you came to the right place for ideas, lots of friendly people here! Just a few thoughts;

1. How will your ISA compliment your pension?

2. Do you have enough cash for the unexpected?

3. Do you have a mortgage/personal debt?

Before investing it`s best to get the macro picture sorted first, but you have probably done that!

Otherwise £5K into 5 funds seems like a good start and a fund platform is a great way build up an investment portfolio. Keep it simple, watch the fees and enjoy the learning experience. Wishing you every success!
Mickey
Posted: 15 February 2018 10:46:58(UTC)
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George C;57174 wrote:
Thanks for your thoughts.

I need to make a decision to invest before April, but I partly felt like the timing might be good now with alot of funds still down around 5% (might not be but I guess no one knows for sure)

With regards to recommended funds, do very unexperienced investors really have the skills to pick with confidence? My approach at mo is filter my options down based on sector (Ie. Emerging markets), have a look through the types of assets and judge how I like it, then do a little research and see if I can find a few opinions dotted around online. Not saying it's perfect but Im happy to make best judgement I can, let time do its work and not worry too much.

If anything, id probably like one option in my portfolio that maybe isn't well promoted and a bit higher risk.

One option to help is to take a look at the holdings of a multi-manager fund, they may give you a steer for starter. I used to look at the Jupiter Merlin fund range for ideas when I held funds. Their factsheets are at Jupiter Merlin Range

Other fund houses run multi-manager funds where you can view their factsheets to get ideas also.
George C
Posted: 15 February 2018 15:07:04(UTC)
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Peter59;57203 wrote:
Well George, you came to the right place for ideas, lots of friendly people here! Just a few thoughts;

1. How will your ISA compliment your pension?

2. Do you have enough cash for the unexpected?

3. Do you have a mortgage/personal debt?

Before investing it`s best to get the macro picture sorted first, but you have probably done that!

Otherwise £5K into 5 funds seems like a good start and a fund platform is a great way build up an investment portfolio. Keep it simple, watch the fees and enjoy the learning experience. Wishing you every success!


Thanks Peter.

I effectively have no pension other than the tiny amount that goes in from auto enrolment.

I'm covered for unexpected events, i'm fairly cautious on that front.

I have mortgage which I've overpaid to the allowed limit last 2 years. At around 4% interest that gives me direct returns, but i also want to get other savings i have working rather than just sitting in cash.

You have prompted me to look again at my pension situation though. I may be able to invest in a SIPP and write off quite a lot of tax (if that's the right phrase), I didn't do that last year after earning well (i'm PAYE) and I think i need to look at that again. The macro is basically putting together a portfolio that will work for me as i get towards retirement in say 30 (?!) years. Start with accumulation focus and move into other options as i get older. This initial investment for the long haul basically.
Alan Selwood
Posted: 15 February 2018 16:13:43(UTC)
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Subject to all the provisos on earlier threads :

SIPP investments may not be cost-effective for smallish sums, as the set-up costs plus transaction/annual costs are often geared to the larger investor. Worth checking the fee scales for all possible charges that could be levied at outset, along the way and on drawdown with several platforms, especially A J Bell, Hargreaves Lansdown.

Wherever possible, try to invest via SIPPs and ISAs, to reduce the risk of extra tax now or in the future, rather than via non-tax-exempt means.

If you wish to invest in an ISA in a hurry but are anxious re timing and market levels in any way, the comment about putting cash in now and deciding where to invest at leisure is a good one.

Your initial choice of places to invest does strike me as rather adventurous for a newcomer. I would suggest that you emphasise 'core' funds and keep 'specialist' funds as a minority, perhaps to be started later, when they only have to complement the basic portfolio. It is all too easy to be enthralled with this week's wonder sector, only to discover that what is in vogue and going great guns now is the first to fall off a cliff when conditions change.

So with funds (rather than investment trusts, which I generally prefer) I would start with a generalist fund or two : my personal choices for these would be :

(a) Fundsmith Equity Fund (T accumulator units if bought direct from Fundsmith, which is the cheapest way, with no charge for using an ISA framework to hold your units; or I accumulation units if bought through another platform such as A J Bell or probably also Hargreaves Lansdown - but when you include their own platform charge on top of this most beneficial class of units, this comes out as a dear option! This fund will give you about 30 very carefully selected very large global companies with head offices in the USA and Western Europe that aim to survive and grow, without any whizz-kid stuff attached. For the record, it is by far my biggest holding.
(One alternative to this is Lindsell Train Global Equity Fund).

(b) A global smaller companies fund to go alongside the Fundsmith. Lots of choice here, but perhaps Invesco Perpetual Global Smaller Companies (z accumulation units) or Standard Life Investments Global Smaller Companies accum units could be considered.

(c) A UK mid-cap fund such as Old Mutual Uk Mid Cap Accum, or a generalised UK growth fund such as Slater Growth or Marlborough UK Multi Cap Growth.

When it comes to investment trusts (which I prefer most of the time and which are cheaper in platform fees on H/L), you could consider adding these to Fundsmith :

Foreign & Colonial (global generalist equity spread)
Scottish Mortgage Trust (racier, investing in the shares of the future, with high potential for growth, but greater risk of dropping in bad times)
Worldwide Healthcare [WWH] (to take advantage of one of the key trends for the future)
Pacific Assets Trust [PAC] (wide spread of Far East holdings)
Jupiter European Opportunities Trust [JEO] (a European Fund that is selective in a similar way to Fundsmith).

When you are feeling really well established with a good solid core portfolio, the racier ones to consider might be
Pacific Horizons Trust [PHI]
Vietnam Enterprise Fund [VEIL]
International Biotechnology Trust [IBT]
BlackRock World Mining [BRWM]

There is a LOT of choice overall, and this is just a very small selection that I put forward for you to research (TrustNet, Investors Chronicle, Digitallook, Citywire and the research offered by investment platforms too, but taken with a pinch of salt).

All the above are thoughts, not recommendations.
11 users thanked Alan Selwood for this post.
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Jeff Liddiard
Posted: 15 February 2018 16:34:36(UTC)
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Alan Selwood;57233 wrote:
Subject to all the provisos on earlier threads :

SIPP investments may not be cost-effective for smallish sums, as the set-up costs plus transaction/annual costs are often geared to the larger investor. Worth checking the fee scales for all possible charges that could be levied at outset, along the way and on drawdown with several platforms, especially A J Bell, Hargreaves Lansdown.

Wherever possible, try to invest via SIPPs and ISAs, to reduce the risk of extra tax now or in the future, rather than via non-tax-exempt means.

If you wish to invest in an ISA in a hurry but are anxious re timing and market levels in any way, the comment about putting cash in now and deciding where to invest at leisure is a good one.

Your initial choice of places to invest does strike me as rather adventurous for a newcomer. I would suggest that you emphasise 'core' funds and keep 'specialist' funds as a minority, perhaps to be started later, when they only have to complement the basic portfolio. It is all too easy to be enthralled with this week's wonder sector, only to discover that what is in vogue and going great guns now is the first to fall off a cliff when conditions change.

So with funds (rather than investment trusts, which I generally prefer) I would start with a generalist fund or two : my personal choices for these would be :

(a) Fundsmith Equity Fund (T accumulator units if bought direct from Fundsmith, which is the cheapest way, with no charge for using an ISA framework to hold your units; or I accumulation units if bought through another platform such as A J Bell or probably also Hargreaves Lansdown - but when you include their own platform charge on top of this most beneficial class of units, this comes out as a dear option! This fund will give you about 30 very carefully selected very large global companies with head offices in the USA and Western Europe that aim to survive and grow, without any whizz-kid stuff attached. For the record, it is by far my biggest holding.
(One alternative to this is Lindsell Train Global Equity Fund).

(b) A global smaller companies fund to go alongside the Fundsmith. Lots of choice here, but perhaps Invesco Perpetual Global Smaller Companies (z accumulation units) or Standard Life Investments Global Smaller Companies accum units could be considered.

(c) A UK mid-cap fund such as Old Mutual Uk Mid Cap Accum, or a generalised UK growth fund such as Slater Growth or Marlborough UK Multi Cap Growth.

When it comes to investment trusts (which I prefer most of the time and which are cheaper in platform fees on H/L), you could consider adding these to Fundsmith :

Foreign & Colonial (global generalist equity spread)
Scottish Mortgage Trust (racier, investing in the shares of the future, with high potential for growth, but greater risk of dropping in bad times)
Worldwide Healthcare [WWH] (to take advantage of one of the key trends for the future)
Pacific Assets Trust [PAC] (wide spread of Far East holdings)
Jupiter European Opportunities Trust [JEO] (a European Fund that is selective in a similar way to Fundsmith).

When you are feeling really well established with a good solid core portfolio, the racier ones to consider might be
Pacific Horizons Trust [PHI]
Vietnam Enterprise Fund [VEIL]
International Biotechnology Trust [IBT]
BlackRock World Mining [BRWM]

There is a LOT of choice overall, and this is just a very small selection that I put forward for you to research (TrustNet, Investors Chronicle, Digitallook, Citywire and the research offered by investment platforms too, but taken with a pinch of salt).

All the above are thoughts, not recommendations.


Alan re (a) above, I've been looking at Fundsmith again the last few days and the notes I've made say 'I' class is cheaper direct at 0.95% than the 'T' class at 1.05%, but you're saying the reverse? Also, for me with IWEB I decided there was no incentive to go direct as I can buy 'I' at 0.95% or 'T' at 1.05% from IWEB and the only one-off cost is £5 to buy and no custody or other charges. Re the other comments, you've given me some ideas for an alternative to LT Global Equity to sit alongside Fundsmith.
Alan Selwood
Posted: 15 February 2018 19:56:38(UTC)
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T Class direct from Fundsmith is cheaper than I Class via A J Bell (0.25% annual platform charge), and much cheaper than I Class via H/L (0.45% annual platform charge). I Class direct from Fundsmith has a rather gigantic minimum subscription!

If you can get I Class from IWeb and pay only £5 or so to buy or sell, but no annual charges, then that is marginally better still, apart from if you suddenly decide to transfer out or close the account, where they wil charge but Fundsmith itself won't.

Among other solid portfolio ideas, I would rate City of London IT, not for its capital growth but for its relentless dividend growth over decades, and trusts like Bankers IT for the same reason.

For the UK market, I also rate Keith Ashworth-Lord's Buffetology fund, though the annual charges can be steep.
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Antonio VIvaldi
Posted: 15 February 2018 22:51:23(UTC)
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Before you go any further, I recommend you read two books: "The long and the short of it" by Prof John Kay (the first edition, not the more recent second one, which is significantly worse in my view); and the FT guide to investment trusts, by John Baron. Both will steer you to towards doing things cheaply and simply. I set up a portfolio of ITs a few years ago and the ones I have been very happy with include some of the biggest, cheapest, international ones such as Bankers, Foreign & Colonial, and Scottish Mortgage. A FTSE All-Share tracker and a World ex-UK tracker would be good too. Top tips: reinvest your dividends; and use the statistics on the AIC website. They are a goldmine of useful information on yields, dividends growth rates and costs. Avoid most funds. As John Baron reveals, most change their names or are merged with others within five years, because they don't do very well.
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Alan Selwood
Posted: 15 February 2018 23:11:38(UTC)
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That AIC website looks an interesting one. Thank you!

Also worth mentioning is Morningstar ( http://www.morningstar.co.uk/uk/ ), which provides some of the data to the AIC.
Hugh M
Posted: 16 February 2018 14:11:11(UTC)
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gillyann;57188 wrote:
Be careful with opinions "dotted around online." Don't bother with Yahoo and I have my doubts about The Motley Fool. Personally I like this forum and as a beginner I have learned lots from people here. Good advice from posters here with no-one trying to flog a falling knife they have over-paid for. Also, high risk is fine if you can cope with seeing your money halved- if you can cope with that but I know I can't. Though maybe some on here can recommend high risk that might be successful. Wish you luck and let us know how you get on.



Motley Fool. I seem to remember them forecasting FTSE to be 8000 before end of 2017.
David 111
Posted: 16 February 2018 14:15:31(UTC)
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As usual a very good and full response from Alan Selwood.

I would also say go for Investment Trusts rather than funds. Before purchasing you need to check all charges made by your platform. If investing in Investment Trusts, I would try to invest more than £1,000 at a time as dealing charges are the same regardless of how much you invest. Also, if you decide on some Investment Trusts, you need to keep an eye on the premium/discount situation. Unless you have a very good reason, you should avoid purchasing Investment Trusts at a premium.
Big boy
Posted: 16 February 2018 15:28:23(UTC)
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As a beginner I would not try and micro manage your Portfolio. My suggestions are

Herald IT
Brit Empire IT
Brunner IT
Law Deb IT
Mercantile IT
Scottish IT
Edinburgh IT

These 7 Investment Trusts will give a massive Global Spread with lower risk. The average discount to NAV is just over 9%. I use HLs ISA for stocks and share trading and the cost are very low.
Once you have built up a good base you might want to get more involved with Managing your money but be careful not to be pushed into the flavour of the month which is not easy as you will be lead by other investors.
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Tyrion Lannister
Posted: 16 February 2018 22:54:15(UTC)
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Hugh M;57296 wrote:
gillyann;57188 wrote:
Be careful with opinions "dotted around online." Don't bother with Yahoo and I have my doubts about The Motley Fool. Personally I like this forum and as a beginner I have learned lots from people here. Good advice from posters here with no-one trying to flog a falling knife they have over-paid for. Also, high risk is fine if you can cope with seeing your money halved- if you can cope with that but I know I can't. Though maybe some on here can recommend high risk that might be successful. Wish you luck and let us know how you get on.



Motley Fool. I seem to remember them forecasting FTSE to be 8000 before end of 2017.


I used pay a subscription to a Mottley Fool but stopped when I realised how foolish that was.

The advice is at best questionable and it’s very American especially their sales pitch - why use 1 paragraph when you can use 20!
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FarmerDoc
Posted: 17 February 2018 12:53:27(UTC)
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George, you have stimulated a wide range of views and wise words from others about investing. I would like to emphasise the following -
Thinking long term means 10+ years
Although you have selected HL, take time to consider the wide range of platforms as the charging structures vary a lot but the right choice can save you a lot of money long-term -
http://monevator.com/find-the-best-online-broker/
As your portfolio grows beyond £30,000, a fixed fee broker is likely to prove cheaper in the long run
Place cash in an ISA account but don't feel in a rush to invest because of the recent market dip as you may have 40+ years managing your portfolio
Whatever you choose for your investments, try to get into the mindset of being a long term investor and not a short term trader
Consider drip feeding monthly into your ISA by direct debit - dealing costs can be as low as £1.50 per month plus Stamp Duty on some platforms and it eliminates any worry about market timing
Ensure you reinvest all dividends during your working life
Researching past performance of funds/ITs is probably a waste of time but checking ongoing charges including any performance fees is a must before you invest
UTs generally have higher annual costs than ITs but trackers and ETFs are cheaper still
Consider global passive funds for your core portfolio and watch these 5 short videos as part of your research - http://www.kroijer.com/

Good luck
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