How to Start a Pension in the Face of Economic Armaggedon
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  • There is a stocks and shares thread somewhere but I thought I'd keep it simple by starting a new thread. This post will basically involve:

    1. Buying a tracker fund and wrapping it in an ISA.
    2. Not touching it except to periodically top it up with more spare cash.
    3. Not touching it some more.
    4. Definitely not touching it.

    This requires absolutely no knowledge of the markets, except to know that they exist. A tracker fund is great because it is diversified and cheap. It's cheap because your money is automatically invested in say, the top 250 companies in a given stock exchange, and will buy and sell as some companies enter the top 250 and some leave. You are not paying for a fund manager that pretends he knows stuff nobody else does. They are all, by and large, shit. If they were any good (and honest) they would tell you to invest in a tracker fund anyway. It means you can invest money and just leave it. It doesn't matter if BA goes bust because as it's falling from grace the tracker will automatically sell it once it falls outside the remit of the top 100 or 250 or whichever tracker fund you buy. You'll just invest in whatever company rises up to take it's place and the tracker will do this automatically. 

    It also diversifies risk because your money is not invested in any one sector (like airlines). It is vital that you don't try and time the markets unless you have access to a supercomputer that might buy and sell the same stock hundreds of times an hour. The only timing you're going to attempt is to invest when the markets shit themselves, which is now. This will give you a great start even if the markets plummet still further. In time they'll recover - they always do, and you'll not have to fret that you've bought at a high price. 

    Most of the money you make will not come from buying cheap, it'll come from company profits. It's outrageous you can reap the profits by doing no personal work whatsoever but you can and here we are. It's important to put your cash into an accumulation fund. All funds have this as an option and it means the dividends you make (profits from companies you part own) are automatically invested back into the fund rather than paid directly into your bank account, so you get more of a snowball effect from the reinvestment.

    Now it's important you put this in an ISA wrapper. You basically use a stocks and shares ISA and I'll post some links. The ISA is important because exponentials go a bit daft and the money you'll be making towards the end would otherwise involve a large tax bill when you withdraw. For example, if your money doubles every 5 yrs or so then somebody who has invested for 45 yrs will have twice as much cash as someone who has invested for 40. As you approach pension age you'll be surprised how much it's grown and the tax bills would be huge unless it's prorected in an ISA. Any profits in that ISA, however large, are exempt from the same tax rules you's otherwise be paying. As long as it grows inside the ISA you'll be fine. The government are allowing this because they're naturally worried about the cost of pensions in 30 yrs and they want people to be able to support themselves.

    I'm not going to advise on specific trackers except to say buy cheap ones. You're going to have to read up a bit don't be scared, it's very easy (see list 1-4 above). Now you'll need to buy the fund from a fund supermarket. There is a general supermarket fee and then an extra fee for the tracker you buy. I will advise on the supermarket fund and I'd probably go for Cavendish. They're very cheap. From this you'll then have to choose a tracker from the funds they sell. 

    Read this.

    https://www.moneysavingexpert.com/savings/stocks-shares-isas/

    I notice they also recommend Cavendish because they're cheap. They will offer various types of trackers funds so pick one you fancy based on brief Google searches. It may well take a couple of weeks to get the ISA sorted but don't fret if the markets rally a little, the important thing is you didn't buy them 3 months ago. 

    Here's why timing the markets isn't as important as you think:

    https://www.thisismoney.co.uk/money/diyinvesting/article-8101459/The-FTSE-100-15-20-years-invest-long-term.html

    Mainly, do not put money in you'll need back later, even if the wife gets kidnapped. I'm not kidding - only invest cash you can spare. The other thing is to top it up every now and again. You can periodically save as you normally would but just put that cash into the tracker. This could be every month or whatever you're comfortable with.

    Then you sit back and try and forget about it. This is hard at first because you'll no doubt be checking your fund everday but will get easier as the months and years go by. You'll suddenly find you listen to the financial news a bit more and you'll slowly pick things up until you're at a level that you can confidently re-examine your investment in a few years and maybe decide to swap it into another tracker (it should stay within the ISA but be careful - once it's out it's out and there is a limit to how much you can invest into an ISA in any given year).

    Mainly, don't be afraid. It's a very simple thing to do despite all the jargon.

    Here's Warren Buffett to tell you some things and the point starts about a minute in (an Index fund = tracker fund).



    Here be some tracker funds:

    https://www.moneyobserver.com/our-analysis/most-popular-tracker-funds-and-etfs-2019

    American ones are great but not all will be available depending on what fund supermarket you go with (Cavendish etc).
    "Plus he wore shorts like a total cunt" - Bob
  • And don't forget to invest in the accumulation version of your chosen tracker!
    "Plus he wore shorts like a total cunt" - Bob
  • And don't forget to invest in the accumulation version of your chosen tracker!

    I’m going to do all of the above but what does this mean SG? Sorry, dunce here.
  • Also, if this appears in bad taste right now remember what you're really doing is taking advantage of the fear of other investors (and computer algos) that are bailing like mad.
    "Plus he wore shorts like a total cunt" - Bob
  • And don't forget to invest in the accumulation version of your chosen tracker!
    I’m going to do all of the above but what does this mean SG? Sorry, dunce here.

    it means the dividends automatically get put back into your investment - essentially those company profits are used to purchase a bigger stake in the tracker. You can also choose the option to get paid from the tracker - the dividends are paid in cash to a separate account (like a wage). The links explain all this - the MoneySavingExpert one is the place to start.
    "Plus he wore shorts like a total cunt" - Bob
  • Silly question. What's an isa exactly?
    SFV - reddave360
  • cockbeard
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    Individual Savings Account, a tax free allowance, most banks have pre-made accounts that have it all sorted, but you are technically allowed to save that allowance in whatever method you choose, hence the ISA "wrapper" that can be put around the £20k allowance limit
    "I spent years thinking Yorke was legit Downs-ish disabled and could only achieve lucidity through song" - Mr B
  • Yeah, it's a tax free (ish) place to put savings. Amazingly, if your investment balloons to 4 trillion pounds the same tax relief applies. The only limit is the amount you're allowed to invest into that ISA in any given year, not any profits that accumulate once it's in there.
    "Plus he wore shorts like a total cunt" - Bob
  • There is not an equivalent in Ireland unfortunately.
  • OK, cheers. I'm keeping cash handy but I do have a savings fund that is due to finish soon. It might be the next destination for that cash. The savings plan I'm on sounds similar but I reckon I'm paying more in fees.
    SFV - reddave360
  • RedDave2 wrote:
    OK, cheers. I'm keeping cash handy but I do have a savings fund that is due to finish soon. It might be the next destination for that cash. The savings plan I'm on sounds similar but I reckon I'm paying more in fees.

    Yeah and those fees really add up over time. A simple DIY tracker is the way forward. The internet has made investing very cheap.
    "Plus he wore shorts like a total cunt" - Bob
  • Yeah, but just as a warning to Dave, in Ireland there will be an exit tax of 40% on any income gained from the investment and you will have to file it yourself.

    Unless I've wildly misinterpreted everything I've read over the last few days.
  • I forgot to add that maybers the FTSE isn't the best investment - US trackers or international ones tend to fare better. If you do choose a FTSE-based one you'll still make money long term, but I'd reach a litte wider. North America is a very safe bet. One that blindly follows the S&P say, is going to make you money. I've added some popular US trackers to the OP.
    "Plus he wore shorts like a total cunt" - Bob
  • Is it possible to lose your original investment money with this?
  • cockbeard
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    Frosty wrote:
    Yeah, but just as a warning to Dave, in Ireland there will be an exit tax of 40% on any income gained from the investment and you will have to file it yourself. Unless I've wildly misinterpreted everything I've read over the last few days.
    Jesus fuck, that's a big chunk. I mean Capital Gains is the same number over here, but we also don't start higher rate until 40k, as opposed to 30k over there
    Dinostar77 wrote:
    Is it possible to lose your original investment money with this?
    Possible but very very unlikely, and the circumstances that would lead to that would likely have far greater consequences, so it's not really worth worrying about
    "I spent years thinking Yorke was legit Downs-ish disabled and could only achieve lucidity through song" - Mr B
  • I have an isa, stocks and shares isa worried me as i cant afford to lose my inital investment
  • Dinostar77 wrote:
    Is it possible to lose your original investment money with this?

    With a tracker, not really unless the entire stock market folds, by which time you'll be more worried about the gangs of marauders breaking down your door in a Mad Max Britain. Just do not take out money you put in so only invest what you can afford.
    "Plus he wore shorts like a total cunt" - Bob
  • b0r1s
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    Not all stocks and shares ISA's do that. It's based on the level of risk you want to take. Some you can ensure you get your stake back.

    EDIT - @Dinostar77
    SW-2099-8822-2505 - Boris - Goldenisle - Apples
  • New York has just had a fit and passed out. Buy buy buy etc
    "Plus he wore shorts like a total cunt" - Bob
  • cockbeard
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    FSCS protects 75k I think, so there is some state protection, which is why I said if you did lose your investment, there are likley bigger demons to scrap
    "I spent years thinking Yorke was legit Downs-ish disabled and could only achieve lucidity through song" - Mr B
  • I have a Moneybox account linked to a Stocks and Shares ISA. I was typically putting in around £10 a week and was earning 9% interest ahead of this latest dip/crash on a pot of around £1,200. It’s currently sat at -9%, meaning my investment has lost £98 off the amount invested (and around £100 in interest). I’m not going to panic and pull it, but that hopefully gives some insight into what can happen.
  • Yeah sit tight. It's going to get worse before it gets better but keep putting in and stay calm.
    "Plus he wore shorts like a total cunt" - Bob
  • could it cost you more money? i don't mean just lose value on what you put in, but potentially could they say "your dividends/pot is now negative, you owe us x"?
    or is the worst possibility you just lose what you put in, like an expensive bet?
    "Like i said, context is missing."
    http://ssgg.uk
  • Looking on Cavendish, they all seem like you have to put a minimum amount in every month. Is this the case with all trackers?
  • @ram

    Give me all your money and I'll tell you.
    "Plus he wore shorts like a total cunt" - Bob
  • Looking on Cavendish, they all seem like you have to put a minimum amount in every month. Is this the case with all trackers?

    No. Cavendish are just the funds market. They offer a range of funds for you to invest in, each will be different. Funds don't generally ask for you to invest every month. Cavendish ask for a minimum amount (£500?) to start investing with but what you invest in is up to you.
    "Plus he wore shorts like a total cunt" - Bob
  • Can you link to one that doesnt then, because every one i click on is saying minimum monthly investment £25
  • Think of Cavendish like Cosco. They have a range of funds for you to invest in. You pay them a small percentage of your total investment monies. The funds they sell also have a fee but you don't actually have to buy any. Trackers are very cheap because you don't pay for a fund manager and all funds can charge what they please. The funds are mostly independent from the fund supermarket and different supermarkets will have slightly different offerings but they will also sell the same funds. Some funds will be available in one supermarket that aren't available in another.
    "Plus he wore shorts like a total cunt" - Bob
  • Can you link to one that doesnt then, because every one i click on is saying minimum monthly investment £25

    I'm just going to do the school run but I'll post tonight. It's a good idea to do monthly investments btw.
    "Plus he wore shorts like a total cunt" - Bob
  • It might be, but I cant guarantee I could do that, so I'd prefer it to be my choice that I can stop if I need to.
  • I've been thinking about doing something like this for a while but I get decision fatigue with all the products and different options. Any suggestions for a top three to look at?
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