TheBoyRoberts wrote:

My pot has made about 20% over the last 6 months or so; very pleased with that return. I've got mine with Hargreaves and after I put a small lump sum in, I now pay in £50 per month into the USB S7P 500 & Vanguard US Equity Index (both accumulators). I also dabbled a little with some shares and I bought some shares in Gregg's which have made 110% profit!!  I've also bought some in Virgin Galactic, but alas, they are currently down 42%.  Hoping the "take off" again sometime soon!

SpaceGazelle wrote:

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).

Funkstain wrote:

Also worth remembering you can withdraw up to 25% of your pot, at age 55, completely tax free - which represents a significant tax saving, and can be used to eg: pay off remaining mortgage etc.

Funkstain wrote:

Then when you draw down (get "paid" from your pension in whichever way you choose), it's likely you'll be taxed at the lower rate (unless you've saved and are withdrawing more than £50K per year, which, well done you!) of 20%, so there are significant benefits to being richer. Again.