#518566
Postby elephanthunt11 » July 31st, 2022, 4:07 pm
I've read through most of the posts here, some great advise and in my opinion, some questionable.
What you're going to find it conflicting information everywhere and depending on who you ask. My opinion is that some of the information you've been given is great but too complicated for where you are in your investment journey; this applies to most of what you've been told about ITs (investment trusts).
The first thing I would recommend is to maintain your monthly contributions. Do not try to time the market by contributing quarterly to coincide with dividend payments as a previous poster has suggested. This is unnecessarily complicated, doesn't actually make much sense and is effectively timing the market, which all of us agree is a fool's game.
Right, let's begin.
1. Open a stocks and shares ISA with HL. They are not the cheapest but their app is really well developed and their customer service is great.
2. Decide whether you are looking for an income portfolio or a capital growth portfolio. Given your time horizon, I couldn't, with any integrity, advise you to gear towards an income generating portfolio.
3. Before you invest, you need to decide how you want your portfolio structured: understand the term 'Core/Satelltie' by doing some googling. Your core (60-70%) should be a very broad based, highly diversified low cost index tracker. A global fund or an S&P 500 fund is probably your best bet at this stage. ETFs will be the better option later. At this stage, ETFs are traded like stocks, you will therefore incur an £11.95 fee per month, on a £1200 contribution this will be a whole 1%. Fund dealing is commission free on HL. When it gets to a certain value ETFs are better, right now they absolutely are not.
4. Your satellites should be commensurate with whatever level of risk you are willing to take. These can be investment trusts, or direct equities. My advice is to stay away from everything except the most boring index tracker for around two years, explained below.
This is basically it as far as my advice goes, but, the biggest piece of advice I can give you right now is just build up your core holding .
The reason I say this is that successful investing is largely strategic lethargy: doing nothing. I believe 80% of successful investing is stomach, not brain. Managing your emotions towards market fluctuations is not something that happens overnight. I'm 30 as of last week, started investing in 2017/18, stock portfolio is £70k right now. If I had a £70k PF to manage 4/5 years ago, a -3% would've destroyed me watching 2k just get wiped off my holdings in cold blood. Now it's 'just another day in the market'. You will build you emotional tolerance to fluctuation by investing consistently each month.
Some books I would recommend:
The Simple Path to Wealth by J L Collins. The definitive guide to index investing.
Common Sense Investing by John Bogle, founder of Vanguard.
In summary, there is a lot of conflicting information out there. When you realise the undeniable power of indexing you simply won't be able to go with an alternative despite how exciting holding direct equities may be. Every piece of data in investing shows that passively tracking the market will beat professional stock pickers 80% of the time over a ten year period, increasing to 99% of the time over a 30 year period.
Feel free to ask questions, I'm happy to elaborate on any of the points made in this post.