Hi all, thinking about getting into some share trading (with all my bags of spare cash) so...
1) Best online trading site/app to use?
2) Stocks & Shares ISA; how does tax work if I use one of these (can I trade using one?)
Cheers!
I love the share trading threads...
Best advice is don't lump a load of new money into the ftse when it's at it's current highs. Load up your account with cash and submit your bids to buy at levels you feel comfortable buying at, your bids may or may not get taken in a few months, so keep them realistic.
There's a correction on it's way and it will happen when you least expect it.
Hargreaves Lansdown and IG are probably the best trading platforms-IG I find has a very good mobile app if that's how you want to trade.
Beware of so called 'experts'. Choose your own method of buying shares. However I always find Robbie Burns blogs/Naked Trader/Proactive investors site has useleful info.
You won't pay tax on stocks & shares ISA however there will be stamp duty and fee/transaction.
Don't get suckered into Spread betting (for now), it's gambling in effect. I occasionally do it to short stock and make a quick couple of tax free quid. I have also lost a few quid!
And yes, you can trade, but at low volumes you'll be incurring fees per transaction and probably not worth the effort. Be aware also that it's £20k in s&s ISA-anything above that will have to be in a separate trading account that will be taxable.
Hargreaves Lansdown is a very easy app to navigate
Stocks and shares ISA are good. You don't pay any tax on gains. - this only has any bearing if you make more than the Capital gains allowance really, (currently £11.5k or so)
You can put max £20k into one.
You can only hold 1 per year
You can hold a single company or a fund in one.
if you put the full £20k don't trade from them as anything you take out, you cannot put back in.
Thanks for the replies, I'll have a look at the HL app. Will definitely be taking it easy to begin with, need to learn quite a bit!
if you put the full £20k don't trade from them as anything you take out, you cannot put back in.
I'm pretty sure that's not the case from this year; if you withdraw funds from an ISA you can put them back in again, up to a maximum of a net £20k total subscription per year
You can hold a single company or a fund in one.
Bit confusing...
You can hold as many companies shares up to the value of £20k as you want.
There are a few fee-free trading platforms springing up..
The app will allow investors to make 10 trades per month each worth up to £10,000 commission free, an offer it estimates will cover the demands of around 90 per cent of its customers. More active and bigger spending traders will be charged a commission of £1.95 and 0.05 per cent commission per trade.
You can put max £20k into one.
You can only hold 1 per year
Confusing...
You can only put £20k into one this tax year, but over the years you can put as much in as the annual allowances, er, allow.
You can hold more than one per year, but you can only open one (S&S) ISA per year, though I believe you can also open a cash ISA , totalling up to the yearly max.
Hargreaves Lansdowne have an excellent site. They are a bit more expensive than most but their site is easily navigable, unlike some, and they have excellent research and dealing tools.
I listen to the podcasts from
Investors chronicle, companies and markets and personal finance shows
Ft money show
Wake up to money
All free and full of useful info, I d listen to a few before you part with your cash
All free and full of useful info, I d listen to a few before you part with your cash
+1, though the best lessons are usually the ones learnt the hard way!
+1, though the best lessons are usually the ones learnt the hard way!
I'll agree with that. When they say hard way, they mean loosing nearly your whole original investment. 😉
"trading" is a mug's game. Just buy a few decent companies and hold them. Over time, trickle in more money as you have it (obviously only buy decent sized chunks so you don't pay too much min commission etc). Don't churn any more than you have to.
As thecaptain says, do you actually want to be trading? I suppose its a fun hobby if you like that sort of thing but can you actually make more money buying and selling? Mine is just stuck in a couple of funds. It made good money last year, this year not so much so far but still up.
I think that's probably the plan. I've watched some companies over the past couple of years, now kicking myself I didn't invest in them earlier! It would also be nice to get a bit more return than the interest offered on current ISA's, which is pitiful. There's always [i]someone[/i] making moneyJust buy a few decent companies and hold them
Capital gains tax allowance is £11,300 (or so) per year - I suspect you won't get close to that (based on a guess of the amount of money you are prepared to risk) - so I would not bother with an ISA. If you do have a stellar year and rack up decent gains then you simply "realise" these by selling the shares and rebuying. This resets the capital gains calculation and is generally "cheaper" than paying the tax if the gains continue. FYI tax free capital gains allowances don't carry over year to year.
If you do have a stellar year and rack up decent gains then you simply "realise" these by selling the shares and rebuying. This resets the capital gains calculation and is generally "cheaper" than paying the tax if the gains continue. FYI tax free capital gains allowances don't carry over year to year.
Though to realise these gains you would need to Bed and Breakfast, leaving you out of the market for 30 days. With an ISA you could Bed & Isa the gains, keeping you in the market continuously.
An ISA may not make much sense in the first year or so but sometime in the future you will wish you'd opened an ISA from the start. HL charge 0.45% for shares held in an ISA, capped at £45 pa. iWeb charge nothing.
+1 suburbanreuben
No reason not to ISA, no downside but potential upside in the future.
Price is what you pay,value is what you get.
Your not buying shares your buying a portion of a business.If the stock market was suspended tomorrow,would you be happy still holding your picks in ten years time?Also try not to buy at the bottom and always sell to soon.You'll need a benchmark for this process.
Anyone looked into an Lifetime ISA?
Invest up to £4000 per year and get 25% government bonus
'free money' always sounds too good to be true which probably means they'll can it further down the line
Good if you're a FTB or supplementing a pension pot
http://www.hl.co.uk/investment-services/lifetime-isa
A suggestion, also backing what nickjb said. Have you considered index funds (Vanguard do a good LifeStrategy series).
These aim to track the stock market by holding proportional amounts of shares. So something tracking the S&P 500 would hold 3.8% APPL, 2.5% MSFT etc.
This works under the assumption that you don't know more information that the market and so your best bet is just to track the market.
You don't get the spectacular gains that you would have if you had put £1000 into AMZN in 97, but you don't get the total losses that would if you had put it all into Pets.com in April 2000. Unless of course the stock market fails totally, in which case you have bigger things to worry about than the fact your investments have vanished.
I'd recommend investing in funds - effecteively just a mixture of shares but managed by a fund manager who buys and sells as they see fit to take advantage of market situations.
If you use HL they also have their own funds. I have a selection and they're all up about 20% at the moment.
Also look at funds from Neil Woodfood and Fundsmith.
Buy a Vanguard global index tracker in an ISA wrapper and put your feet up 🙂
By all means use funds if you don't have the time or inclination to do it yourself. But bear in mind that you're paying someone else a fat fee for the privilege. If they take say 1%pa then after 70 years they have taken more than half pf your money!
But by investing in funds you're buying someone's expertise - and you will potentially earn much more than just randomly buying shares in x, y and z.
I'll happily pay someone 1% if they're making me a return of 30%.
Yes that's the myth. But it's a myth.
But by investing in funds you're buying someone's expertise - and you will potentially earn much more than just randomly buying shares in x, y and z.I'll happily pay someone 1% if they're making me a return of 30%.
+1
Over the years I have been paying into ISAs for me and the missus. I have been buying and selling , wheeling and dealing, spending hours seeking the next opportunity, winning and losing...
The missus's portfolio I treated almost as an afterthought, choosing a selection of funds in Europe, Japan, China, India, Frontiers etc. These have remained untouched, save for topping them up every year, with only the odd addition. She's comfortably outperforming me, and the markets.
Sounds like I need to look into funds as well. TBH I'm not experienced enough to be sifting through hundreds of companies and picking them out to build a varied portfolio, I'd just like to concentrate on a few at the moment. Presumably you can see how a fund has been compiled if you have money in it?
I'll happily pay someone 1% if they're making me a return of 30%.
That sounds like a pretty high rate of return!
That sounds like a pretty high rate of return!
But achievable, in the past few years anyway...
is what you need!
Play around with this, clicking on column headers and your mind will be boggled...
If you use HL they also have their own funds.
They won't be cheap or good value.
Presumably you can see how a fund has been compiled if you have money in it?
Yep, they will give you a breakdown of how the fund is invested.
That sounds like a pretty high rate of return!
I invested in the Neil Woodfood fund at launch and it's currently up by 35%! I'm very happy with that.... 🙂
I invested in the Neil Woodfood fund at launch and it's currently up by 35%! I'm very happy with that....
You need to compare it with an equivalent tracker or market index. UK and US markets have been having a bull run for nearly 10 years, so it would be very hard not to be up...
I invested in the Neil Woodfood fund at launch and it's currently up by 35%! I'm very happy with that...
Ditto with Terry Smiths fund, up 150% since the beginning! (although I only had small amounts to begin with)
Buy a Vanguard global index tracker in an ISA wrapper and put your feet up
Is probably the best answer on here
But by investing in funds you're buying someone's expertise - and you will potentially earn much more than just randomly buying shares in x, y and z.
It's a bit like giving someone who follows the horses your betting money. They stand a [I]slightly[/I] better chance than you do, but they're still just betting.
All people choosing fund managers think they're applying expertise to beat the market by picking a fund manager who's better than the other fund managers. All fund managers aim to beat the market by picking stocks thinking they're better at it than other fund managers. Everyone thinks what they are doing is outsmarting everyone else, which is clearly nonsense.
It's been shown many times that a low-fee tracker will generally outperform a higher-fee managed fund over time, mainly because of the cumulative effect of the fees. Any 'advantage of expertise' is nullified.
It's been shown many times that a low-fee tracker will generally outperform a higher-fee managed fund over time, mainly because of the cumulative effect of the fees. Any 'advantage of expertise' is nullified.
Whats been the best performing tracker over the last 5 yrs?
I have just changed how I invest. As most people do I thought I could make shed load of money trading and then sail into the horizon on my new yacht. Wrong wrong wrong!! I wish it was that easy. I have stocks in 2 companies that I have done the groundwork research in and see them as good long termers. I have a global index tracker all wrapped up in a stocks and shares Isa. I had a bit of a wake up call after losing a fair whack on a couple of sure things.
Watch these videos for some good ideas on passive investing.
Whats been the best performing tracker over the last 5 yrs?
Surely the more pertinent question is what will the best performing tracker over the NEXT 5 yrs otherwise you run the risk of confirmation bias affecting your thoughts?
The compounding nature of fees generally work to erode any addition value of a fund, that and the fact that skill isn't scaleable.
Surely the more pertinent question is what will the best performing tracker over the NEXT 5 yrs
Nope my question is the pertinent one. I am interested in the statement ref Trackers outperforming managed funds. Do you know what the best performing tracker was (also its annual charges?)
The compounding nature of fees generally work to erode any addition value of a fund
Yes and growth compounds as well.
Do you know what the best performing tracker was (also its annual charges?)
They vary a lot as there are good value and poor value ones.
0.1% annual fee or lower is good.
Some 'con ones' run by high street banks aimed at the naive investor can have fees similar to managed funds.
I am interested in the statement ref Trackers outperforming managed funds.
Generally true for well researched markets such as USA. Less so for Europe / UK.
But all depends on the period you look over.
I've gone for US trackers, but managed funds for UK / Europe.
growth compounds as well
And consequently the [b]fee [/b]growth compounds with it (as all fees are a %age of the fund value).
So "Yay, my fund has grown 30% in a year", but "booo, my fees are now 30% higher".
To be honest, I don't know what the best performing tracker was over the last five years, and I will guarantee that there are managed funds that did better. The point is, will they continue to do better over the next 15-20 years? The odds are that they will not. So, how do you know when to switch? And to what? That's when you start going around the expertise/luck cycle again.
Some v good advice as usual...i hold c 10 stocks, some funds, mostly individual companies. C80% is in a core portfolio I hold and leave, the remaining 20% I churn as I see individual stocks being overvalued, sell them, buy them back after banking the difference.
Keep a watch list and buy when you think it's right.
To be honest, I don't know what the best performing tracker was over the last five years, and I will guarantee that there are managed funds that did better. The point is, will they continue to do better over the next 15-20 years? The odds are that they will not. So, how do you know when to switch? And to what? That's when you start going around the expertise/luck cycle again.
My point being that there are lots of under performing funds however the better ones will out perform even the best trackers. The number is small and yes the fees are higher however its not fair to say trackers are the best investment. They are a very good one but can be beaten.
the better ones will out perform even the best trackers
Undoubtedly. But how do you know which ones they are (or more accurately, will be, as it's future performance that you're after)?
can be beaten
By the application of 'expertise', aka luck.
Undoubtedly. But how do you know which ones they are (or more accurately, will be, as it's future performance that you're after)?
And you can guarantee an increase in your tracker fund? based on what? past performance?
By the application of 'expertise', aka luck.
Therefore the increase of 150% over the last 5yrs on one of my funds indicates that the fund manager has been extremely and consistently "lucky" you know what another word for that is>
Undoubtedly. But how do you know which ones they are (or more accurately, will be, as it's future performance that you're after)?
Generally speaking, good stock pickers will continue to be good stock pickers.
Trackers are great when the market is on the up, but when it stalls, or falls...
What then? We are yet to find out!
They are great for lazy IFAs though, who presumanly pocket the difference in fees themselves...
I'm very glad I've been in legg Mason Japan, frinstance, rather than a Japan tracker
"trading" is a mug's game.
No, it's just a different game. When I used to day trade we thought of investors as the mugs.
Any honest fund manager will admit that their only value is in reducing risk and/or investing in markets that are inaccessible to private investors (e.g. overseas).
Are there any trackers that have actually come close to tracking their target index when you account for reinvestment of dividends? Share price rises are only half of the total return (roughly speaking).
And you can guarantee and increase in your tracker fund?
There are no guarantees with any fund, it's all gambling. However, if the thing it's tracking grows, the fund grows. Which are generally market indices (FTSE100/250, DOW, whatever), which generally rise over time.
..Trackers are great when the market is on the up, but when it stalls, or falls.
And at the times the markets fall significantly, pretty much everything falls, including the 'expertly-managed' funds. Unless, of course, you've been lucky enough, or had the 'expertise', to pick one of the few that may buck the trend.
And, again, the key is the difference in charges. Over time the higher charges on a managed fund often outweigh any gains from any higher top-line growth rates.
Are there any trackers that have actually come close to tracking their target index when you account for reinvestment of dividends?
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index. They will therefore get any dividends due and reinvest them. I'm not aware of any tracker that grow at a slower rate than the thing they're tracking. If I'm wrong, then fair enough...
But you said
It's been shown many times that a low-fee tracker will generally outperform a higher-fee managed fund over time, mainly because of the cumulative effect of the fees. Any 'advantage of expertise' is nullified.
I explained an investment of mine that grew by 150% over 5 yrs. Can you tell me a tracker that has done that?
Are there any trackers that have actually come close to tracking their target index when you account for reinvestment of dividends? Share price rises are only half of the total return (roughly speaking).
Trackers benefit from reinvestment of dividends the same as any other fund.
They are just a managed fund where a formula is used to decide what to own. There are many different tweaks as buying and selling every day to exactly match the index would be a bit daft, so they have various lags / water marks to reduce unnecessary churn.
I explained an investment of mine that grew by 150% over 5 yrs. Can you tell me a tracker that has done that?
Nope (but there might be one, 150% over five years isn't [I]that[/I] amazing).
But will yours do that over the next five years? How do you know?
And at the times the markets fall significantly, pretty much everything falls, including the 'expertly-managed' funds. Unless, of course, you've been lucky enough, or had the 'expertise', to pick one of the few that may buck the trend.
Exactly, Some funds will fall more than most , but just as a good manager can regularly beat the market going up, some can beat the market going down. Luck does have a part to play, but undoubtedly so does skill. Just like Backgammon, or Poker, or other "gambling".
But will yours do that over the next five years? How do you know?
I dont know, just like you dont know if your tracker will.
Luck does have a part to play, but undoubtedly so does skill. Just like Backgammon, or Poker, or other "gambling".
Again, I don't disagree, but there's the added feature that in fund investments there are two 'layers' of luck/skill/uncertainty, call it what you will; the investor picking the right fund manager and the fund manager picking the right stocks.
With a tracker investment, one layer of that uncertainty is removed (the fund manager, cos they just have to buy in proportion to the index) and one is lessened as the investor 'just' has to pick an index, and in general they all rise over time.
There's a huge amount of psychology at play too. Investors, and fund managers for that matter, want to be seen as clever and active in being able to beat the market. Trackers are seen as dumb and passive.
I dont know, just like you dont know if your tracker will.
Nope, but I'll have a bet with you now that the FTSE 250 is higher in five years time than it is now.
Just so we're clear, I see this as an interesting debate, I'm not being all internet know-all, I promise. FWIW I work for a wealth management firm, trackers are not very popular around here, the firewall alerts are probably glowing red-hot as I post this stuff 🙂
😆Just so we're clear, I see this as an interesting debate, I'm not being all internet know-all, I promise. FWIW I work for a wealth management firm, trackers are not very popular around here, the firewall alerts are probably glowing red-hot as I post this stuff
I can imagine...
You'll be pleased then that some investors still value active funds,
but not so pleased with the belief that "wealth" managers are spawn of the devil. 😉
in general they all rise over time.
I'll have a bet with you now that the FTSE 250 is higher in five years time than it is now
Why is it logical for you to base your assertions on past performance but when people invest in funds they are "gambling" 😀
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index.
No they don't.
I'll have a bet with you now that the FTSE 250 is higher in five years time than it is now
I'd expect it to be very slowly climbing out of the next crash/correction in 5 years time.....
I'm looking to possible start buying stocks soon. currently trying on a virtual app, to see how things progress, though i don't think fees and stamp duty are taken into account..
it would be investment rather than buying and selling regularly , but am not sure if i should wait for a possible downturn. it feels like one is around the corner, but isn't that always the case?
If you want the two cents of someone else new to all this I'd say get on with it. Long term they will go up. You just need to ride out the dips. If you want to hedge your bets a bit then put the money in bit by bit, say once a month. It is my understanding that is the best long term (obviously you may get lucky, or unlucky with a lump sum but this averages things out). If you aren't buying and selling then just stick it in a fund or tracker (see earlier [s]arguments [/s] discussion)it would be investment rather than buying and selling regularly , but am not sure if i should wait for a possible downturn. it feels like one is around the corner, but isn't that always the case?
buying and selling regularly
In addition to fees, dealing costs are a killer. I wouldnt bother buying individual shares unless you were confident and even then only ones I was intent on keeping for the long run.
Long term they will go up
Really??
If you want the two cents of someone else new to all this I'd say get on with it. Long term they will go up. You just need to ride out the dips. If you want to hedge your bets a bit then put the money in bit by bit, say once a month. It is my understanding that is the best long term (obviously you may get lucky, or unlucky with a lump sum but this averages things out)
+1 !
The best time to plant a cherry tree was 20 years ago. The second best time is now!
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index.
No they don't.
Educate us (me) then (I realise there's scope for nit-picking in my explanation)
Yep get on with it. I started this year & picked 8 funds from around the world and a 4 shares I fancied. Better off with funds imo.
The best time to plant a cherry tree was 20 years ago. The second best time is now!
Personally I'd buy a wide selection of ready-grown fruit 😉
Can confirm that I've now learned enough to know that I know less than I thought.
The best time to plant a cherry tree was 20 years ago. The second best time is now!
Sounds like reasonable advice!
Therefore the increase of 150% over the last 5yrs on one of my funds indicates that the fund manager has been extremely and consistently "lucky" you know what another word for that is>
I take it you do know of the Texas Sharpshooter fallacy?
I don't, whattisit?
I don't, whattisit?
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index.
No they don't.
Educate us (me) then (I realise there's scope for nit-picking in my explanation)
In proportion to their market capitalisation....
Interestingly, there was an article in the FT, which I can't find, a few years ago which found that unweighted passive funds (eg FT 100, each co has 1% weighting), had the highest long term gains, just beating a monkey with a pin...
sounds like good advice.... cheers
In proportion to their market capitalisation....Interestingly, there was an article in the FT, which I can't find, a few years ago which found that unweighted passive funds (eg FT 100, each co has 1% weighting), had the highest long term gains, just beating a monkey with a pin...
I'll class that as nit-picking 🙂
And them monkeys get paid good money...
I don't, whattisit?
It's a form of confirmation bias. The apocryphal situation is someone shoots a load of bullets at a wall and afterward then draws a target round a close grouping that has appeared at random. The shooter then looks like they are a good shot even though they weren't aiming at a target.
In this situation looking at one specific funds performance might make it seem like it is brilliantly managed when in fact the gains may simply have been down to luck.
Educate us (me) then (I realise there's scope for nit-picking in my explanation)
Sorry I'm being a bit of a dick really, they do more-or-less match the index but (the ones I've looked at) certainly reserve the right to use other investments also.
in fact the gains may simply have been down to luck.
Yep, thats it, 5yrs on the run. Lucky.. As long as the fund manager keeps drawing around the profit "target" then they can keep hold of my money 🙄
1)You could lose all your money.Think Japan and/or1929.
2)The latest fad for trackers and ETFs is taking place in a bull market.They may well come a cropper in a bear market.Don't forget,your buying in most cases all the shares in an index.Including the rubbish.
3)Never confuse brains with a bull market.
4)Nobody knows exactly when the next bear market will occur.We only just crawled out the Depression in 2013.The stock market itself is only just above its 1999 highs.
5)Put some money into gold.After 12 trillion of money printing hyperinflation is surely a possibility.
I take some of your points about trackers,but worry about people chasing heat.Neil
surfer,Anthony Bolton had many years of success,until he didnt.
You could always build up a cash pile and wait for the bear market.I mean would you rather pay 50p for your favourite hamburger or a £1.00.This could be some time away however.I,m looking at German infrastructure at the moment.They've got to do something with their £200 billion current account surplus.We,on the other hand are still in deep turd.Surprised non of you have raised the issue of Brexit and the stock market.I think Merkal has the funds to really screw us over.Just a thought.