Author Topic: UK Index Tracker Investment - where to start?  (Read 13671 times)

LindseyBob

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UK Index Tracker Investment - where to start?
« on: July 20, 2012, 06:20:14 AM »
Hi Guys,

I'm hoping this will come to the attention of some of the growing number of British Mustachians (or anybody who can help!)

By following the MMM guidelines I've found myself in a position to start investing in index trackers. Problem is - I have no clue where to start in terms of signing up with a fund supermarket, how to buy etc. Only looking to invest a small sum each month to start (£50-£100) but it's better than nothing for now....

Any help appreciated :-)


Sacadoh

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Re: UK Index Tracker Investment - where to start?
« Reply #1 on: July 20, 2012, 07:39:51 AM »
I use Hargeaves Landsdown in the UK but think they have a minimum starting deposit.

Check the moneysavingexpert website for UK ideas.

Are you saving in an ISA, Pension or some other type of tax wrapper?

Best of lcuk.

LindseyBob

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Re: UK Index Tracker Investment - where to start?
« Reply #2 on: July 25, 2012, 07:50:18 AM »
Thanks for your reply,

I've never had much to max out any cash ISA's but I do use them!

I've had a look at the Nationwide's Stocks and Shares ISA - they do a 'Fantasy Portfolio' where you can effectively use play money for first-timers like me to get an idea what it's all about.

My company have a generous pension scheme which I contribute to also.

Yabusame

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Re: UK Index Tracker Investment - where to start?
« Reply #3 on: July 28, 2012, 04:44:03 AM »
Hi Lindsey,

Being in a position to invest is fantastic.  I have a few suggestions...

Before investing anything in the stock market learn all you can about investing.  Put your £50-£100 pm in a high interest Cash ISA whilst you read up on the subject.  You can always transfer the funds in the Cash ISA to a Stocks & Shares ISA later (you cannot transfer the other way though).

There are many books but I would start with a couple of blogs, such as Monevator or Simple Living in Suffolk, and don't forget The Motley Fool UK.

Set your money aside in a tax-free wrapper (Cash ISA) and start learning.  Is Index Tracking really what you want to do?  Why?  What style of investor are you?  Do you want to diversify your portfolio?  Do you know why you would want to do this?  These are just some of the questions you need to be asking yourself.

You're in this for the long haul (financial independence), so take your time and start studying.
« Last Edit: July 28, 2012, 04:48:28 AM by Yabusame »

modusoperandi303

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Re: UK Index Tracker Investment - where to start?
« Reply #4 on: August 06, 2012, 08:26:39 AM »
Hello Lindsey

I have spent some time looking into some longer term passive investments (vanguard index trackers) and investing though a fund supermarket like you mention is the only way to do if you have under £100000. This post might not answer your questions entirely though spending some time with a fund cost calculator and knowing when, where and why you are investing in that fund will help answer your questions better than I could.

The fund supermarkets which make investing in Vanguard (supposedly the cheapest index tracker fund and 'The company has a hard-won reputation for serving investors’ interests.') possible are:

http://www.hl.co.uk/
http://www.sippdeal.co.uk/
http://www.alliancetrustsavings.co.uk/
http://www.bestinvest.co.uk/index.aspx


There are two other companies which allow you to invest in them but they charge at a rate of .5% and .85% annually which combined with inflation could reduce your investments to below the average high street bank 3% isa return.

I will update this with the costs I incur when I invest with vanguard though a quick google  has taught me that in 2010 investing via Alliance Trust Savings cost per year:
£12.50 dealing fee
£5 automatic dividend reinvestment
£10 cash withdrawal charge
£30 annual ISA charge

Because of the costs I would not have though that putting money in very other month would be great for your needs, though putting in a lump sum would. The other catch to bear in mind is that to with draw from Alliance Trust Savings you have to send off a form and only once they have received it they will send you a cheque back.

I will post more information up about the costs how I set up an account and why, at the moment it looks like I am going to go for Alliance Trust as you can buy direct from the firm as long as you have a debit card and there is a £50 minimum investment per fund (Hargreaves and Lansdown require £1000 minimum). Below I have included a few links to websites with information which helped me. Let me know how you get on.


http://monevator.com/cheap-vanguard-index-funds/


The best option for you might be www.bestinvest.co.uk if you wish wish to drip feed into a fund like Vanguards as the link to the blog post below explains.

http://monevator.com/bestinvest-vanguard/


Another link to a post about:


http://monevator.com/hargreaves-lansdown-vanguard-funds/


Regards
Andrew H V