Yeah, I plan on adding to, and holding my ETF investments for years to come
Sorry, I know even for a beginner question that was probably mind numbingly dumb haha but I felt i might as well ask
No worries, it’s always better to ask, so ask away.
Some of the questions I asked when I started all those years ago
If I were looking to get dividends (are they regular returns?) how would I go about that?
Dividend payments can vary year to year as they are decided by the company’s board based on various factors. Some of the things you can look for is how often they pay per/year, is it regular dividends, e.g. interim/final, or are they special ( one off ) dividends, the history of company paying dividends. Be careful with companies that pay very high dividends as it can be a sign the company is in distress.
The easier, and less riskier way is to find a ETF that pays dividends, these tend to pay quarterly, or semi-annually.
Have a look at the Freetrade Dividend and Conquer! post which goes into more details about dividends.
Noted Thank you. You’ve been such a help
Buffets response to the safest investment was “S&P 500 index fund”. Is that what is currently on Freetrade app?
Are stocks in a way ‘compound interest’?
I’ve had some experience on something like IQ Option which is day trading if im not mistake, Freetrade is very different as its more long term? Which by extension means ‘shorting’ isn’t possible?
Yes, Buffet recommended Vanguard’s S&P 500 index fund which is available in the app
If you reinvest your returns then they compound. We’ve explained what that means in more detail in this blog post -
Exactly, this is one of the key differences of Freetrade’s service - we’re building a service for long term investors, not day traders - which has a big influence on the design & services we offer. Typically services for day traders are provided by companies that offer CFDs & we’ve explained why we’re not fans of those here -
As you say, we won’t offer shorting or leverage because we don’t want to expose our users to the risk of losing more money than they’ve invested.
Clear answer / Use of Medium and Fast reply.
An exceptionally dumb question coming up but asking has done me well so far so here goes.
If I wanted to put £5000 in Vangard S&P with my Investment ISA, would I then only be able to invest another 15,000 forever or will it cap out at 20,000 over the years (hypothetically)? When it says 20,000, what’s the deal etc (apart from it being untaxed etc)
ISA limit is £20,000 per year
What would happen with any earnings past that?
It’s £20,000 across all ISA products. As far as I know you’d end up paying normal rates of tax after that. If it was with one provider they’d probably refuse to take any more than £20,000
This is one for @Vlad to clarify
Everything Emma said is correct. ISA contributions’ limit is renewed every 6th of April and you can contribute another £20,000 across your ISAs until April the 5th of the following year (subject to the budgetary changes). Source.
If by “earnings” you mean additional contributions over £20,000, it is theoretically possible if you have more than one ISA provider you contribute to simultaneously (e.g. Cash ISA and S&S ISA). Do not do that. HMRC are unbelievably panoptic and most likely know more about most individuals’ earnings and tax affairs than said individuals do themselves. Simply do not contribute over £20,000. If you happen to have done it, then call them up and explain the situation. If you do not, they will not hesitate to call you and you probably do not want them to do that
If you mean contributions, see @Vlad The easiest mistakes to make with ISAs are contributing to too many ISAs in any one tax year (there are four kinds and you’re only allowed to contrib to one of each in any one tax year). And contributing too much in any one tax year. Both mistakes would need to be fixed.
But if earnings beyond that means you put X in and then it grows a bit because the investment goes up in value… then enjoy the fruits of your money’s labour, and tax free!
Did you receive an answer to this???
I’d be keen to find out also.
Unfortunately we can’t allow US citizens of any kind to open a Freetrade account at the moment.
But with some more work, that could change, please vote for the request here FATCA compliance - enable Americans to use Freetrade.
My weeky question If I buy stock in a company and there’s a degree of expectation that that company will be bought out at some point. Let’s use SNAP as an example. There’s assumptions that a bigger fish will gobble up SNAP, what would happen to my stocks if that were to happen?
My first thought Is that my shares and what I’ve spent are converted into the new owners stock perhaps? so say I have 300 shares in SNAP that would equal to like 1-2 shares in Amazon. (if they were bought by amazon)
p.s made my first buy this week
There is a real science to mergers and acquisitions and there are numerous possibilities of what can happen.
In a nutshell, the acquirer offers the price, then the acquiree’s key shareholders (not the minorities like ourselves) decide whether they want to sell and if they agree, given there are no questions raised by SEC, a merger will eventually happen,
The most likely scenario for you is that you will get cash equivalent of what was the tender price, and SNAP shares will disapper from your brokerage account. That is it. Sometimes there could be other arrangements, for example, you get shares of the acquirer, but it is not common. It is, however, more likely when two companies merge and for a new entity, but again, does not happen all the time.
One other thing to remember, the share price of acquiree almost always rises once the acquisition is announced. The acquirer’s, on the other hand, will most like fall due to the premium they will be paying. Therefore, it is not always easy to calculate the shares’ equivalent you are eligible for, hence cash is the most likely option.
You can read more on this here if interested.
Interestingly, there can be an opposite scenario, whereby a public company splits into more than one. For example, Freetrade has dealt with the split of Old Mutual, which turned into two separate public companies (Old Mutual + Quilter), and if you held shares of Old Mutual prior to the split, you would have got both (presumably of comparable value) the day after that.
Congrats on your first buy, hope it is the first of many. (Was it SNAP?)