Iām a young(ish) lad and going to start putting some money aside into stocks and shares. I donāt have a bit starting pot (Ā£125) but plan to but 5% of my wage each into to grow for the long term.
Just a few questions:
With such little starting pot is the ISA not worthwhile at the moment? I feel I wonāt be getting close to the 12.5k savings for for the foreseeable future.
Secondly been reading what to invest into and also some of the advice in here. Thought of going for the following; also whilst I research more. I wonāt be touching individual stocks etc for the time being.
20% of pot plus each month into Global Green Energy. This Is something Iām fairly interested in personally so feel Iād find it enjoyable but I also appreciate the risk involved.
If you donāt mind paying for Plus - limit orders might save or gain you a great deal of money - an ISA makes sense because it avoids paying capital gains tax on any profit you make. Letās imagine you put in Ā£500 and somehow do really well on a given stock or fund. You make Ā£2,000 profit, for the sake of argument. By using an ISA, you avoid paying 10% of your gain to the tax man.
I wouldnāt give you any advice on a given company or fund, but Iād say that if you want Freetrade to be your primary (or sole) broker and think Plus has sufficient value for you to justify the Ā£9.99 monthly, the stocks and shares ISA is a good way to protect any future gains. Even if you donāt come close to putting in the Ā£20,000 a year thatās allowed. If you didnāt use that ISA and a given fund or share did well, any gains (including dividends) will be subject to that 10% capital gains tax. Itās simply easier, I think, to have the S&S ISA from the start.
What I would say is that you should always do your own research. I use Simply Wall Street because I think itās a good value analysis tool, but there are many options out there to help you understand how well a company or fund is doing, or if itās potentially a good value investment.
Welcome to the forum and good luck in your investing.
Have a regular deposit and sticking to your plan is a great first step anyway. Youāre going to see alot of ups and alot of downs but having a regular strategy allows you to average out your purchase prices.
Investing in the funds youāve mentioned, given that you say thatās what youāre interested in is a great idea. It means youāre more inclined to research the subject more.
All I can advice is to diversify your holdings which is what youāre doing if you invest in funds. Perhaps add another few funds and stick Ā£25 in each a month? Make sure you check the fund charges in the information document for each holding in the app and try and research the constituent holdings and see if it still suits your interests.
On the isa, personally its always worth it if youāre looking at a long term horizon but you wonāt be seeing the benefits for a number of years given your tax free allowances. Perhaps acknowledge that if you hold things outside an isa, if you get a big pot in the future and want to transfer in to the isa, youāll need to seel everything in order to transfer cash in to the isa and rebuy.
On the ISA question if you build up Ā£4K on US stocks. When the time comes to get an isa, the FX fee on the sell will be more than had you just paid for the ISA for a year and didnāt need to do an additional sell and buy order
Too true! Good point that is worth considering. Also to mention that when you do come to sell all shares in your gia to rebuy into the isa, you will lose some money on the spread of the share price. Youāll find it very hard to buy for the same price as you sell for.
Thanks for the advice. I will defintely consider looking into other holdings and spreading them. Thats great. The isa point defintely makes sense and seems a no brainer now. I have opened an isa Iāve got a balance in my GIA do I have to withdraw this to my bank and then deposit to isa. Can you not just move the funds in the app
If you contact the team on the app chat theyāll transfer the funds over (canāt transfer shares) and itāll take a few days to process. It may take a while for them to get back to you at the moment due to how crazy its been lately.
Chat support is normally 7 days a week but they have had to stop the ability to open new chat requests over the weekend to allow the team to catch up on the volume of support requests there are at the moment. Noones app will be showing the ability to start a new chat at the moment.
Just a note to say congrats on starting the journey, you have a clear and robust plan so make sure you stick to it - ignore people betting on certain stocks or 90% of āgurusā without any qualification.
Itās expected that a downturn is coming soon but keep investing throughout and youāll do better than the average player.
The only other thing Iāll mention is pension, the sooner you can put money away for 40+ years, the better. starting early makes a huge difference here. Donāt rely on state / employee pension.
Sorry for the numerous questions. Been looking into a few more ETFs and also trusts. Very stupid question looking for example at iShares global clean energy & say Europe ex - uk. Where I can find which companies are in the etf
Thatās just what I wanted thanks! I was expected it to be in he key info pdf on freetrade. I did have a Google but wasnt too sure on a reliable source of information