Who invests in the Stock Market?


(Richard) #1

So on the back of @nikimukhi fantastic post and guide “a lil doc to help you understand savings and investment” I was wondering who else invests in the stock market?

It is something I am interested in doing eventually and I want to learn as much as I can. Here is as good a place to start.

  1. I believe that the stock market is a long term game. If that’s the case is it wise to bring some profits out to spend on yourself or should you re-invest it into more stocks?
  2. I have heard from a friend that his dad invested in the stock market over 10 years ago (I don’t have details, numbers or dates) but effectively his dad has made a loss and wish he placed his investment in property instead. He used a broker so my question is how likely is this scenario? What is the best way to manage your money in the stock market?
  3. If you are personally investing in a stock market, is it still worth paying into a pension scheme?

I can’t think of any more questions right now, but I am interested to hear people’s experience on the matter, whether good or bad and any advice.

Thanks in advanced.


(Tom Halloran) #2

Definitely the right idea to learn as much as possible before diving in!

I can recommend the stocks and shares part of this book (and the book generally): https://www.amazon.co.uk/Money-Users-Guide-Laura-Whateley/dp/0008308314/ref=sr_1_1?ie=UTF8&qid=1548331785&sr=8-1&keywords=laura+whateley+money

Its a good place to start to learn the core ideas about stock markets and investing


(Chris) #3

(Matthew Jones) #4

I used to have shares in a few different companies and a ETF but I’m just down to Amazon now. I think I need to start again now it’s the new year but I’ve made a fair amount of money on Amazon.

I wouldn’t recommend Moneybox purely because the fees are high.


(Splodf) #5

Just wanted to dive in and say read Tim Hales Smarter Investing before you do anything.

Then visit Monevator and copy his slow and steady portfolio.

Profit.


(Jordan) #6

Unless you are a day trader - the stocks game is 100% long term. From most of what I have read anything over 6 years (ish) your returns as compared to cash interest is likely to be higher in stocks.

Depending on how his portfolio was established this is completely possible - but the general trend circa 2009 has been positive the FTSE 100 for instance has an overall positive trend.

“nowadays” depending on who you operate with you tend to pay fees on a multitude of things, fund fees, platform fees etc etc. This is usually why you keep the stocks in the same place as you’ll get burned if you continually move money around.

I’m only 22 but in my personal opinion I would do both - it just diversifies things even more and depending on your company - they’ll be paying into it as well. It also attracts tax benefits, which for the most part Stocks and Shares don’t/won’t (depending on the gain you make).

My only other tip would be to expect a fall - its completely naturally for stocks in the volatile market we are in to go down VERY fast and grow slowly. Don’t be afraid!

Also - I would recommend reinvesting your dividends (naturally depending on the nature of your investment) as drip feeding your portfolio will help mitigate losses.


(Tom Halloran) #7

Pension schemes are free of tax (i.e. you pay money in from your salary before tax is taken off) whereas your own personal investing money will be after tax, so generally speaking it definitely makes sense to keep paying into a pension


#8

Never used to be. But since Freetrade has come along I’ve learned more about it. I put a small amount in each month and invest. I intend just to keep them there many years. It is definitely a long term game.

The amount I put in is only what I can afford to lose, and yes I do have a works pension as well. The bulk of my spare money goes in my Marcus account.


(Shreyas Zanpure) #9

We have had a 9 year consecutive bull run since the last crash. For now, I will hold my cash and not invest anywhere, unless it risk free interest (Marcus, Dozens et al.). No stocks and shares. S&P 500 for example has shed a fair bit from it’s October high. China economy is on a slowdown. Property prices have increased a fair bit since 2014 and are now reaching a stagnation point.
Every 10 years-ish we get a recession. Is the next one around the corner then? Nobody knows apart from the people who pull the strings, or have insider knowledge.


( related to Monzo CEO, Investor in Monzo ) #10

Should you get to the position of having a gain in a normal share dealing account , if its big enough that it offsets your sell / buy price + your 2 deal prices + a useful gain, realise it every year against your £11000 + Capital Gains Tax allowance :slight_smile:


(If there's the wrong end of a stick, you'll find me holding it.) #11

I’ll be honest; that might as well have been in Japanese :joy:


(Jordan) #12

I think this means:

If by selling the shares back you make the big money money :money_with_wings::money_with_wings::money_with_wings: and if you sell them you can realise a gain of up to £11,700 tax free this tax year.

However unless you’re dropping bank I would reinvest the small dividends you’ll receive. Then when you do redeem or sell years down the line you’ll likely pay some capital gains tax on them but you’ll still get your tax free allowance (this tax year its £11,700)


(Alex Sherwood) #13

Just to fill in any gaps, here’s a round up of what you should bear in mind, when it comes to capital gains tax on investments -


(Jordan) #14

Thanks - I didn’t want to bog anything down with loads of Tax spiel (and couldn’t find a comprehensive link the your one) so thought I’d just address the core talking point of the poster above!


( related to Monzo CEO, Investor in Monzo ) #15

うまく説明できなかったらごめんなさい

Option 1 - If you have £100,000 that makes 10% a year - woo hoo - sell and buy every year = less tax to pay on final sale after 20 years after taking off your CGT allowance of £11,700 gain every year - with a sell and re buy and realising your gain every tax year - At year 20 you have claimed CGT every year at £11,700 - around £230,000 off your final profit - giving around £68,000 CGT to pay

Option 2 - leave £100,000 investment for 20 years @ 10% / year = £672,000 - CGT tax on £572,000 gain = c. £114, 000 tax less 1 year CGT allowance of £11700 - or whatever it is in 20 years time so £102,000 tax to pay

:slight_smile: pay CGT on the final amount at pension age if its easier, much better for the chancellor


#16

Or you can just use an ISA…


(Jordan) #17

I think if you are investing big chunks of money it probably serves you better putting it into an ISA as the fees levied will likely be less than the tax you would pay.

But for myself as I have a Stocks and Shares LISA which is managed for me (house deposit savings) I can’t now open a Stocks and Shares ISA and pay into both in the same tax year - but I would be unlikely to be making gains of over £11,700 anyway.

But TL;DR - ISAs are you’re best bet if you haven’t opened one or pay into one yet!

EDIT: thanks to @Rat_au_van for clearing up - it appears you can have a S&S LISA and a S&S ISA


(#savetheseabass) #18

Pretty sure you can have both, it’s 1 of each product per financial year


(Jordan) #19

You can have a Cash ISA and a S&S ISA and can open a new ISA every tax year but I think you can only pay into one Cash ISA and one S&S ISA a year - so you cant pay into two S&S ISAs in the same tax year (I think).


Quote from this article reads: “However, they would have to be different types of accounts, meaning for example you can’t invest in two cash ISAs in the same tax year. So you can definitely have more than one ISA per year - they just have to be different types of ISAs.”


(#savetheseabass) #20

A Stocks and shares ISA and a stocks and Shares LISA are 2 different products though. The fact you’re using shares is irrelevant