Your investing questions answered

Every now and then I get questions from followers on social media or newsletter subscribers about their savings and investments.

Of course, I’m not qualified to advise anyone on their investments or their money generally, I just give you information. However I can ask qualified advisors and investment managers on your behalf, when I have time!

Here are a few questions I’ve had recently which I have then put to advisors and investment managers.

If you have more questions, feel free to get in touch with my via social media. I’m at @Jasmine on Twitter, @Jasminebirtles on Instagram, @JasminebirtlesFinancialExpert on Facebook and JasmineBirtles on Linkedin. You can also follow my YouTube page at JasminesMoney.

• Best fund manager for my ISAs
• Where can we put our money if we don’t want to lose it?
• When is the best time to buy shares in a particular company?
• Which is the best platform to use to invest in shares?
• Can I pay my mortgage weekly instead of monthly?
• Expert insight on investing

 

investing in isas

Q: I would like some advice finding the best fund manager for ISA’s. I don’t feel experienced enough to manage myself at the moment.

A: This is understandable as all these financial products can look complicated and there’s so much choice it can mess with your head!

However, there are a few things you can do:

index-trackers

Frankly, the easiest way to choose an equities ISA (that’s a stocks and shares ISA) for yourself is to go for a cheap, simple index-tracking fund.

You can choose one that tracks the FTSE100, or the FTSE All-share, or perhaps one that tracks the S&P500 in America or one that tracks the Asian economy. Admittedly, again, there is a huge amount of choice here, but at least you know that your money is spread across many, many companies so it is automatically diversified.

Also, index-tracking funds tend to have low fees and that makes a big difference in the long-term.

Maybe start with a FTSE100 or FTSE All-share tracker as it’s UK shares and there’s some comfort in knowing a bit about that index? Later you could move to more exotic ones!

off-the-shelf

Laith Khalaf from investment house AJ Bell says “If you’re not going to get financial advice best to go onto one of the platforms and find a managed portfolio.”

AJ Bell does these, as does Hargreaves Lansdown, Fidelity and most of the companies that have fund platforms. Take a look there. Khalaf goes on to say “If you’re going for income you need a fund that is specially targeting income. If you’re targeting growth, go for a tracker fund or a managed portfolio. Look at the ‘favourite funds’ list on AJ Bell and you could pick a couple. They think these are good funds in the income space. We can’t guarantee that they will outperform but if you pick a couple you will have a decent selection there. That way you leverage the fund research of people like AJ Bell.”

do a bit of digging yourself

I know you say you don’t know enough, but this might be a great opportunity to get some good investing knowledge and start to invest for yourself. Let’s face it, it’s something you’re going to need to be at least a bit on top of through your life so you might as well start picking up some information now. Laith Khalaf says “If you’re younger you need to get your head around investing anyway because you’re going to be investing for 30-40 years. You can get to a happy place relatively quickly whereby choosing an ISA isn’t too traumatic.”

• For a start, of course, you can do some of my webinars which will get you on the road to more confidence in investing. Take a look at the webinars coming up here.
• Also, do look at the articles in our investing section to get lots of info, plus articles on other sites like The Motley Fool and newspaper money sections like the FT, The Times and The Telegraph. The more information you glean the better you will be at picking investments and the more confidence you will have.

very low risk investing

Q: I am desperately trying to find a ‘safe’ home for our cash ISA’s having lost money on shares by selling at the lowest point last year …that’s why we (my husband and I) are nervous of shares – we can’t afford to lose any more.  Where should we put our money?

A: This is a difficult one to answer because returns on anything safe – like savings accounts, bonds or gilts – are so low that I hesitate even to mention them!

However if you want really, really low risk, those are what you will have to go for.

Savings rates are horribly low – well below inflation so, effectively negative – and Premium Bonds, on average, return pretty much the same as savings accounts, so not really worth it either unless you’re feeling lucky!

Gilts (government bonds) are very safe products but also offer pathetically low returns at the moment so it’s not worth bothering with those unless you mix them in with other, riskier investments. Corporate bonds are also low on the returns and to get any sort of income from them that you could be happy with you would have to go for the much riskier junk bond funds.

Laith Khalaf says “The pricing of inflation=linked bonds is complex. In an inflationary environment they should outperform normal bonds. They do offer some protection but they also suffer from their own cashflows being eroded. Inflation bonds are long-dated so the capital you get back at the end can be discounted back at a higher rate. So they have more protection than a nominal bond but they’re not the super asset you would expect. It makes sense to have bonds index-linked and or short maturity but you don’t tend to get index-linked bonds which are short.”

do a mix

Frankly, to get any sort of decent income or growth in your investments you will have to take some risk. But you could mitigate it by mixing your investments and investing in some riskier equities funds as well as some poor-performing but more stable bond funds.

If you’re investing in equities the risk of loss reduces the longer you hold them. If you can hold your nerve through those times then over ten and twenty years the chance of losing money in the stock market reduces massively compared to one year. Over one year it can be up 40% or down 40% but over 10 years it smooths out. On the whole you’re going to make money if you leave it there for long enough.

There are multi-asset funds that are conservative and invest in equities, bonds, possibly gold, cash and other assets. It’s worth looking for those on the platform that you use to invest. Essentially they manage your portfolio for you by spreading your money across these various assets. They’re slow and steady plodders that will do all right but wouldn’t be very exciting.

 

best time to buy shares

Q: when is the best time to buy shares in a particular company?

A: Haha, if I knew that I would be sunning myself in the Bahamas right now as I would have done so well with my investments!

But seriously, this is the age-old question for investors, together with the ever-popular “when is the best time to sell my shares’.

No one really knows. Investing is an art, not a science, but there are some things you can do.

• Ignore the whole idea of ‘timing the market’ and just invest a certain amount every month into a particular fund or company. It’s called pound cost averaging and it means that you buy when it’s low as well as when it’s high and over time it averages out at a decent price.
• Thoroughly research the company you’re interested in. Work out what you think its share price should be. Wait until the price drops below that level and then buy. Decide what would be a decent price to sell at in order to make a profit and then, when it hits that price, sell…even if it continues to rise.
• Pay someone else to make the decisions for you.

 

best investing platform to use

Q: Which investing platform should I use? I only invest occasionally so I don’t want anything too expensive.

A: Good question, and one we get asked more and more now.

We have looked at some of the top fund platforms in this article reviewing some of the main ones that you can use.

If you’re only investing, or moving your investments around, once a month or less, it’s best to go for a platform with low monthly fees. This will probably mean that their one-off trading fees are higher but, as you’re not trading very often, that won’t matter so much.

Take a look at our article on fund supermarkets to see which of these well-established and reasonably-priced fund platforms would work best for you.

 

paying your mortgage off early

Q: Are mortgage companies accepting mortgage payments on a weekly basis rather than a monthly basis now? How difficult can it be for them to agree to weekly payments? A friend of mine saved about £15,000 this way. 

A: This is a great question as it reminds me of how useful it is to pay off one’s mortgage as quickly as possible. Even in these days of very low interest rates, it’s still worth trying to pay it off fast. When you think about it, savings rates are significantly lower than even mortgage rates so you’re best off paying off the mortgage extra-quick rather than building up savings quite so much.

It’s quite an American and Australian thing to pay your mortgage weekly and yes, it’s a really good way to pay it off fast. Some mortgage companies allow it here but you will have to ask yours if they will allow this. Some allow fortnightly payments too.

I see paying off your mortgage as about the safest investment you can make. Once you’ve paid off your mortgage it’s paid off. Period. It’s also tax-free as HMRC see it as paying off a debt, not making money.

There are lots of other ways you can pay off your mortgage early. You can

• Overpay each month (so long as your mortgage agreement allows you to do so)
• Reduce the term of your repayment – say from 25 years to 15 years
• Switch to an offset mortgage and put all your savings in the account

 

Expert insight on investing!

Jasmine Birtles’ MoneyMagpie webinars are the perfect place to learn about investing from industry experts, and give you the confidence to start investing your cash. You will learn how to get yourself ready for investing, how to save and how to invest like the City guys!

Some of the topics covered include:

• how to weigh up risk and reward when considering income-bearing investments
• dividend-bearing shares and funds
• bonds and gilts
• savings accounts
• peer-to-peer lending platforms

You can bring any questions you like – none are too dumb – and Jasmine will also point you to websites and services that can give you more help and information.

Keep an eye out on the website or social media channels for what’s coming up next.

 

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.