Many banks offer stocks and shares dealing accounts, however this will generally limit you to UK listed equities. If you haven’t done so already, Stocks and Shares ISAs (individual savings accounts) will be your best bet, they offer tax free investments up to the annual ISA allowance of currently £11,520. So you will be well within this limit with the £1,000 investment. A number of providers offer competitive ISAs such as Hargreaves Lansdown and Standard Life. From here you can invest in a wide range of investment funds at fairly competitive rates.
Next stop is choosing the investment. Most ISAs limit you to investing £500 in each fund, or £50 monthly. Generally a portfolio should have anywhere between 10-20 funds to ensure diversification across asset classes and markets. However, you are fairly limited here with only being able to choose 2 funds.
A number of asset managers have managed funds, which incorporates a range of asset classes. By investing in a managed fund you have access to a diverse and structured fund to ensure management of your money is maintained even when you are not paying attention.
These should provide you with a good starting point for your money.
These should provide you with a good starting point for your money.
The next stop is working out how much risk you want to take, let’s for the moment classify this into three categories, Cautious, Balanced and Aggressive. A Cautious investor would have anywhere between 20 and 60% in equities, Balanced 40-80% and Aggressive 80-100%.
Jupiter Merlin Portfolio funds are a great place to start, winning numerous awards over the past 5 years, the team, Peter Lowry, Algy Smith-Maxwell and John Chatfeild-Roberts have one fund to fit each of the three risk categories above.
Jupiter Merlin Income (Cautious) - The fund aims to achieve a high and rising income over the long term with the possibility of capital growth. Like all three of funds, they invest in a range of collective investments from OEICs, Unit Trusts to ETFs. Currently the fund is positioned to the heaviest equity weighting permitted within this sector (60%) as they believe we are at the start of an equity bull market. Past performance is not one to doubt their abilities on, returning 43% over 5 years. Top fund! Literally.
Jupiter Merlin Balanced (Balanced) - The fund aims to achieve capital growth with income over the long term investing in a range of collective investments. They have shown it is possible to provide real returns over the past five years with this slightly more dynamic fund. Past performance again has been top decile returning 40% over the past five years.
Jupiter Merlin Growth (Aggressive) - This fund is the most aggressive of the three, and it invests almost 100% in equity funds. With a spread across global markets this fund has performed well over the past five years again top decile returning 41.5%.
The continued top performance over the long term from the Jupiter Merlin team has earned them the top name in the managed fund spot and seen their funds reach over £9bn in size.
Whilst these funds have a higher total expense (underlying fund costs) than others as it invests in collective investments rather than direct equities, it does not detract from the excellent performance demonstrated.
Whilst you may want to select a managed fund that is able to diversify across asset classes, some Aggressive investors (especially young ones) would prefer buying 100% equity funds in specific markets. For the longer term, emerging markets should offer the greatest prospects as these countries have the highest growth rates. A number of funds therefore may be of interest; Invesco Perpetual Latin America, Pictet Russia and First State Global Emerging Market Leaders all target these areas.
You alternatively could pick one of the investment themes discussed or check out our top 10 funds of the month for more ideas.
You alternatively could pick one of the investment themes discussed or check out our top 10 funds of the month for more ideas.
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