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Invest with Fidelity or through the funds directly?

by TheDizzle 21 September 2010 |

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I've been looking into investing for quite some time (trying to build up my financial safe net before jumping in). Now I'm at a stage where I can start investing - I just don't know the best way of doing it.

I'm hoping to invest £100 per month into 3 funds initially. I've been very interested in the L&G or HSBC All Share trackers, plus throwing in 2 emerging market funds.

Is doing this through Fidelity the best way to invest? Or should I just go into HSBC or sign up with L&G and make my investment that way?

If you were starting your investment portfolio again, is this how you would start? (keeping in mind this is very basic investing).

Thanks in advance.

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JoeEasedale posted
If I were starting all over again, I would do what I did, only more of it. I would shun any type of fund,bond,tracker or anything else that can be screwed up by so called experts. I would save in a cash isa until I had £5000 and then I would invest in 5 ftse 250 companies in different sectors buying pure equities via a stockbroker.
Then I would save up all over again etc etc.
Posted on 21 September 2010 | Love 0 loves Report
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MikeGG1 posted
First you need a large enough emergency fund in a readily available cash ISA. 6 months net pay for the higher earner of a couple should be enough.
Then the same invested in longer term cash.
After that you can consider equities. At £100 per monthyou aren't saving enough for anything other than a Tracker or ETF. I would go for 1 direct and opt for accumulation units so as not to be tempted to spend the dividends. Choose a FTSE All-Share tracker or ETF. Set it up as an ISA, just in case you have to disinvest in emergency after making a substantial gain.
Once that is over the £5,000 mark, you could try Joe's suggestion of saving up to buy individual equities. Because you still hold the tracker, you could buy them one at a time once a year, having saved in a 12 month fixed rate monthly saver.
Continue until you hold about 12 different companies spread around the markets. Then re-assess your whole portfolio. Start to include some commodities including gold and overseas/emerging markets.
Mike
Posted on 21 September 2010 | Love 0 loves Report
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TheDizzle posted
Thanks Mike and Joe. Just got in, so first I've seen of your responses.
OK, so you're saying I should go straight to HSBC or L&G to make my tracker investment (All-Share) and not do this through Fidelity. Is there any particular reasons for doing so i.e. I save money?
Assuming I then only have the one investment for the time being, wait until that has amassed £5k, then move onto other investments - picking my own equities. I've been ready a few Warren Buffet books, and most of what is in there takes some serious getting use to. Although the basic principles are getting through. So I'll pick them based on the advice I'm receiving there. Although it would be interesting to hear how you guys research your investments...morningstar?
Finally, how much would you suggest would be a good monthly saving to put into this account? Do I only make the one trade to save on trading costs? What software/broker would you suggest to make these trades through?
A few questions I know, just want to understand the whole picture before making big, long-term decisions.
Thanks again.
Posted on 22 September 2010 | Love 0 loves Report
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MikeGG1 posted
I assumed you to be a novice investor so recommended you to build up gradually. Trackers don't require any previous experience as they mimic the whole market. They are also more diversified which is safer. The expense ratios are low as well so you can invest your £100 per month without any extra expense.
Once you have gained more knowledge and experience then you can start to choose your own shares. I would suggest high yielding blue chip companies from different sectors for safety, but one at a time to keep the expense ratio as low as possible. It usually cost the same to trade 1 share as 1000.
With a well spread investment like an All Share Tracker as a base, you can buy one company at a time with reasonable safety. The usual recommendation is for minimum purchases of at least £1,000 so a 12 month fixed rate regular saver would a good investment vehicle to save up for your next company.
The key considerations are: diversification for safety, keeping Expense ratios to a minimum and doing your own research as well as reading the research of others.
Mike
Posted on 22 September 2010 | Love 0 loves Report
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debtwagon posted
They didn't answer your question about Fidelity v direct. I've always thought it's better to go via an investment house (Fidelity in this case) rather than directly because you usually save most, if not all, of the initial charges, so obviously more of your money is working for you straight away. I assume that's because they can "bulk-buy" units from the funds, which is obviously preferable for the likes of L&G rather than doing lots of small deals with individuals. Maybe I'm wrong about that, in which case I'm happy to be corrected.
Posted on 26 September 2010 | Love 0 loves Report
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TheDizzle posted
Thanks debtwagon. Definitely does make sense for it to work in that way.
I emailed Fidelity in regards to charges, but they were unable to answer my question.
I was under the impression, you only able to save the initial charges if you conform to some criteria? I was unsure whether or not I'd be able to save on these charges, because most of the material is "save up to £500 on initial charges with us" type stuff, whilst making it quite unclear once you delve a little deeper.
What I'm hoping to do is invest £1000 straight away, then make it £100-£300 a month into an All-Share tracker, sugar coated in an ISA. Later on down the line, invest in other funds and equities. I liked the look of Fidelity because I could then track all my investments in one place. But based on this level of investment, am I going to be losing money doing this?
Or are there any glaring advantages that make either route an obvious choice?
Posted on 26 September 2010 | Love 0 loves Report

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