plonkee money an english-er's thoughts on personal finance

March 25, 2008

basic guide to Stocks and Shares ISA: conclusions

Filed under: investment — Tags: , — plonkee @ 12:38 pm

the guide to Stocks and Shares ISAsFor a while now, I’ve had a trickle of requests for a basic guide to investing in UK Stocks and Shares ISAs. As I want to go through things carefully, I’ve split all the details into several different parts, starting with thinking about yourself and what you want with the money, and moving into what there is available, and the nuts and bolts of products and investments.

Previously on the basic guide to Stocks and Shares ISAs:

what have we done?

If you’ve been following the series, you should be able to work out how best to invest your Stocks and Shares ISA allowances for 2007-08 and 2008-09.

We’ve covered your goals and timescales for your money, and the amount of money you have available. We’ve then talked about risk and the things we need to consider when relating risk to investments – especially asset allocation. We’ve also covered funds and providers that you might be interested in using to create your asset allocation.

If you use the ideas and tools in the guide, you will be able to make a reasonable attempt at defining your investment plan for your stocks and shares ISA, and a reasonable attempt is probably good enough for now. You should know what you want to invest in, and a pretty inexpensive way of doing so.

what next?

Open a Stocks and Shares ISA account with your chosen provider. If you know what you want to invest in (and I’d suggest that you don’t open one until you do) then it’s no more difficult than opening a bank account. Just remember to have the names of the funds and the percentages you want allocated to each written down correctly.

You can usually set up a direct debit or standing order if you want to invest monthly, or you can generally do a bank transfer or send a cheque if you’ve got a lump sum to invest.

Investing doesn’t have to be hard, and to a certain extent you can “set and forget” but just as regular shopping around for the best savings accounts will earn you more interest, keeping an eye on your investments intermittently will allow you to manage them better.

The most important thing to keep your eye on is your asset allocation. Different funds will grow at different rates so your investments will veer away from the percentages that you initially set up. This is ok, all you need to do is rebalance selling what you have to much of, and buying what you don’t have enough of. Rebalancing is one of the easiest ways to make yourself buy low and sell high – the surefire way to investing success. 

The final thing is don’t forget that if your investment goal has a specific timeframe associated with it (like school or university fees) then you probably want to start “lifestyling” it, and changing the asset allocation about 5 years out.

If you’ve got any more questions about Stocks and Shares ISAs, please let me know in the comments below.

PS The tax year 2007-08 ends on 5th April 2008, so if you haven’t used your Stocks and Shares ISA allowance yet, you need to get cracking on with it.

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