Since I started this column, I’ve had a number of letters saying more or less the same thing: It’s all very well chatting about investing, but how do we get started?
So, if you’re an experienced investor, forgive me, because, today, this column is aimed at those who want to dip a toe in the stock market for the very first time.
You basically have two options – and I’ll talk you through both.
Don’t panic: Getting started as a DIY investor can be overwhelming so this column is aimed at those who want to dip a toe in the stock market for the very first time
Find a financial adviser to do it for you
The first is to seek out an independent financial adviser who, for a fee, will do all the work.
You should ask for an initial, basic, free consultation, but then expect to pay between £75 and £350 per hour, depending on the qualifications of the adviser.
Alternatively, they may work for a fixed fee, which might be around £450 to set up an investment Isa or £2,500 for retirement advice on your pension pot.
The difficulty is where to find the best advisers. Word of mouth can be useful. You can also check their qualifications at the Financial Conduct Authority’s website, but a lot will come down to whether you feel comfortable when you meet them.
Be a DIY investor, like me
But this column is primarily concerned with DIY investors like me.
For us, it is all about finding good sources of information and choosing how to invest.
The starting point is to choose a fund supermarket, also known as a DIY investing platform.
This is basically a middle-man operation that purchases and holds investment funds and shares you have chosen on your behalf.
They operate on the internet, but some will work by phone, too, usually for a higher charge.
Which? subscribers named their favourite three as Hargreaves Lansdown, The Share Centre and AJ Bell Youinvest. Others gathering good scores include Alliance Trust, Charles Stanley Direct and Fidelity Personal Investing.
For DIY investors it is all about finding good sources of information and choosing how to invest
For the record, I use Hargreaves Lansdown, as I like its research, the efficiency of its website and phone app and its customer service. However, its charges are higher than some competitors — an issue to which I plan to return in a few weeks.
How to choose the best DIY platform
DIY investing platforms act as a place to buy, sell and hold all your investments and a tax-efficient wrapper around them if you choose to invest in an Isa.
When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.
For more information, read our guide on on how to choose the best (and cheapest) DIY investing Isa.
You’ll have to pay to use the supermarket. Hargreaves charges 0.45 per cent of the money you have invested on the first £250,000, then 0.25 per cent on the next chunk up to £1 million, and nothing above this.
There are separate charges for trading shares, but not for investment funds.
The Share Centre has fixed fees of £57.60 for an investment Isa and £172.80 for a self-invested pension plan. There are also trading charges of 1 per cent, with a minimum of £7.50 per trade on shares and investment funds.
AJ Bell Youinvest charges 0.25 per cent for holding investments up to £250,000 plus £4.95 to £9.95 for trading shares and £1.50 for trading investment funds.
It’s really important to consider both the costs of having your funds held and the level of customer service.
Choosing your investments
Next, you will want to choose a few investments. You may decide to dip your toe in the water with regular saving or you may have a lump sum.
Either way, most of these websites have ideas and some have excellent research. You can find further information on funds at websites such as Morningstar and Trustnet.
You should decide why you are investing. For example, do you want long-term growth or immediate income?
Consider how much risk you can afford or are willing to take.
Alternative: Seek out an independent financial adviser who, for a fee, will do all the work but then expect to pay between £75 and £350 per hour
Some of these websites have very useful guides aimed at first-timers, taking you right down to sample portfolios.
Hargreaves Lansdown has its Wealth 150 featuring — err — 87 of its favourite funds. Meanwhile, Fidelity has its Select 50, which features rather too many of its own funds for my taste.
Some, including AJ Bell Youinvest and Hargreaves Lansdown, offer their own investment funds made up of their choice of funds from other managers. You’ll pay for using these, but they are making the decisions for you.
Investment funds all charge an annual fee, which you will pay on top of the fee to your supermarket. But some supermarkets negotiate lower fees on particular funds.
The fee will usually be between 0.5 per cent and 1 per cent of the amount you hold, if you opt for a fund that is actively run by a manager.
But with discounts offered in some cases, you could pay a lot less, particularly if you opt for trackers that simply follow a stock market index.
For the past 30 years, I’ve found having most of my money in the stock market to be far more rewarding than leaving it in a savings account.
Income on the FTSE 100 biggest companies is currently around 4 per cent, outstripping the 2.4 per cent inflation rate and the 2.3 per cent paid on three-year fixed-rate savings bonds.
But if this is your first time investing, be certain that you are prepared to ride out any shocks and falls because, with the stock market, there can never be certainty.