If you are in the UK you can open an ISA and you can put a max of Ā£20k per year into ISAs (there are different types of ISA - LISA, Shares, Cash) and the ISA is free of capital gains tax.
Invest is a straight investment account. You will pay capital gains tax of profits (if they are over the cgt allowance in any year). Advantages of Invest is you can hold multiple currencies (saving fx fees) and you get interest from shares being lent out.
AVOID cfd if youāre a newbie. High risk. It is leveraged - so you only have to put 20% of the cost up but you can easily lose everything. Also T212 charges a ridiculous interest rate on your positions (0.1% per day).
You likely want the Isa option. That way, your dividends are somewhat protected from the taxman. You can look up payment dates online and youāll get notifications when they hit in your account.
One word of warning though: dividend investing can be a newbie trap. A lot of people end up chasing yield at the cost of capital when total return is all that matters.
You may be better off lumping everything into a cheap tracker like VWRP or VUAG.
lse.co.uk have a diary that shows corporate events including dates when dividends go ExD and are payable. You can select week to see all of the events next week which is handy. There are websites/apps such as dividendmax.
Iām not a massive fan of dividend stocks. Some people just search for companies that pay dividends or even pay the highest dividends. However, what is important (imo) is the actual overall return so Iād question why invest in a company that pays a high dividend but the share price is static or going down. I much prefer growth stocks. Also the share price often drops by more than the dividend amount on the ExD date meaning you could have sold the day before, not taken the dividend and bought back in at a price lower by more than the dividend amount.
Basically from the practice platform you should be able to click āSwitch to real moneyā. Be aware and check, though, sometimes it will switch from Inv to CFD, or VV at the same time.
Confusing bug, yes.
As you probably know there are rules about ISA accounts - if you already have filled your 20k allowance fror this financial year you canāt just open a new one on T212.
Thanks for all the replies guys, if iām being honest some of it went over my head, only because you guys are way better educated
Iāve put Ā£10 into ātrading 212 investā but iām not sure if itās better than ātrading 212 cfdā , i think Ā£10 is about right for me at the moment until i get my knowledge up
WHat about dividend stock account where the broker chooses the stocks for me, is this called an etf?
It seems to make more sense to have them choose the stocks rather than me choosing for myself?
You can buy a passive ETF like VHYL which gives you exposure to dividend-paying stocks across the world. That way, you donāt have to worry about individual stocks. It makes sense if you look at it from an opportunity cost point of view.
As another option, you could buy an active trust like JGGI which pays 4% and offers more scope for capital growth.
Dividend is simply when a company or product pays money out to the shareholders. ie BP will pay a dividend to its shareholders from its profits. Thus if you own the shares you can sell them when you like at whatever the price is at the time but while you own the shares the company will periodically pay out a dividend. Its a bit like having interest on a bank account. Some people get blinded by the idea of getting dividends but the reality is that the share price often goes down by the value of the dividend so its arguably better just to look at companies that you think will grow and if they pay a dividend thatās a bonus (and can be a sign that they are a stable profitable company).
A broker is someone who gives advice or provides investment services. You arenāt talking about a broker in your question/post you are referring to a fund manager. There are many types of fund/eft. They charge fees (embedded within the return/profit you get). Some of the lowest cost (in terms of fees) are simply tracker funds - eg a fund that simply tracks the FTSE or some market index. The products you are referring to have a management team that actively invests. There are a wide variety of products in this area of different types - funds, trusts, eftā¦ They donāt always have great performance compared to the overall market but at the moment some are trading at a discount so are arguably a good buy.
I promise this is the last question guys, it must be draining listening to someone so Clueless, it it was crypto Iād be getting annoyed, in gonna be patient and not rush inā¦
What about vanguard? They seem to offer dividend stocks and they choose the portfolio etc? Are they the right fit for me?
I kind of want my portfolio set up and me personally stick a few 100 in each week and also reinvest the dividends etc until I hit a reasonable amount
I do genuinely appreciate all the answers and I promise this is the last one and Iām aware that Iāve got a lot of learning to do
If you want to understand grab yourself a copy of Tim Hales Smarter Investing - it goes over exactly what you need to know to invest in the way you describe above, but will help you develop the conviction to stick at it when the going gets tougher.
If you never read another thing again in investing itās the one to read.
Personally I donāt care how many questions you ask, many others will probably have the same questions. People can easily ignore the questions or posts if they arenāt interested. Thus Iām happy to answer as many questions as youāve got if I know the answers or can contribute an opinion.
As Scrooge suggests it may be a good idea to read a book. Generally Iād avoid many youtube experts/videos unless they are from reputable sources (but even then they may be aimed at getting you trading where investing in a fund may be the best option for you). Investopedia is also a good source of reference info but sometimes you need to know what you are looking for but if you come across terminology you donāt understand its a great source of info.
I donāt really invest in managed eft or funds except where I think they have specific value. Recently I invested in SMT because theyād had a long trend of being out-of-favour and were heavily discounted and Iāve made a good profit but it was a short term investment/trade rather than a long term investment. Vanguard are one of the big companies but I have no personal knowledge of whether they are good. If you look at them, look at the historical performance of the fund but to be honest thatās also a bit tough at present because the last few years have been unusual because of covid. Morningstar rate funds so you could also look there as a source of independent info. The problem with funds is their performance is often mediocre but they may give you a way to accumulate some capital in a fairly low risk way. Donāt fixate on dividends.
T212 does give you the ability to mix so you could do something like putting 60% into one or two managed funds (ie 2 x 30% so you spread the risk and coverage over two managed funds) and 40% spread across a few good companies. At the moment Iām bullish on lots of tech companies so consider companies like Microsoft, AMD, Amazon as good choices. There are lots of other sectors but some are cyclic - ie house builders obviously go through cycles depending on the state of the economy and mining companies can also go through cycles. Thus its hard to make general recommendations given that some sectors are having either tough or mixed times at the moment (ie retail, mining, banks, house buildingā¦). However, you could find a small number of good companies to give a balanced portfolio.
You might also consider getting a trial subscription to something like Investors Chronicle. In my experience, Investors Chronicle have a pretty mixed success rate with some of their recommendations (same is true if most/all pro tip agencies) but you can get a very cheap trial subscription and cancel before the end of the trial and it will give you something interesting to read each week.
I donāt use T212 pies (others can help you with that) but whether in a pie or done manually you could easily split your money between a small number of regular investments. Start with 1 or 2 managed funds and add in 1 or 2 good companies (ie something like Microsoft) and just put Ā£5/month into the individual companies you select and the rest put in the managed funds. You can then see how the different options do over 6 months.
If thereās a good fund manager , I havenāt come across him yet , except for a guy I know.
Ā£10 is absolutely fine. [edit: maybe not quite]
You can have great fun in the demo accounts losing and winning hundreds, which shows at least how things work.
The CFD platform is ok for stabbing the market for a quick return. Itāll usually stab you, and cut your arm off.
Itās INV you want. Most divi stocksā fundsā returns Iāve seen are pretty dire, Only a few seem to do well.
Instead you could try the stock which is managed by Warren Buffett, big famous hedge fund guy, who DOES pick sensible stocks to invest in. He changes his portfolio from time to time:
BRKA or BRKB. (either).
Past performance yadayada, but there arenāt many which perform āpretty wellā, āmost of the timeā.
(NB, heās just had his 94th birthday!)
If you buy UK stocks ie not ETFs and some others, be aware thereās an immediate 0.5% tax on them which is charged separately.
When you buy/sell US stocks, there will be a 0.15% exchange cost - quite small. You can hold a dolllar account in T212 which is better if you want to dance between US stocks.
Ask as much as you like. Itās always interesting for us to see how others answer anyway.
Everybodyās point of view is different.
Oh , ,Ā£10 might not be fine - the minimum amount you can buy is stated in the instrumentās panel on the right. Itāll be something like 0.1 shares, which may be more than a tenner. For Berkshire Hathaway itās Ā£36.
For me ādiversificationā means, āput some money in places you know arenāt doing as wellā.
Well, you can if you like.
I think these truisms of old were borne in the days when you had to go to the hassle of getting paper share certificates.
You wouldnāt put money on a slow horse because it might speed up later, would you?
No harm if a few are all doing equally well, sure. It depends how reactive you expect to be to what happens.
If you ignore all other advice given here, then follow this because WakeMeUp is absolutely right. Even after about 2 years of investing, I still wouldnāt know enough to mess around with CFDs.
I wouldnāt be too quick to dismiss YouTube in the case of the OP though, although I get the point about reputable sources. Personally, Iāve learned all I know about investing from YouTube. To get you started, The Swedish Investor is a YouTuber I would recommend. He summarises all the main books about investing with 5 takeaways for each book and gives excellent explanations so it could be a short-cut to understanding a wide variety of investing concepts. Also, donāt underestimate the videos provided by T212, many of them are very good!
Vanguard Iāve found good in the past on several aspects.
But be careful that you arenāt prioritising ease of use over effectiveness.
Iāve had some pension in an all-cap global fund. Return since January - absolutely bugger all. And this is in a period when, if youād looked into things a bit more (as I should have done) one should have done so much better.
Donāt let too much āConventional wisdomā suck you in. Weāre in the world of AI now, not old men in pin striped suits telling you itās all too difficult for you.
Vanguard all cap fund: 5% ish?
Nasdaq top 100 companies: 35% ish.
You get the point. Yes you might need to change every once in a while - youād have been better off in a building society before last January even though the interest rates then were minimal. For regular limited amounts, you now can eg get 7% at First Direct.
To be a bit pointed about it, it depends how much one is prepared to let oneās laziness cost one!
Iāve started to read āSmarter Investingā by Tim Hale, iām only a few chapters in, one lightbulb moment for is where talks glowingly about āthe effect of interest-on-interestā
I nearly just thought āfk itā yesterday and signed up to vanguards āvhylā or āvwrlā , if I did would i be best to use vanguards website or do it via the trading212 app?
Also at the checkout thereās the option for āpersonal pensionā āstocks and shares isaā āgeneral accountā or ājunior isaā
Iām guessing for me it would be isa or general shares? Am i correct in saying thereās zero tax on the isa as long as I donāt deposit more than 20k per year? Iām a touch ocd and I reckon iād put around 10k a year in and iād enjoy watching it grow
Then again thereās another part of me thatās enjoying playing around on trading212 and choosing my own stocks, I think itāll be another week or so before I bite the bullet, again though, many thanks for all your help
edit - the s and p 500 was another one i was tempted by
T212 will be a shade cheaper as you wonāt have to pay Vanguardās 0.15% account fee on top.
For tax purposes, you probably want an Isa. Yes, thereās zero tax apart from the odd exception which I wonāt explain as I donāt want to confuse things.
You may also want to open a VG Sipp depending on how youāre fixed for pensions. (More details on how these work can be found here.)
In terms of your last paragraph ā there is nothing to stop you doing both, eg have 90% in VWRL and 10% in individual stocks. As you learn more, you can up the percentage. I do something a long those lines ā itās called core-satellite investing.
, except for a guy I know.
