Whats a fund supermarket ?

86JR

86JR

86JR

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One of my accounts offers me "access" to "the UK's largest fund supermarket".

Ive had a look through and even though I own shares, I cannot really tell what it is.

It tells me I can buy funds...well surely fund = your money so why would you want to buy your money ?

From what I can see you plough money into investments, these investments are for example into the "UK Growth" initiative (yeah, because anyones going to do that in this climate ?) and then when it actually works, you get your money + interest back.

Am I correct ?
 
A fund supermarket is a company that offers lots of different invesment funds. You buy units in the fund and the fund is used to purchase shares. There are many types of fund with different purposes investing in different things. The advantages of a fund are that you get to invest in a wider portfolio and because the fund has larger capital it can normally get better deals when it comes to commission and the like. However the fund manager will take a fee to manage the fund. They may also take an initial charge.

Investment funds can pay out dividends just like shares, alternatively they reinvest those dividends to buy more units (just like some share dealing accounts). The fund can be set up for capital growth or it can be set up to pay out an income, some also offer guarantees.
 
Thankyou :)

Is there a starting point in money I need to enter it ? I know I can ring whomever at the bank, but Im more interested rather than seriously going to do it.

For example i have £1500 sitting here doing nothing, its in the bank making pretty much no interest.

Say I put that in one of these funds that pays out an income, how much income am I likely to get per month off £1500 ?
 
It's as risky as dealing in shares, each fund spreads the risk by buying lots of different shares in different sectors.
You should look at low risk bonds, if you want to guarantee any sort of return.

the interactive investor site has some good tools for helping to research this stuff, you can also use your stocks and shares isa allowance for this.

You can also get reduced initial costs and reduced annual charges by using someone like h&l or iii.

I was just researching this yesterday! What are the chances eh! I setup a h&l account as it has the lowest costs i could find.

Good luck, but i reckon stocks and shares are wildly overpriced (ftse highest its ever been or close to it) and come the election we could be in for another down turn when tories start slashing.....
 
twoblacklines said:
Thankyou :)

Is there a starting point in money I need to enter it ? I know I can ring whomever at the bank, but Im more interested rather than seriously going to do it.

For example i have £1500 sitting here doing nothing, its in the bank making pretty much no interest.

Say I put that in one of these funds that pays out an income, how much income am I likely to get per month off £1500 ?
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Impossible to say what you are likely to get as it depends entirely on how the fund that you invest in performs.

However I injected my savings of around 7k into the market via funds in September last year and I'm already over a grand up, mainly thanks to the recent come back of world markets.

Sat in a savings account it would have given me nothing like this in terms of a return, and the devaluing pound having an even greater effect on it.

Do your research carefully on funds that you want to invest in, use websites like trustnet and citywire. Some funds are more volatile than others and have huge downwards and upwards swings, where as some funds are more 'defensive' and try to give moderate returns in all market conditions (have a look at absolute return funds).


Good luck.
 
True.

Consequently, it is certainly worth considering non UK funds, if you don't believe there will be a further global downturn.

Take a look at ETFs (Exchange Traded Funds) too, if you find the concept of shorting morally acceptable, then there are ETFs to short (basically bet that something will fall in value) pretty much everything. You can also get ETFs which have multipliers, which make use of leverage, to amplify the rises or falls in an underlying asset, for either your profit or lost.

There are even ETFs which rise and fall in value according to increasing or decreasing volatility in a given underlying asset - so you can profit from when an asset is experiencing rapidingly changing prices.

Assets can also be indexes (which track performance of a group of assets, for example the FTSE), commodities, groups of commodities (like say all relating to energy) and so on ...

Check out www.seekingalpha.com and www.trustnet.com.

Keep in mind, that whatever position you take, someone out there is taking the opposing position - are you sure you are right and they are wrong ?

*** MAKE SURE YOU CAN AFFORD TO LOSE EVERYTHING IF THE WORST WAS TO HAPPEN ***



Showboat said:
It's as risky as dealing in shares, each fund spreads the risk by buying lots of different shares in different sectors.
You should look at low risk bonds, if you want to guarantee any sort of return.

the interactive investor site has some good tools for helping to research this stuff, you can also use your stocks and shares isa allowance for this.

You can also get reduced initial costs and reduced annual charges by using someone like h&l or iii.

I was just researching this yesterday! What are the chances eh! I setup a h&l account as it has the lowest costs i could find.

Good luck, but i reckon stocks and shares are wildly overpriced (ftse highest its ever been or close to it) and come the election we could be in for another down turn when tories start slashing.....
Click to expand...
 
Absolutely and also beyond the Shares ISA allowance, you have a Capital Gains Tax (CGT) allowance. This is an amount of realised profit, on which you pay no CGT. For 2009/2010, this is £10,100 - see here http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4016313

That, together with the Shares ISA allowance, will allow for some quite significant returns, before you'll have to start paying CGT.

Long term, for pension investments, you should also look at pre-income tax pension contributions and SIPPs, but bear in mind, any of that investment is locked up till you reach pensionable age.

RDM said:
Also worth mentioning is that quite a few can be invested in as an ISA to maximise tax benefits.
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Not bothered about pension at all, in fact, i dont belive in them.

My nan worked her whole life for her pension and paid far towards it than she recieves and therefore has to make do without.
 
twoblacklines said:
Not bothered about pension at all, in fact, i dont belive in them.

My nan worked her whole life for her pension and paid far towards it than she recieves and therefore has to make do without.
Click to expand...

So what happens when you stop working?

Saying you don't believe in a pension is exactly the same as saying:

"I know I can save extra into my pension fund because I can claim the income tax back, but I'm not going to do it based on evidence of a single case where an investment went wrong back when pension schemes were badly regulated."

If you're going to save money for retirement (and - yes - you *will* need money after you retire), any money at all, try and do it through a pension scheme.

For £1,500 the most you'll get out of a guaranteed product (of some sort) would be about 3-4% PA, so about £4 a month interest.

If you work for a company that has a sharesave scheme, then consider that too, as you usually get a good discounted price.
 
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