I'm pleased to introduce this guest post from newbie investor Trisha. She and her husband have been working through the steep learning curve, having done the Rebel Finance School free course and are now putting things into action.
Trisha initially posted a shorter version of this on Facebook, and I suggested that she expand it into a blog post. The perspective of a newbie doing this for the first time is really valuable - us old hands will struggle to see things that way, so hearing her experience - and series of "lightbulb" moments - is incredibly useful.
I hope that it helps other newbies and gives them some lightbulbs too.
From Polishing Screens to Pressing Buttons: My First
Steps Into Investing
I’m new on this journey. If you’d asked me three months ago what I knew about stocks and shares, I’d probably have mentioned men in dark suits shouting “buy, buy, sell, sell” very loudly.
I once worked at the London Stock Exchange. I had a temporary cleaning job for a few days, and as I polished my way through the offices, often with computers left on, I couldn’t help wondering if I had the power to crash the market with a misplaced spray of polish. But that was as close as I got to stocks and shares.
Then, a few months ago, my sister told me about Rebel Finance, so I signed up for the course, and that was that.
I’m still right at the beginning of my journey, but I wanted to share some of my early lightbulb moments, in case they help someone else.
Firstly, it’s scary, and that’s ok. I’ve realised I’m not actually scared of the risk itself, but of pressing the wrong button or answering a question wrong, and as a punishment my money would somehow be catapulted to the moon.
But I pushed through that, and today I opened a stocks and shares SIPP.
It’s baby steps. I’ve only put in £5,000 so far, but it feels like I’ve climbed the first mountain.
Andy Farrell said to me, “Only take the amount of risk you’re comfortable with, at each step.” I think that’s the best advice I’ve had.
So here are my lightbulb moments from the last few days:
Lightbulb Moment 1: Vanguard isn’t right for everyone
Realising Vanguard didn’t meet my needs, I turned to another platform I’d heard mentioned in the Rebel Finance Facebook Group – Interactive Investor.
Lightbulb Moment 2: Interactive Investor actually pick up the phone
Interactive Investor have a phone number on their website that is reasonably easy to find, and they answered quickly both times I called. They even walked me through how to find the form I needed to set up employer contributions. In this day and age, that is impressive.
https://www.ii.co.uk/ii-accounts/sipp/useful-forms
Lightbulb Moment 3: I finally understood the difference between platforms and funds
This was huge. It sounds silly now I understand it, but when I realised I could invest in the Vanguard FTSE All Cap Accumulation fund from another platform, it was like a confetti gun went off in my head.
(The Rebel Finance course covered this, but it was only seeing it in real life that made it click for me.)
Lightbulb Moment 4: Getting a referral link saves money
Discovering that using a referral link from someone who has an Interactive Investor account means I get no fees for a year, and they get £200, was a fantastic bonus.
Lightbulb Moment 5: You have to open the account before choosing a fund.
Another big learning curve. I now understand that with Interactive Investor you have to open your account first, before being allowed to choose where you put your money.
This was scary as I was adding money without being able to say where it went, to a website I had never used before. Would it end up on the moon? This almost made me run away, but instead I reduced the amount I was adding to £500 to calm my nerves and pressed forward.
Account opened – £500 staring at me. Then what to do? This was where I felt most out of my depth.
Lightbulb Moment 6: Money sits in cash until you invest it
It was only after going through all of this that I realised that the money you add to the account sits there as cash until you choose to invest it. If you don’t touch it, it will stay there doing nothing. I have just been told that someone left their money in cash for months before they realised this. I can see how easily that could happen.
Lightbulb Moment 7: You can pay to invest now or wait and do it for free
So, there I am with £500 in cash, and I’m confronted with a new problem, how to invest.
I now understand there are two ways to do this:
· You can either pay £3.99 to invest immediately and choose the fund then, or
· Use the free regular investing option in the profile tab.
I went for the free option. They give you a date each month when any money in cash will be invested. All money you add to the account stays as cash until that date unless you pay to invest it immediately. When you set up the free regular investing option, you choose which fund you want to go with at the same time.
You can also add more money here too, either as a one-off amount or as a regular contribution. This money will just sit there until your allocated date each month when the free invest sweeps to see what is there and invest it in your chosen fund. It will also sweep up any cash from dividends or tax relief which turns up.
And that is it – for now.
I played around with the page until I felt more confident. And when I finally understood how it works, I added another £4,500. That was enough for today.
I now have a month to recover before I begin my next lot of baby steps.
For some of you, everything I’ve written will be second nature. For me and my husband, it was a scary morning. But I’m so proud we’ve done it. We have set up two SIPPs and, rather than cleaning the Stock Exchange, I’ve finally dipped my toe into investing. But old habits die hard – I think I’d better polish my keyboard.
Or you may prefer my FIRE series for beginners.