If you missed week 1 you can access it here:
Grow it - Week 2
Day 8 - Investing for Income vs Growth
|Task:||1 - Read our article "What is growth and income investing – and which is best for you?"
2 - Listen to the podcast below on building an income portfolio
3 - Sign-up to my free 80-20 Investor email course "How to become a successful DIY investor" to read about the most successful strategies used by DIY investors
|Key Takeaway:||It's important to define your investment objectives as this will determine how you invest your money. There are two main ways in which you can invest: for growth or for income and you may choose to focus on one style or incorporate both in your investment strategy. The way you choose to invest may also alter throughout your lifetime as your goals and appetite for risk change.|
|Time Required:||35 mins|
|Building an income portfolio to provide a sustainable & growing income
|Additional Reading||How to invest £100,000 for the best return|
Day 9 - Buying assets - funds vs direct holdings
|Task:||1 - Read our article - "How to invest in the stock market - a simple guide" which gives a good overview of investing in the stock market directly and indirectly.
2 - Watch the videos below on "What is a fund" as well as the difference between unit trusts, investment trusts and an ETFs
|Key Takeaway:||Understand the difference between investing in assets directly versus investing via a fund. Also it is important to learn the difference between a unit trust, investment trust and an ETF|
|Time Required:||20 mins|
|Click to watch:||What is a fund?
What is a unit trust, investment trust and an ETF?
|Additional Reading:||How to buy shares for beginners|
Day 10 - Investment platforms explained and how to choose one
|Task:||Read the key takeaway below and look at our round-up of the best platforms in the additional reading section|
|Key Takeaway:||With the rise in DIY (Do-It-Yourself) investing many investors are now looking to maximise the return from their investments by using a fund platform (also known as an investment platform) to manage their investments themselves.
An investment platform (also known as a fund platform or a fund supermarket) is an online shop where you can buy, sell and hold all your investments in a tax-efficient wrapper such as a Stocks and Shares ISA or a SIPP (Self Invested Personal Pension).
Fund platforms will have their own Stocks and Shares ISA (often called an Investment ISA) as well as SIPP product (which is a pension) which we covered on Day 6. Think of these like boxes into which you place your investments (funds). While the way these products work are the same across the various investment platforms there are distinct differences, such as the number of funds available, the ability to trade shares directly (if that is what you want to do) and the charges that are applied.
The best investment platform for one investor is not necessarily the best for another investor.
In addition, there are investment platforms (commonly known as robo-advisers) that will not only allow you to invest but also pick the funds for you and manage your money - which is why they are popular with novice investors. They create model portfolios to suit your risk profile. Instead of spending hours researching and selecting your own funds or shares, you can just choose a suitable 'off the shelf' model portfolio that best suits your needs. We call this the GSI (Get-Somone-In) option.
|Time Required:||10 mins|
|Additional Reading:||The best investment platform|
Day 11 - Active vs Passive Investing (and GSI vs DIY)
|Task:||1 - Watch the video below to learn about the difference between active and passive investing
2 - Read our article "How to choose the best ready-made ISA portfolio" which covers active and passive investments including Multi-Asset Funds, Investment platforms and robo-advisers
|Key Takeaway:||Active funds are usually more expensive because you’re paying a professional to ‘actively’ manage your investments, researching and meeting companies and keeping on top of market-moving events to decide what to buy and sell and when. You’re also paying for the higher transaction costs associated with more frequent trading. But, even though you pay more for potential outperformance, active funds have been criticised as the majority have failed to beat their benchmarks over the long term.
Passive funds such as exchange-traded funds (ETFs) or index trackers buy and hold the same stocks that are in their index, they don’t try to anticipate what the market will do. This means they won’t outperform, but they aren’t trying to. If the market falls, your passive fund will fall, whereas an active manager has a theoretical chance of reacting to reduce losses in falling markets. Despite this, passive funds are very popular as a low-cost, no-frills way to get exposure to major markets. Many investors use a combination of active and passive funds in their portfolios. If you decide to go down the GSI route mentioned yesterday, then ordinarily the robo-adviser will use ETFs to build a portfolio for you in order to keep costs down.
|Time Required:||15 mins|
|Click to play:||What is the difference between active and passive investing?
If you would prefer to read the article - What’s the difference between active and passive investing?
|Additional Reading:||Best and cheapest investment ISAs for beginners|
Day 12 - Ethical investing
|Task:||1 - Read our article - "How can I invest ethically and what are the costs?"
2 - Watch the video below on "What is ethical investing and how does it have an impact on society & the world?"
3 - Listen to the podcast below which contains highlights from our live ethical investing event that covers the what, how and why of ethical investing. A video of the event can be found in the additional resources section below
4 - Read our article "Which are the best ethical stocks and shares ISAs?" if you want to research some of the best managed ethical investing solutions available.
|Key Takeaway:||There is no single definition of what ethical investing is because its meaning can be subjective. In its simplest form it means investing in line with your morals, principles or religious values. This is often achieved by a process known as "negative screening", which means removing objectionable industries and sectors from your investment universe (the things you’d consider adding to your portfolio).|
|Time Required:||25 mins|
|Click to play:||What is ethical investing and how does it have an impact on society & the world?|
|Click to play:||Ethical & Sustainable investing: Can it improve the world and your wealth?|
|Additional Resources:||Ethical & Sustainable Investing - Can it improve the world AND your wealth? - LIVE EVENT (recording)|
Day 13 - How much do I need to start investing
|Task:||1 - Watch the video below "How much do you need to start investing"
2 - Read our article "How to start investing"
3 - If you want to get started with passive mobile based investment products read our article "Best investment apps in the UK - how to invest from your mobile"
|Key Takeaway:||A common misconception is that investing is for people with large sums of money but you can actually start investing either with small regular amounts or a small lump sum.|
|Time Required:||15 mins|
|Click to play:||How much do you need to start investing|
|Additional Reading:||How much money do I need to start investing?|
Day 14 - Rest day
|Task:||Use today to finish off any Week 2 tasks.
I strongly suggest that you listen to our "How to become a millionaire" podcast for inspiration. I explain how anyone can become a millionaire. I crunch the numbers to see, depending on your age, how much you would need to invest each month in order to become a millionaire before explaining how to get a boost along the way. The podcast also pulls together a number of topics we have already covered and will be covering in the coming weeks, including investing for children.
Now that you have completed Week 2 of GROW IT, make sure to continue with Week 3.