UK total beginner book

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BritAbroad
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Joined: Fri Jul 11, 2014 12:52 am

UK total beginner book

Post by BritAbroad » Sat Nov 17, 2018 9:43 am

I'd like to buy a family member a complete beginner's guide to investing. My brother is based in the UK and has little financial literacy. I'd like to get him a book that explains the basics with a UK 'hat on'... i.e. ideally recommendations for ISAs, UK accessible fund platforms/ETFs etc. The Boglehead community/reading list is often very US focused and I think he may be frustrated if he feels presented options are not relevant (e.g. ROTHs... not that I know what that is, just that I see it mentioned around here a lot!).

Can any UK Bogleheads share some recommendations?

I am currently looking at the following two, but don't think they exactly hit the brief:
  • The Little Book of Common Sense Investing
  • Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School

magneto
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Location: On Chesil Beach

Re: UK total beginner book

Post by magneto » Sat Nov 17, 2018 10:11 am

Most good investment books are of US origin.
One UK book that might assist is :-
'Smarter Investing' by Tim Hale.
The title is misleading which might cause concern to a passive investor; but in fact contents are essentially passive.
'There is a tide in the affairs of men ...', Brutus (Market Timer)

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Pizza_and_Beer
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Location: Brooklyn, NY

Re: UK total beginner book

Post by Pizza_and_Beer » Sat Nov 17, 2018 10:25 am

BritAbroad wrote:
Sat Nov 17, 2018 9:43 am
I'd like to buy a family member a complete beginner's guide to investing. My brother is based in the UK and has little financial literacy. I'd like to get him a book that explains the basics with a UK 'hat on'... i.e. ideally recommendations for ISAs, UK accessible fund platforms/ETFs etc. The Boglehead community/reading list is often very US focused and I think he may be frustrated if he feels presented options are not relevant (e.g. ROTHs... not that I know what that is, just that I see it mentioned around here a lot!).

Can any UK Bogleheads share some recommendations?

I am currently looking at the following two, but don't think they exactly hit the brief:
  • The Little Book of Common Sense Investing
  • Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School
I'm looking for the same as well. Especially written from a Bogleheads philosophical viewpoint. I got family in the UK I would like to help steer in the right direction.

ICH
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Joined: Wed Jun 13, 2018 3:08 am

Re: UK total beginner book

Post by ICH » Sat Nov 17, 2018 10:28 am

I am not from the UK, but I have found these two relevant to UK and international people:

https://www.amazon.co.uk/Smarter-Invest ... b_title_bk

https://www.amazon.co.uk/Investing-Demy ... inw_strp_1

LongTermInvestor88
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Joined: Mon Dec 25, 2017 9:18 am

Re: UK total beginner book

Post by LongTermInvestor88 » Sat Nov 17, 2018 12:13 pm

I second lars Kroijers Investing Demistified. Makes strong case for Index funds and why they will nearly always beat active. Keeps things really simple and explains why combination of gilts and global index is great choice. Other than that tell him to open up vanguard ISA choose these two funds and invest away

Pinkllama
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Joined: Sat Jan 06, 2018 10:42 pm

Re: UK total beginner book

Post by Pinkllama » Sat Nov 17, 2018 7:33 pm

+1 for Lars Kroijers - Investing Demistified.
He’s got some excellent short videos on YouTube.
He basically explains the logic behind global passive investing via a 2 fund portfolio.

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fortyofforty
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Re: UK total beginner book

Post by fortyofforty » Sat Nov 17, 2018 8:10 pm

Any of Jack Bogle's early works would be a good introduction to the principles of investing. Little Book of Common Sense Investing is an awesome starting point, as it is, indeed, little. It won't overwhelm a beginner, and is short enough to encourage reading it from cover to cover. You can even find it gently used, at a reduced price, if you look for it.

If you know his particular financial position (high debt, high earner, or other specific circumstances) you might have to tailor the selection to what he needs.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

BritAbroad
Posts: 45
Joined: Fri Jul 11, 2014 12:52 am

Re: UK total beginner book

Post by BritAbroad » Sun Nov 18, 2018 8:11 pm

Thanks all.

It's an uphill struggle... I thought I'd start him with some of Lars' youtube videos (for a quick and easy introduction), but got the response 'thanks, but I don't even know what an equity portfolio is' :oops:

Valuethinker
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Re: UK total beginner book

Post by Valuethinker » Mon Nov 19, 2018 3:45 am

BritAbroad wrote:
Sun Nov 18, 2018 8:11 pm
Thanks all.

It's an uphill struggle... I thought I'd start him with some of Lars' youtube videos (for a quick and easy introduction), but got the response 'thanks, but I don't even know what an equity portfolio is' :oops:
Equities are shares, or stocks as Americans call them (hence "stock market").

Investing in Shares for Dummies by David Stevenson

Investing for Dummies UK Tony Levene

Shares Made SImple by Rodney Hobson

The problem with these books is that they will make it look easy to pick good shares that outperform the market. Actually it is incredibly difficult - for every Warren Buffett there are (literally) 1 million people who have tried and failed - he is unique.

The rational person realizes they can't beat the odds and seeks to minimize fund management Expense Ratios, and also taxation.

For a UK investor that means, basically:

- open up an ISA at Vanguard UK

- buy the global equity index fund (Accumulating or Accumulation fund shares work inside an ISA or a pension, they should not be used in taxable accounts where one uses Distributing shares. This should be 30%-70% of your portfolio (depending on your age and risk tolerance)

- the balance should be a global bond fund (sterling hedged)

If you keep in mind that equities (shares) outperform bonds in the long run. BUT an equity bear (falling) market can lose you half your money in 12 months. -50% is a reasonable bet ( it's -20% before a "correction" becomes a defined bear market, average bear market is probably around -35-40% but there's at least one -70%+, in the UK, in the 1970s; on October 19, 1987 the share market lost 25% in one day).

So one holds bonds for stability and to keep your nerve. The very common mistake in a bear market is to watch it go down (they kept going down, with periodic rallies, from May 2000 to March 2003, for example) and eventually panic and sell out. Thus missing the upturn. The good performance of stock markets comes in a very few days. The stats are something like miss the best 100 days of the last 30 years and lose 4% p.a. in returns. You really cannot afford to be out of equities (up to your risk tolerance).

So one holds bonds. They are much more stable, a good bet is you probably won't lose more than 10% of your value in bonds.

That year when your 60/ 40 portfolio goes down to 30/ 36, you've lost 1/3rd of your wealth. If you were 100% equities you just lost half of it.

There's a lot of merit in just being 60% global equity index fund, 40% global bond fund (investment grade, sterling hedged) and rebalancing back once a year. If you are under 40 there's a case for being less in bonds (age in bonds is a common formula used).

In order of priority for a UK investor in the accumulation (investing) phase of their life:

- pay down high interest consumer debt (basically except mortgage and cheap car loans). Student loans are tricky - moneysavingexpert has some advice I believe

- get up to the employer match in the pension if there is one, in addition to the 3% your employer has to contribute (if you are working in the state sector, join the defined benefit scheme and just forget about it)

- invest in ISAs

- invest any spare cash above that in pension and in taxable accounts - beware the £1,030,000 lifetime limit

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