Should I invest in growth index fund or individual shares?
I've got about £2000 saved up that I'd like to invest for the long term (5+ years), but I'm a bit torn between two options.
I've seen lots of people recommend broad market index funds for beginners which seems safer and easier to manage. But I'm also interested in picking some individual company shares, especially in sectors I understand well like tech and renewable energy.
My main concerns are:
- Is it really worth researching and picking individual shares as a beginner?
- What's the best way to start - all index funds, all individual shares, or a mix of both?
- Should I be using an ISA for this amount?
Thanks in advance! 🙂
1 Answer
I think broad market index funds are solid for everyone - beginners and experienced investors alike should have them as their core holding. For beginners especially, index funds are way less hassle and historically outperform most active stock pickers.
If you're itching to try individual shares, go 80% index fund and 20% individual stocks in sectors you actually understand.
Definitely use a Stocks & Shares ISA for the tax wrapper. Sometimes the boring approach is the winning one!