Investor Clinic: Hamish, age 13, has been given £1800 to invest in three trusts


#1

Originally published at: http://whichinvestmenttrust.com/investor-clinic-hamish-age-13-has-been-given-1800-to-invest-in-three-trusts/
Hamish is a smart young man, who is keen to learn more about investing. His grandparents are supporting his efforts by gifting him £1,800 to invest in to three investment trusts. Hamish would like some help in selecting them and is looking for ideas from the community. Name: Hamish Your Portfolio: £1,800 cash…


#2

Hi peeps, I have registered and my handle is @Hamish. Thanks :trophy: :relieved:


#3

Nice to have you on board with us @hamish, you must be the youngest here by a long way!

Can i ask why you have chosen investment trusts over shares? If you want risky high reward stuff there is loads of that on London’s AIM market for smaller companies.


#4

Wow, that was a fast response @jonno I’m a Newcastle fan but happy to get advice from MU guys!

My gramps uses investment trusts, he suggested them, he knows all about them, I just don’t wanna buy the same as him.


#5

Hi @Hamish, I think it is a really cool thing that you are doing. I wish I had the same opportunity when I was your age.

I am not an investment expert like some of the people on here but I’m going to suggest one that was suggested to me as being a higher risk investment but with conservative management that you could tuck away and would likely do very well in the long term.

It is called Scottish Oriental Smaller Companies investment trust and it does just that.

See its 10 year performance graph here…

http://tools.morningstar.co.uk/uk/cefreport/default.aspx?SecurityToken=E0GBR04AN0]2]0]FCGBR$$ALL


#6

@Hamish hello mate, you’re the same age as my son and I can’t interest him in anything to do with investing so well done for getting this far.

The suggestion form @donnat of Scottish Oriental is not bad at all. It’s a great little trust suffering at present because its sector is out of favour but that won’t last forever and in the past this little trust have motored like crazy.

However, what you need to be wary of is investing in something just because it is risky - risk doesn’t necessarily equate to reward.

I’m a bit unclear of if you’re going to need to take the money out when you’re 18 or not because if you do need the money then you’ve only got five years and unfortunately for you you’re starting when stock markets across the world aint cheap. That increases the risk for you that something might happen, a correction, world crisis or whatever o bring those higher prices down.

You said you have other savings your Dad has made in to a Child trust fund. If we’re talking about the same thing, I have these too. Gordon Brown and Tony Blair brought these in to encourage parents/grand parents to put money away for their kids. I’m just wondering where it’s invested, you said Scottish Friendly, it might be in a plan that moves in to cash the nearer it gets to you taking it out. You might wanna find out a bit more about that pal.


#7

Hello Hamish

The three trusts I would choose are Scottish Mortgage (SMT), Finsbury Growth & Income (FGT) and Jupiter European Opportunities (JEO).

If you wanted to consider adding a fourth trust, I would suggest adding F&C Global Smaller Companies (FCS).

There’s a lot of information on these trusts and their managers so do some research.

Once you’ve chosen your trusts and Invested the money, leave it alone and try not to tinker with it. I try to buy and hold forever.

Follow your chosen trusts and their managers. Read as much as you can and watch all the videos you can find.

I wish my grandchildren were as interested in investing as you are. Remember, monitor you investments, build up your knowledge and be patient. I like your attitude and what you’re doing. You have time on your side. Good luck.


#8

It sounds like you are prepared to accept some risk @Hamish, so as well as the great selections from @djauk6 (which I would recommend) why not try some private equity - HG capital (HGT) is well placed for some future success (and still on a decent discount).

GIven the small sums (£600 per trust) - you will need to consider buy and hold I expect as it will cost ~£10 each time you buy or sell.

Good luck.


#9

Wow this is so cool, you guys are like experts.

So I am checking up HG capital from @scjim

Scottish mortgage
Finsbury Growth & income
Jupiter European Opportunities from @djauk6

Scottish Oriental from @harjinder @donnat

Thanks for the suggestions.

@harjinder To be honest all this seems like loads of money to me, I would feel like a millionaire if I had this right now.
But I suppose I might not need this money at all until I’m 19, 20, 21 or more. My Dad has invested money for me as well that I get when I’m 18. It’s already worth a little bit under £5000 so it will hopefully be more then.

I’ve looked at Scottish Oriental already and it looks exciting, well I like the bits where it goes up, ha!

I need to look at the other suggestions to which I will do tomorrow. I might ask more questions about them to.

Thank you guys.


#10

I use Jarvis Investment Management for my ISA and SIPP. They also have a share dealing account and charge £5.95 per deal on all three accounts.

www.x-o.co.uk

I use Halifax for my Share Dealing account (to buy and sell shares outside my ISA and SIPP). They charge £12.50 per trade but have a “Commission Countdown” day once a month, every month, when the charge goes down to £3.95 per deal to buy or sell.

I’m in it for the long term so I only deal on “Commission Countdown” days.

One other thing I make use of with Halifax. I transfer (gift) shares to my children and grandchildren every year. The cost is zero and I’m careful to keep within my CGT allowance when selling or transferring any shares.

I hope this helps. It works well for me


#11

Jarvis SIPP/ISA charge only £5.95 for trades, that’s bloody cheap! I’m shocked by how cheap that is @djauk6

I pay £12:50 for my trades which I thought was cheap until I saw your post.

That sounds perfect for young @hamish


#12

Three is probably too many over which to spread the 1800 quid - probably better to plump for just the one holding. Doing so will help to reduce the negative effect of fixed-fee transaction costs.

There is also the issue of re-investing any dividends in the absence of new contributions being made - one of the disadvantages of investment trusts when compared to open-ended funds. Even a £1 or £2 charge could be a relatively high percentage of any dividends received. Might be worth looking at the savings schemes from Aberdeen and Baillie Gifford to see what they charge these days (not sure, myself). Even better to look at getting a parent to open a Junior ISA if possible.

Regarding the answer Yes I’ll manage them often - don’t! This is one method of depleting value due to transaction costs, both buying and selling. It’s also likely to result in chasing recent winners rather than something that might do well in the future. For a five or six year holding period for the size of the investment then buy adnd hold


#13

Hello @hamish, sorry I’m late to this party! It is great you have made it this far with your decisions. Previous trusts mentioned are all good long-term holds but you could also add Rights & Issues (soon just income shares), Small Companies Dividend (will provide decent income for reinvestment), Henderson Opportunities, Henderson Smaller Cos, TR Property and if you think the Far East and Emerging Markets may move, which they should in the long term, then JPMorgan Emerging Markets.
The problem you will have is that looking back, the performance of these trusts is brilliant, but how will they perform going forwards? We are in a low growth world and it will be the fund manager’s philosophy and stock picking skills that will count. Read some R&As to pick up the style, and the Manager’s Outlook.
P.S. If Lindsell Train ever crashes to par (currently about 35% premium) then buy that too!!