Index Tracker Isas

[DoctorJ]

I have about £100 a month that I can put aside each month (on top of other savings) and was wondering whether saving regularly in an Index tracker is a good idea long term.

Does anyone know whether any of these trackers include dividend payments in the return, or does anyone have any particular accounts/indexes that they could recommend?

[christhpc]

Hi. Funds are a good way to get into share investing. I'd just say be psychologically prepared for your investment to tank short term (or even medium term if you're unlucky) and watch out for the charges on funds - 1% annual fees are fairly standard for FTSE 100 / FTSE all share ISA tracker type funds - anything more than that is a rip-off. Fidelity's Moneybuilder UK Index Fund has possibly the lowest charges on the market - 0.1% p/annum. I used to have a couple of grand with them before I took the plunge into direct share investment (plunge being the operative word). I should add that it's a FTSE All Share tracker rather than a FTSE 100 tracker.

http://www.fidelity.co.uk/adviser/products...neybuilder.html

As far as dividends go, funds are usually labeled either 'accumulation' (acc) or 'income' (inc). Accumulation funds automatically reinvest dividends, while income funds pay the divis to you. I reckon that in the accumulation phase of your investing it makes more sense to reinvest the dividends although I guess it depends if you have other plans for the money.

Disclaimer: the above does not represent financial advice, the value of your investments can fall as well as plummet, etc.

[Guest tbatst2000]

Hi. Funds are a good way to get into share investing. I'd just say be psychologically prepared for your investment to tank short term (or even medium term if you're unlucky) and watch out for the charges on funds - 1% annual fees are fairly standard for FTSE 100 / FTSE all share ISA tracker type funds - anything more than that is a rip-off. Fidelity's Moneybuilder UK Index Fund has possibly the lowest charges on the market - 0.1% p/annum. I used to have a couple of grand with them before I took the plunge into direct share investment (plunge being the operative word). I should add that it's a FTSE All Share tracker rather than a FTSE 100 tracker.

http://www.fidelity.co.uk/adviser/products...neybuilder.html

As far as dividends go, funds are usually labeled either 'accumulation' (acc) or 'income' (inc). Accumulation funds automatically reinvest dividends, while income funds pay the divis to you. I reckon that in the accumulation phase of your investing it makes more sense to reinvest the dividends although I guess it depends if you have other plans for the money.

Disclaimer: the above does not represent financial advice, the value of your investments can fall as well as plummet, etc.

Sound advice. A couple of bits to add: all the stats show that, over the very long term (20 years plus), actively managed funds almost always underperform the index due to the higher costs involved and human fallibility. You might be lucky and pick the one actively managed fund that outperforms (due also to luck) but probably you won't. The second point is that the stats also show that you can't time the market, sticking 100 GBP per month into an index fund regardless of conditions will give you just as a good a return, and probably a great deal better, than waiting until you think the market has reached some kind of low. If you only ever read one book on investing, read this one.

The same disclaimer as above applies. If you're risk averse, stick all your money in gilts.