Are SPDR funds good for beginners?
No, SPDR ETFs are not a good fit for a novice investor with a low level of financial literacy.  In fact, there is no investment that is safe for an absolute beginner, not even a savings account.  (An absolute beginner could easily overdraw his savings account, leading to fees and collections.) I would say that an investment becomes a good fit for an investor as soon as said investor understands how the investment works.  A savings account at a bank or credit union is fairly easy to understand and is therefore a suitable place to hold money after a few hours to a day of research.  (Even after 0 hours of research, however, a savings account is still better than a sock drawer.) Money market accounts (through a bank), certificates of deposit (through a bank), and money market mutual funds (through a mutual fund provider) are probably the next easiest thing to understand.  This could take a few hours to a few weeks of research depending on the learner. Equities, corporate bonds, and government bonds are another step up in complexity, and could take weeks or months of schooling to understand well enough to try.  Equity or bond mutual funds -- or the ETF versions of those, which is what you asked about -- are another level after that. Also important to understand along the way are the financial institutions and market infrastructure that exist to provide these products:  banks, credit unions, public corporations, brokerages, stock exchanges, bond exchanges, mutual fund providers, ETF providers, etc.
Mostly you nailed it.  It's a good question, and the points you raise are excellent and comprise good analysis. Probably the biggest drawback is if you don't agree with the asset allocation strategy.  It may be too much/too little into stocks/bonds/international/cash.   I am kind of in this boat.  My 401K offers very little choices in funds, but offers Vanguard target funds.  These tend to be a bit too conservative for my taste, so I actually put money in the 2060 target fund.  If I live that long, I will be 94 in 2060.   So if the target funds are a bit too aggressive for you, move down in years.  If they are a bit too conservative, move up. If you havent yet maxed out your ISA, then its a no-brainer. You get excellent tax rebates and its silly not to take advantage of these before considering self investing in shares.   Note that even if your ISA is maxed out, the economic turbulence means that investing in individual stocks is an intimidating place for beginners right now.  The FSA is also looking at revising the average percentages used for pension, from 7% for adventurous investments, down to 5% or 6%, so there is industry wide recognition that on average the stock market is going to be a little less lucrative than it was a few years ago. Thats not to say you cant still make a whopping profit, but the chances of you doing so as a first time investor are remote to say the least. My advice would be to look seriously into some of the social lending sites, where you can still easily get a 7% return with minimal risk. Whilst I do have a portfolio which is performing well overall (I am a very speculative investor), I am moving a lot of funds into Zopa.com, as I am averaging 7% return with a lot less time, effort and risk than the stockmarket.  Whatever you decide, I think its time you thought about consulting an IFA. They can help you understand what sort of risk you are willing to tolerate, which is a very important aspect of investing. Looking for the best driving school in Castle Hill? Safe Driving School is right here for you. If you are looking for a beginner, advanced or professional course, we offer it all.  Address: 9, 103-105 Lane Street, Blacktown, NSW 2148,  Ph.No: 0404052557 Khan academy videos are really good. You should start to read the tutorials for beginners on investopedia.com. Additionally, you should keep yourself informed about the current finance related events. I would suggest reading the wall street journal and watch Bloomberg TV on their website. "That argument is an argument for investing generally, not peer-to-peer lending per se, and the argument as phrased (""thus you should invest your money at a Peer-to-peer loan platform"") is a false dichotomy. That said, as soon as one is investing as opposed to just getting a small but guaranteed return, then risk comes into play.  In that sense, any savings account is fundamentally different from any investment, and, in that reading, the two shouldn't be compared as different approaches to ""investing"".  Peer-to-peer lending as an investment could be aptly compared with stock market investing, for one." "Assuming you can understand and emotionally handle the volatility, a good indeed fund would be wise. These are low fee funds which perform as well as our better than most managed investments and since they don't cost as much, they typically out perform most other investment vehicles. The S&P 500 is traded as SPDR. Another option is the Dow Jones Industrial Average, which trades as DIA. Average returns over the long term are 10-12%. If you expect to need the money in the short term (5-8 years), you have a non trivial chance of needing to pull the money out when the market is down, so if that's unacceptable to you, choose something with a guarantee. If you're terrified of losing money in the short term, don't think you can handle waiting for the market to go up, especially when every news caster is crying hysterically that the End of Economic Life on Earth is here, then consider a CD at your bank. CDs return much lower rates (around 2% right now) but do not go down in value ever. However, you need to lock your money into them for months to years at a time. Some people might tell you to buy a bond fund. That's horrible advice. Bond funds get lower returns AND have no guarantee that you won't lose money on them, unlike aactual bonds. As you're new to investing, I encourage you to read ""The Intelligent Investor"" by Benjamin Gramm." Now the question: is advisable for a beginner to speculate in CfDs?  No. If not, is there a better way to invest with a small amount of money? In the US, and I'm sure this carries to the UK, most (if not all) big brokerages (Schwab, TD Ameritrade, Fidelity, Vanguard, etc) have a set of funds that are zero load and zero commission though the fund will still have an expense ratio.  This is the Barclay's UK page related to zero cost investing in the Barclay's funds.  Barclay's might not be the right fit for a beginner as it seems there is a hefty account minimum, but the same zero commission concept exists in the UK.  Again, most of these brokerages will also have an extremely low expense ratio S&P index (or some other market index) fund.  As a beginner that's where you should start. This is not meant to patronize beginners, it's just math.  Assume your trade commission is £7.  If your investment is £100, you'll lose £7 right up front to the buy commission, then another £7 when you sell.  Lets say your position raises 10%, you'll be at a net loss of 4.7%. Meanwhile if you put your £100 in to a 0.1% expense fee mutual fund with no transaction commissions and no load fees, after a 10% gain you'd owe £0.11 due to the expense ratio at the of the year.  You'd have £109.89. Beginners get crushed by fees and commission.  It is not advisable, by any stretch of the imagination, to attempt to day trade or actively manage a portfolio of any sort of security; and commodities and currency are the WORST place to start. "One other thing to consider, particularly with Vanguard, is the total dollar amount available.  Vanguard has ""Admiralty"" shares of funds which offer lower expense ratios, around 15-20% lower, but require a fairly large investment in each fund (often 10k) to earn the discounted rate.  It is a tradeoff between slightly lower expense ratios and possibly a somewhat less diverse holding if you are relatively early in your savings and only have say 20-30k (which would mean 2 or 3 Admiralty share funds only)."