My first dip into Stocks and Shares has turned sour

mark1234567890

Hi everybody,

A couple of months ago I dipped my toe into the murky world of stocks and shares. I can’t fully recall why I chose to do this. :rolleyes:

I think it was because the stock market losses were in the press and I thought that it would be a good time to buy. I also recall a quidco cashback offer (which never tracked and paid) :mad:


Anyway I put £500 into a Legal and General Stocks and Shares fund as part of my ISA allowance. I went for the Pacific Index Trust as I wanted exposure to the emerging “Tiger” economies of China and Russia etc. I had read good things about past growth and alot of the newspaper pundits were predicting that these economies would be relatively unscathed by the Credit Crisis that was engulfing the western markets. :cool:


Of course I also read the warning that past performance is not an indication of future performance.

At the beginning everything was rosy. By the end of the first fortnight my £500 had grown to £530. Fantastic I thought. :j


However recently things have been on a steady decline. So much so that my investment is now worth only £430.

I have noticed that it is a common occurrence to ask for basic life information to establish a person’s risk profile. So here is mine:

20 years old
No debts (Appart from student loan)
£6k in 2 seperate Cash ISA’s.
No long term financial commitments, mortgage, car loan etc.

So what do others think about this situation? Should I cut and run or stick it out?


Any help that can be provided will be greatly appreiciated. I realise that if I had to see a financial adviser with my current predicament I would probably incur a heafty charge.

Many Thanks

Mark

Masomnia

Investments are long term options, you should be thinking up to 5 years. As long as you didn't risk money you can't afford, you should therefore be ok.

Stick with it. Is my opinion.

mark1234567890

Investments are long term options, you should be thinking up to 5 years. As long as you didn't risk money you can't afford, you should therefore be ok.

Stick with it. Is my opinion.

Thanks for your post.

I am ok - I didn't risk any money that I couldn't afford to loose.

I am beginning to think that I would have been better "investing" the money in a new games console. Perhaps an Xbox 360 lol.

1echidna

Hi Mark, you are not alone, I inherited about £250k about 15 months ago. Fortunately the vast bulk of it is, at the moment, in savings but I have lost 10-15% on what I have investmented. The perceived wisdom is that in the long term the the stock market makes a monkey out those who rely on savings accounts. Better to invest at a low point than a high point though. It is difficult though because at the low points there is all doom and gloom whereas at the highs it is all optimism and people think the good times will last forever. As for the so called five year rule the FTSE 100 reached 7000 in Dec 1999 a point it has not touched since. Perhaps I am a fool but I am going to invest some more soon in the hope that things will recover in a year or two, and in any event I can afford to wait.

Banderman

mark1234567890 wrote: »

Hi everybody,

A couple of months ago I dipped my toe into the murky world of stocks and shares. I can’t fully recall why I chose to do this. :rolleyes:

I think it was because the stock market losses were in the press and I thought that it would be a good time to buy. I also recall a quidco cashback offer (which never tracked and paid) :mad:


Anyway I put £500 into a Legal and General Stocks and Shares fund as part of my ISA allowance. I went for the Pacific Index Trust as I wanted exposure to the emerging “Tiger” economies of China and Russia etc. I had read good things about past growth and alot of the newspaper pundits were predicting that these economies would be relatively unscathed by the Credit Crisis that was engulfing the western markets. :cool:


Of course I also read the warning that past performance is not an indication of future performance.

At the beginning everything was rosy. By the end of the first fortnight my £500 had grown to £530. Fantastic I thought. :j


However recently things have been on a steady decline. So much so that my investment is now worth only £430.

I have noticed that it is a common occurrence to ask for basic life information to establish a person’s risk profile. So here is mine:

20 years old
No debts (Appart from student loan)
£6k in 2 seperate Cash ISA’s.
No long term financial commitments, mortgage, car loan etc.

So what do others think about this situation? Should I cut and run or stick it out?


Any help that can be provided will be greatly appreiciated. I realise that if I had to see a financial adviser with my current predicament I would probably incur a heafty charge.

Many Thanks

Mark

You're only down £70. You're hardly going to jump in a front of a train now, are you?

1echidna

Banderman wrote: »

You're only down £70. You're hardly going to jump in a front of a train now, are you?

Yes I bet he has spent nearly that much taking a girl out with no dividend :rotfl: (or do they go dutch these days? :cool: )

dunstonh

When you invest money you should be looking at terms of 5-10 years plus. In a period of 5 years you should expect to have at least one major downturn. Its quite normal.

Also, when you invest you shouldnt put all your eggs in one basket. Now that doesnt really apply to your £500 as that is too small an amount but for larger amounts you would typically have lower risk funds in there as well as the higher risk funds which you should average out to match your risk profile. If you put 100% into one fund then you are just asking for trouble.

LongTermLurker

mark1234567890 wrote: »

Anyway I put £500 into a Legal and General Stocks and Shares fund as part of my ISA allowance. I went for the Pacific Index Trust as I wanted exposure to the emerging “Tiger” economies of China and Russia etc. I had read good things about past growth and alot of the newspaper pundits were predicting that these economies would be relatively unscathed by the Credit Crisis that was engulfing the western markets. :cool:

I was going to say the same as Dunston, but he beat me to it. What I would suggest, if you can afford to tie money up for a good few years, is start to drip feed money into other funds within your S&S ISA - look for something more mainstream like a UK Equity income fund. Don't be surprised if you see the value dropping - remember that as the value drops, the price drops, which means you are buying more units cheaply. As the price rises again, you will have more units which will attract more income and that should mean that the value rises more.

An IFA wouldn't be interested or worth it for £500, and the Xbox would be hardly likely to have increased in value either , so £500 out of your previous £6500 (7.7%) sounds quite sensible.

£6k is a good amount of cash to be sat doing nothing - if you start eating into the cash, freeze the S&S contributions and build up the cash again for a while.

purch

£6k is a good amount of cash to be sat doing nothing

It's not doing nothing........it's making a return, ...............lots more return than any UK Equity Income fund has managed over the last 12 months.

nrsql

You could have drip fed - usually the min is £50 a month.
Depends how much you wanted to invest over the year but you could have maybe gone for two funds and stopped when you had reached your limit (or when you decide against that fund). In that way you would avoid a lot of the volatility and not have to time the fund so accurately.
Of course after a time the new money going in is insignificant compared to the funds already invested but it mitiates the effects of big swings at the beginning when you are learning,

LongTermLurker

purch wrote: »

It's not doing nothing........it's making a return, ...............lots more return than any UK Equity Income fund has managed over the last 12 months.

Sorry - my mistake - it wasn't meant to read that way but I see what you mean! What I meant to say was "£6k is a good amount of standby/emergency cash". It's round about the amount I would want before adding equities.

My point about UK EI funds was also to reduce the risk and volatility in having all his non-cash assets in the Far East & Emerging Markets - I'm not saying they will make immediate or exciting profits, but I believe they will come back at some point reasonably soon, hense why I suggested putting a small amount from £50pm into such a fund while the prices are low and making the most of pound cost averaging.