Going it on your own - making the leap from funds to shares & bonds

mr_fishbulb

Over the last year and a bit, I've drip fed into 3 funds and now started a fourth. Not amassed a fortune so far (just over a couple of thousand) but I'm in no rush - the majority of my money goes into cash for house deposit.

I was just wondering what would be a sensible amount to amass in the funds before I start thinking about investing in individual shares and bonds. £1000 seems to be that absolute minimum lump-sum for this so didn't want to put too many of my eggs into one basket. Would £5000 in funds be a good enough diversification first?

I need to learn a lot more about company valuation before I do this though. Any tips for a book to read aimed at someone who knows a bit about investing basics, but wants to buy shares?

Baz_2

You could try the naked trader book.

Thrugelmir

mr_fishbulb wrote: »

Over the last year and a bit, I've drip fed into 3 funds and now started a fourth. Not amassed a fortune so far (just over a couple of thousand) but I'm in no rush - the majority of my money goes into cash for house deposit.

I was just wondering what would be a sensible amount to amass in the funds before I start thinking about investing in individual shares and bonds. £1000 seems to be that absolute minimum lump-sum for this so didn't want to put too many of my eggs into one basket. Would £5000 in funds be a good enough diversification first?

I need to learn a lot more about company valuation before I do this though. Any tips for a book to read aimed at someone who knows a bit about investing basics, but wants to buy shares?

Ask yourself what you could do better than most professional managers? They meet with Companies management , have access to more research material and most importantly know their sectors. I not suggesting that you don't buy individual shares. But unless you know a particular market or company well you are gambling in its purest sense.

Subscribe to the Investors Chronicle, read the FT daily. In basic terms do you own research into Companies, products etc.

Unless you have the right access to the markets. You'll miss market peaks and throughs if you intend trading regularly. On a £1k investment buying and selling costs plus the market spread will make short term trading at a profit very difficult.

Why not invest through some specialised Investment Trusts ? Some hold as few as 25 stocks. Then at least you've a risk spread but still concentrated enough if one share shines.

If you're looking at the long term. Why not buy and hold the top stocks through an ISA ? HSBc, BP, Vodaphone, Shell, Tesco etc. Then reinvest the dividend income into further stocks.

mr_fishbulb

Thrugelmir wrote: »

Ask yourself what you could do better than most professional managers? They meet with Companies management , have access to more research material and most importantly know their sectors. I not suggesting that you don't buy individual shares. But unless you know a particular market or company well you are gambling in its purest sense.

Very good point. I don't think I'd come close to their knowledge and experience.

Thrugelmir wrote: »

Why not invest through some specialised Investment Trusts ? Some hold as few as 25 stocks. Then at least you've a risk spread but still concentrated enough if one share shines.

Thanks Thrugelmir. I found this guide for anyone else interested in what these are - http://www.citywire.co.uk/personal/investment-guides/investment-trusts.aspx?ViewFull=True