Share Investing - Warning

cinderfella

Just saw this section this morning and a few posts with newbies wanting to invest in shares.
My advice is quite simply DONT.
Unless you have a background in finance this is not an area for any novice.
Having witnessed people losing their savings pot, I would say to prospective investors this. Say you have £2500 now in cash and invest in shares. How would you feel in a years time having shares worth £250!
Share investing is as simple & brutal as that unless you have the know-how & that takes many years to acquire.

le_loup

If that's the case, how does anyone start?
Your argument is far too glib, there are dangers, and people should be aware of them, but know-how is not does not come as a present for Christmas.

Jonbvn

OP,

I strongly disagree. By using only savings accounts you lose out to inflation, especially at the moment, with high inflation and low interest rates.

Investing in S&S is far to broad a subject to be written off in such a glib manner. If you are not aware, investing in S&S for the longer term has historically offered superior returns to housing and cash investments.

cinderfella

le_loup wrote: »

If that's the case, how does anyone start?
Your argument is far too glib, there are dangers, and people should be aware of them, but know-how is not does not come as a present for Christmas.

If you are going to start I suggest the following.
Start in a rising market (bull market) anyone can make money that way.
We are not in a bull market currently, the FTSE cannot break out above 6200 or drop below 5800.
Sit in front of a computer screen all day with a monthly subscription to a level 2 service.
Don't believe what you read on share investment forums or share magazines - do your own research first.
Read dozens of books on share dealing & how to set stop losses.
Obey all the golden rules of share investing.
Know the company you are investing in like the 'back of your hand'

I nearly forgot. Learning how read charts can be one of your best friends. So, if you don't know the significance of a 50 day moving average being crossed by a 200 day moving average perhaps you are not ready to invest in shares just yet!

Do this & you might come out ahead. Otherwise you are just 'pi*sing in the wind' with your dosh.

mystic_trev

Jonbvn wrote: »

OP,

I strongly disagree. By using only savings accounts you lose out to inflation, especially at the moment, with high inflation and low interest rates.

Investing in S&S is far to broad a subject to be written off in such a glib manner. If you are not aware, investing in S&S for the longer term has historically offered superior returns to housing and cash investments.

Agreed. Obviously the OP is happy to let inflation erode their savings. That's fine with me and the Government. You're helping them pay off the deficit via the back door.:rotfl:

Jonbvn

cinderfella wrote: »

If you are going to start I suggest the following.
Start in a rising market (bull market) anyone can make money that way.
We are not in a bull market currently, the FTSE cannot break out above 6200 or drop below 5800.
Sit in front of a computer screen all day with a monthly subscription to a level 2 service.
Don't believe what you read on share investment forums or share magazines - do your own research first.
Read dozens of books on share dealing & how to set stop losses.
Obey all the golden rules of share investing.
Know the company you are investing in like the 'back of your hand'

I nearly forgot. Learning how read charts can be one of your best friends. So, if you don't know the significance of a 50 day moving average being crossed by a 200 day moving average perhaps you are not ready to invest in shares just yet!

What you are describing is day-trading not investing!

On here consensus tends towards long term buy and hold (5years+), with funds being a favourite.

cinderfella

Jonbvn wrote: »

What you are describing is day-trading not investing!

On here consensus tends towards long term buy and hold (5years+), with funds being a favourite.

Again I would advise persons who are ' investing' long term ' to be very careful. If for instance you are 60 and investing for five years, if the market/ company declines, at 65 you do not have enough time (normally) to say wait 10 years for the market/ company to recover.

Many day traders also invest long term. At the end of the day only invest/ trade what you can afford to lose (worse scenario).
By researching your investment product you help safeguard your savings.
When I see persons on this site talking about AIM investment it makes my hair stand on end.

My final comment on this thread is to remember that no learning curve (share investing/ trading) is acquired without some pain along the way. When Wall St collapsed back in the 30's there were plenty of 'professionals' jumping out of 10th floor offices. Just be careful. We are not out of this recession yet, there is still a lot of bad news to come and what has happened to the banks on Wall St these last few years has been worse than the 30's-
financial oblivion very nearly.

Sceptic001

cinderfella wrote: »

Many day traders also invest long term.

Ah yes. Who was it who said that most long-term investments start out as short-term punts gone wrong?

dunstonh

Having witnessed people losing their savings pot, I would say to prospective investors this. Say you have £2500 now in cash and invest in shares. How would you feel in a years time having shares worth £250!

For that to happen, you would have to have a very high risk investment spread. Most new investors don't go high risk like that but enter more cautiously. Of course you do get some that dive in gung ho and they are often the ones that dont have a clue what they are doing.

We are not in a bull market currently, the FTSE cannot break out above 6200 or drop below 5800.

It could do either of those things tomorrow, next week, next month or next year. Who knows.

Again I would advise persons who are ' investing' long term ' to be very careful. If for instance you are 60 and investing for five years, if the market/ company declines, at 65 you do not have enough time (normally) to say wait 10 years for the market/ company to recover.

Most people do not invest for fixed terms. They invest open ended and dont know when they will actually need to access all the money.

As has been said, what you describe is not typical investing in the UK. So, it doesn't really apply.

investing is not all about the stockmarket either. Its part of it but not all of it. Also, the stockmarket is not all one risk level either.

cinderfella

Sceptic001 wrote: »

Ah yes. Who was it who said that most long-term investments start out as short-term punts gone wrong?

I am not a day trader should you think so. It is tempting to use my knowledge to take up day trading, but the taxman dictates otherwise.
Got out of bricks & mortar in 2004, it was too soon and had to endure a couple of years being laughed at. Those persons are no longer laughing however!
Enough said - DYOR

web_ferret

In my first year of investing as a newbie last year I made a 30% return on my investments.

So far this year I'm a bit down as the market is depressed but thats how it goes. Plenty of investment opportunaties for those buying now as shares are cheap.

Don't invest any funds you may need in the next 5 years and do some homework and you will beat the savings rates.