Tim Hale - Smarter Investing

JohnRo

I do agree with the sentiment Glen but I was just trying to highlight the practicalities sometimes get in the way.

The question is centred on how much you are investing and is 10 shares enough to capture the general market and avoid what could be wild swings?

Would you rather have 10 shares or 100 shares or 1000 shares, personally I'd rather hold more but do realise the perceived safety and reduced volatility comes at the expense of stifled gains.

I have a few directly held shares myself but don't monitor them and one is down 95% though that was a bit of a punt to say the least and may yet still come good before I die.

gadgetmind

JohnRo wrote: »

The barrier to entry imho for any such endeavour is having enough initial capital to buy enough shares to dilute both the very considerable cost of purchase for smaller sums and the risk of holding any one individual company, and then having the time to monitor them all.

You need at least 15 shares IMO and anything less than £2k per holding is inefficient unless you can use a regular purchase scheme to get buying cost down to about £1.50 a shot plus stamp duty.

So, £30k minimum and ideally 2x or 4x that, or less if your trading costs are less or you're happy to include some ITs/\ETFs/trackers for diversity.

grey_gym_sock

gadgetmind wrote: »

True, but how much exposure do investors need to these areas? There is some evidence that EM and SC can both can small (and they are small) long term out-performance over developer large/medium cap, but both are far more volatile.

i agree: not a lot. paying higher costs for a small percentage of your investments may be OK, but the thing is to keep a close eye on your overall costs. if most of your investments are very low cost, then the weighted average can be kept nearly as low.

Wilkins

gadgetmind wrote: »

You need at least 15 shares IMO and anything less than £2k per holding is inefficient unless you can use a regular purchase scheme to get buying cost down to about £1.50 a shot plus stamp duty.

So, £30k minimum and ideally 2x or 4x that, or less if your trading costs are less or you're happy to include some ITs/\ETFs/trackers for diversity.

Technically, I think you are right, but small holdings can pay off. I've often bought just around £500. One or two have gone bust but others have been 10-baggers. In both scenarios, the relatively high transaction costs have not been material. There is a place for some "inefficient" holdings IMO.

gadgetmind

Wilkins wrote: »

Technically, I think you are right, but small holdings can pay off.

Yes, but they can also crash and burn. As few people are prepared to risk this, most diversify.

BTW the 15 shares figure is a rule of thumb that only works if you also diversify across sectors, and ideally territories, but between asset classes is perhaps most important.

As it happens, my wife does have a portfolio of directly held equities. This consists of 25+ FTSE 100/250 companies (forming 70% of portfolio by value) all of which were bought when their yields were relatively high, a selection of bonds and preference shares, a few capital preservation ITs, and a couple of non-UK income oriented ITs.

Glen_Clark

Its a good book. But my vote goes to this one because I think it more relevant to the UK situation; http://www.amazon.co.uk/When-Money-Dies-nightmare-Hyper-Inflation/dp/1906964440

brasso

BLB53 wrote: »

Tim Hales book is good (if a little expensive) another (at half the price) would be 'the long and the short of it' by John Kay.

A few (free) websites - https://www.Monevator.com, RIT http://www.retirementinvestingtoday.com/ and also DIY Investor http://www.diyinvestoruk.blogspot.co.uk/

Agree, the Kay book is excellent and gives very comprehensible descriptions of complex issues.

TheTracker

Speaking of books, to celebrate Meb Faber's new book he has made his last couple of books free on kindle from Jan 7-12. That is Global Asset Allocation and Global Value. You could do a lot worse than read those two. Clear writing style, great explainer. Find them on the big book website.