getting started with stocks/shares

ttaylor

Hi,
With the jobs market as it is, people working for very little and on zero hour contracts, a never-ending supply of workers and less union influence, I am looking at different ways of making money instead of slaving away.
I have read about investing in assets to create a passive income, which could be property or stocks/shares. I would like to research more into stocks/shares and maybe have a go at it.

How do you go about it? I don't want to pay someone to manage it for me, I'd rather go in the deep end and invest directly, but don't know how to do it! Are there websites like betfair where you can just create an account and back and lay prices? Should I buy a book like "The naked trader" to learn the basics?

Maybe it's not a good idea, and property is a safer investment?
Is there anyone who thinks stocks/shares are unethical? For example if all companies were like John lewis or Nationwide then there would be no market at all would there?

I'd be interest to hear any opinions on the subject and any advice on the questions above is greatly appreciated.

JoeCrystal

Property is entirely different area of investment compared to stocks/shares.

As for ethics, well, that is entirely up to each individual. I for myself avoid any companies which damage the environments in long terms such as oil & gas due to emissions or mining. There will always people who think investing is gambling and depending on which company you choose, it is like gambling.

Cheers,
Joe

AlwaysLearnin

Do your research. Naivety could cost you a lot of money. You don't have to invest in specific companies - there are loads of options such as funds, ETF's, IT's etc that you should know about.

You might want to look at the monevator site, as it has plenty of articles that are beginner friendly. It endorses a passive approach which, if you don't already know what it is, you should at least be aware of as an investment approach.

atush

It is all well and good not investing in oil/gas and mining.

Unless you live in a house that uses those commodities to heat/cook/live and that you don't use copper in your pipes, gold and platinum on your mobile phones and catalytic converters in your vehicles etc.

CLAPTON

ttaylor wrote: »

Hi,
With the jobs market as it is, people working for very little and on zero hour contracts, a never-ending supply of workers and less union influence, I am looking at different ways of making money instead of slaving away.
I have read about investing in assets to create a passive income, which could be property or stocks/shares. I would like to research more into stocks/shares and maybe have a go at it.

How do you go about it? I don't want to pay someone to manage it for me, I'd rather go in the deep end and invest directly, but don't know how to do it! Are there websites like betfair where you can just create an account and back and lay prices? Should I buy a book like "The naked trader" to learn the basics?

Maybe it's not a good idea, and property is a safer investment?
Is there anyone who thinks stocks/shares are unethical? For example if all companies were like John lewis or Nationwide then there would be no market at all would there?

I'd be interest to hear any opinions on the subject and any advice on the questions above is greatly appreciated.

presumably you have at least 100,000 to start with?

Ologhai

ttaylor wrote: »

Hi,
With the jobs market as it is, people working for very little and on zero hour contracts, a never-ending supply of workers and less union influence, I am looking at different ways of making money instead of slaving away.
I have read about investing in assets to create a passive income, which could be property or stocks/shares. I would like to research more into stocks/shares and maybe have a go at it.

How do you go about it? I don't want to pay someone to manage it for me, I'd rather go in the deep end and invest directly, but don't know how to do it! Are there websites like betfair where you can just create an account and back and lay prices? Should I buy a book like "The naked trader" to learn the basics?

Maybe it's not a good idea, and property is a safer investment?
Is there anyone who thinks stocks/shares are unethical? For example if all companies were like John lewis or Nationwide then there would be no market at all would there?

I'd be interest to hear any opinions on the subject and any advice on the questions above is greatly appreciated.

I don't think that self-select investing in shares (when you're coming from a standing start, as you say you are) is a short- or medium-term solution to the current state of the job market.

If you were to start now, learning a little, investing a little, learning a bit more, losing a little, investing a little more, learning some more still, gaining a little... and on and on... and doing this alongside some other way of making a living (e.g., a full time job) maybe within a few years, you may be well on your way to gradually moving over from 'slaving away' (assuming you don't consider as 'slaving away' the mountain of work you've had to put in on understanding investing) to paying for your life solely by investing. But I would say that it really is a long-term aim, not something to solve what many may expect, and hope, to be the shorter-term job market problem.

(Caveat: there are always exceptions. You may have a large sum of money to invest and be a 'natural' and be making a living at investing within months, but I imagine that this would be less likely than the other scenario I've outlined above.)

gadgetmind

ttaylor wrote: »

With the jobs market as it is, people working for very little and on zero hour contracts, a never-ending supply of workers

My experience of the jobs market is totally at odds with this. Finding the right people is *very* hard and competition for them is intense. Pay is having to rise at well above inflation and some employers are so desperate that they give *healthy* one-off starting bonuses.

Even though we engage closely with universities, and are happy to pull in people from all over the globe, we still find the rate at which we can recruit hinders what we can achieve.

So, we seem to have a two track jobs market. I'm not saying that investing financially isn't worthwhile but investing in your personal skills base is what's really going to make the difference.

And yes, this is hard work, but you can't let dreams of easy money distract you from the kind of long-term planning and execution that works in the real world.

Glen_Clark

gadgetmind wrote: »

My experience of the jobs market is totally at odds with this. Finding the right people is *very* hard and competition for them is intense. Pay is having to rise at well above inflation and some employers are so desperate that they give *healthy* one-off starting bonuses.

Even though we engage closely with universities, and are happy to pull in people from all over the globe, we still find the rate at which we can recruit hinders what we can achieve.

So, we seem to have a two track jobs market.

Absolutely. Most UK Graduates have been trained in unproductive subjects, see what others are getting paid in Banking or the Civil Service, and so come into industry with a grossly inflated idea of what their unproductive education is worth.
Britain was more successful in the old days when the bright kids came straight into industry at the peak of their learning ability (because their parents couldn't afford to send them to University)

atush

Britain was more successful in the old days when the bright kids came straight into industry at the peak of their learning ability (because their parents couldn't afford to send them to University)

Don't think so. Britain may have been more competitive before the rise of the benefit culture, and when University degrees were free to those of low means, and even the most wealthy only had to pay the living costs.

And parents who went to university themselves (even if free at the time) know what degrees lead to jobs and which ones don't. As I advised my own sprogs during A Level and University selection.

Not everyone (including me with a BS degree in Science) chooses the degree that will bag them the most bucks. I worked for US govt as a scientist for many years and earned decently but in a high cost area like London so wasn't well off. But I knew going in that if I didn't go on to Medical school I was never going to be well off, but I liked my job/field and it was very interesting.

I certainly would not pay for my children to go to Uni and study things like Media studies and the like. But If they wanted to fund themselves thru then that is another matter. But i still would advise against.

The one good thing I have seen over the rise in Uni Fees has been the lowering of grades required to get into a Russell Group Uni and the greater concentration on 'proper degrees in proper subjects'.

gadgetmind

ttaylor wrote: »

How do you go about it? I don't want to pay someone to manage it for me, I'd rather go in the deep end and invest directly, but don't know how to do it!

That you don't know how to do it strongly suggests that you're probably better off not doing it, at least not until you have learned a whole load than you know now.

I second the suggestion of start at "monevator" but would add that investing in individual stocks rather than "collective investments" such as unit trusts and investment trusts, take a lot of research. It's also very inefficient fees wise unless buying in £2k+ chunks. As you need at least 15 investments to spread risk, this suggests £30k minimum before diving in.

bowlhead99

ttaylor wrote: »

Hi,
With the jobs market as it is, people working for very little and on zero hour contracts, a never-ending supply of workers and less union influence, I am looking at different ways of making money instead of slaving away.
I have read about investing in assets to create a passive income, which could be property or stocks/shares. I would like to research more into stocks/shares and maybe have a go at it.

Undeniable that you will need a passive income at some stage, because between the ages of 65 and 105 you are not going to find much in the way of jobs. Most people plan to build a passive income by retirement age, and by starting early enough are able to get there.

Rather fewer are able to put enough away and invest it successfully enough to be able to give up work before 'normal' retirement age. And nobody who doesn't already have enough money to live off the income from it (say 4% a year) can just start making money on investments and give up worrying about zero hour contracts or more workers or the demise of unions or whatever. To take £10k a year of investment income safely you need £250k invested, or ideally more (a 4% income draw I mentioned above).

How do you go about it? I don't want to pay someone to manage it for me, I'd rather go in the deep end and invest directly, but don't know how to do it!

Not knowing how to invest directly is a secondary problem to not having the time and resources to research and monitor your directly held investments, nor the capacity to absorb losses on the unsuccessful ones (given you may not be sufficiently diversified to make up for heavy losses on some companies with gains on others).

Say you have a thousand to invest. An investment manager running a billion pound fund might charge 1 percent for doing that, and get ten million quid in the door every year. Some of that will go to his pocket as profits. The majority of it will go in infrastructure for research and monitoring the assets which includes a huge team of full time professionals running all the numbers, making investment decisions, doing the accounting etc and keeping you informed about what is happening. All these costs of employing all the dedicated staff and all the costs of each buy and sell within the portfolio are shared by everyone who puts their money into the fund, and in total it costs the investors the ten million.

You can invest £1000 into the fund. With the costs being 1% of assets, the cost to you personally of constructing and administering the diversified portfolio and selecting all the investments with the dedicated research team which costs millions to run, is ten pounds. Sure, you can try to do better yourself and save the ten pounds to spend on dealing costs and on subscriptions to information services which you try to monitor yourself. To most people it is ten pounds well spent, which is why funds are able to exist.

Are there websites like betfair where you can just create an account and back and lay prices? Should I buy a book like "The naked trader" to learn the basics?

The nearest thing to a betfair-type environment where you can back or lay prices is a spreadbet firm. There are many, IG.com is one. You could bet £100 that Lloyds would go up by 10%. If it instead falls 25% you will lose £250. You could bet £500 that Barclays will halve in price. If it instead quadruples in price (the movement being 8 times larger than you hoped, and in the wrong direction), you will lose £4000.

So, betting on individual shares on that sort of site is not for the faint-hearted, although it can be done with lower amounts (with lower risks and guaranteed maximum losses, with correspondingly lower potential profits and still a chance of losing every penny you put in). Also it is extremely far from a 'passive investment income'. It is an active sharetrading income and professionals with many more years of experience than you will still make incredibly costly mistakes.

Also yes the Naked Trader will talk about share trading via traditional stockbrokers (where he just buys and holds shares for a bit, paying a bit to buy them and a bit to sell them) or via spread bets. What you will get from that is a basic understanding of the mechanics of how operating an account works. This is still 'trading' not 'investing' (the clue is in the name of the book) and so it is not passive. Also, while he can talk about trades he did and opportunities he took during a particular set of economic conditions while writing the book, that no longer exist, he can't tell you what is going to happen to the price of the share you are about to buy or sell. So in that sense it is not going to help unless you are dedicating your time to eductation and research.

And another observation is that he could spend more time on that stuff because he had income from his blog and prospective income from his books so he could afford to take time out from his job to do some research and also to make some mistakes along the way. Can you?

Maybe it's not a good idea, and property is a safer investment?

Property is a different set of risks to shares but it is not particularly safe, unless you are buying it yourself as a place to live in with a fixed interest rate on your mortgage for life or ideally no mortgage.

If you buy a property for 100k and borrow 75k to do so, and it falls in value to 75k you have lost 100% of your equity invested. You will hope to let it out, but sometimes you will have no tenants and other times the tenants will trash the place or fail to pay. You will need to look after the place which of course you can do by employing a managing agent, but you have said you don't want to pay someone to manage things for you because you would prefer to be in at the deep end.

Running everything yourself is arguably not passive investment either. But diving into property investment without proper planning can certainly deliver that experience of being 'in at the deep end' if that's what you want.

Is there anyone who thinks stocks/shares are unethical?

Well, in communism, the workers control the means of production and everything is just shared around society. That has never been proven to work effectively.

In capitalism, individuals and corporations control businesses and can take the rewards from their investment and management efforts. This gives an incentive to do things better and create new products and developments which would not have come into existence otherwise.

I guess we could have a philosophical debate about the morals and ethics of being able to put money into a business to help it grow and then being entitled to a share of the assets and future profits from that business, but it is not going to help you make a decision whether you should start an investment programme or not.

I'd be interest to hear any opinions on the subject and any advice on the questions above is greatly appreciated.

Hope that helps.