Am I being mad and stupid with this idea?

lynzpower

hi there

I have frequently bemoaned that my "investments" are too low risk ( ie - they are all savings LOL aside from a fixed rate bond with B midshire)

Ive now found a Ethical S&S Isa.

I was thinking of sticking 500 quid in and choosing high risk ( such as Pacific or Japan) funds and watching what happens.

im not overly bothered about 500 quid as to me its not a great deal of money and wouldnt care really either way if I lost the lot ( well i would a bit but not that Id lose sleep over it)

Truth be told, Ive no idea what im doing, but wondered whether this might be an opportunity to just learn a bit?

Does this sounds like the most stupid thing youve read? Am I missing any HUGE issue here in terms of waht else I can invest in for the rest of the tax year?

the rest of the money is split between b/midshire bond, reg saver, and a large amount in a craply performing cahoot online saver, plus last years ISA. I know I have to get this years Isa organised as well and pronto but each time I try adn find the best one, they close them :wall:

Your thoughts,
lynz

dunstonh

Pacific or Japan is diving in at the deep end. Ok, its only £500 so its not the end of the world if it takes a dive but it is volatile region and swings of 50% in a year (up and down) are totally possible with this area.

Would you perhaps be better starting with a UK Equity Income fund for dipping your toes into?

lynzpower

Dunstonh

I picked those as it said next to them high risk. For 500 quid I thought Id just kind of enjoy the ride if you see what I mean.

personally, I must say, Im not someone who enjoys financial risk at all, but I thought Ill go for that to expose me to the crazy potential risk and "lighten me up a bit"

The difficulty im having ( and I have the IFS folders in front of me to help) is that none of them give a guidance as to what sort of return Id expect.

I know they cant, as clearly thats what shares are but in terms of what you say about 50 swing up and down

Are you meaning then that at *some* point my 500 quid could be 1k, but at others it could be as low as 250? or have i got the wrong end of the stick again

TBH losing 250 quid doesnt bother me, I can afford to lose that its no biggie

What sort of "swings" would one expect with a UK Equity bond? I cant find any concrete ISH figures on this anywhere

Input very much appreciated
Lynz

plonkee

I also think you might be better off starting with a UK fund, certainly I have been.

I'm not sure that you'll learn a lot by using the dartboard approach. I read around a bit and decided that I liked the philosophy of index funds and then found the best/cheapest way to invest with them. Since this beginning I'm looking into diversifying overseas, eventually I may move into managed and higher risk funds.

This approach has worked for me, other people may differ, but I'd suggest investing in something you understand at least a bit and be prepared to learn more.

nrsql

>> Truth be told, Ive no idea what im doing, but wondered whether this might be an opportunity to just learn a bit? Truth be told, Ive no idea what im doing, but wondered whether this might be an opportunity to just learn a bit?

Excellent idea - not stupid at all.
You could just create a virtual portfolio and monitor it but nothing concentrates the mind like losing money.

You could do a monthly investment into a few funds - that would be less risky and get you involved with more areas - it's more fun seeing the performance of funds against one another.

maybe
UK
global
emerging markets
gold / natural resources

That would be £200 a month if you are happy to spend that.
Keep a spreadsheet of the daily prices so you can see movements and try to see why they have moved.


As to swings - UK and global probably around 2% would be large (usually .5%ish) the other two maybe around 5% often around 2%.

Could be more or sustained during a correction.


You could also pick one fund at £50/month if you wish - but I would do that rather than a lump some to start off.

cheerfulcat

lynzpower wrote: »

im not overly bothered about 500 quid as to me its not a great deal of money and wouldnt care really either way if I lost the lot ( well i would a bit but not that Id lose sleep over it)

Truth be told, Ive no idea what im doing, but wondered whether this might be an opportunity to just learn a bit?

Hmmm. To be honest, £500 that you don't care about is not going to teach you anything. Especially not in a fund...if you really want to learn about investing, you need to do some research ( start here, bottom right ). If you just want a better return than cash over the long term, have a look at investment trusts, particularly the global growth ones ( Alliance Trust, RIT and British Empire Securities, amongst others, are suitable as single holdings ).

demonblade

you might as well stick it all on Red and wait for the wheel to stop.

dunstonh

I'm just worried that taking a hit and hope in a high risk area would put you off investing in the future if it went wrong.

lynzpower

dunstonh wrote: »

I'm just worried that taking a hit and hope in a high risk area would put you off investing in the future if it went wrong.

that is a very good point indeed.

Thank you for this, I hadnt thought about that at all.

I shall look more into the other info provided, and hope to god I can get my head around it. the problem is that no matter how much I read it I cant get it.

what bothers me is that my savings are doing nothing while im struggling to get my head around what Im going to do or not do.

cheerfulcat

What are you stuck on? Perhaps we can help...

lynzpower

its really to do with how the fund managers work .

Say I had an investment in a company that sold say palm oil, then the international community outlawed the "farming " of palm oil due to environmental issues, then clearly the investment would go down the bog.

Would a fund manager have the foresight and or ability to move my money ( and everyone elses) out of this company and into something else? Or do I need to know the future of the palm oil industry ( as an example) and make my decision on whatr to invest in based on what Ive gleaned.

this is an aside as I would be looking to ethical investments and ideally would prefer to look at renewable technology. However, thats coming from a personal ethic rather than anything based on economic fact and returns etc. however I do believe renewable technologies is a growth area Id like to invest in. If you get me.

I am a complete novice, so thats why I was hoping to choose an ethical S&S isa so someone else does the thinking around it for me