Stocks & Shares ISAs

Alexland

Rodgers1 said:

My question is am I in the minority in having a combination of individual stocks and funds or do most choose to either invest in funds OR individual stock?

Some forum members (including me) don't directly invest in individual companies (tried it for two periods in my life with unsatisfactory results) and others are happy provided that no individual company is too high a proportion of their account valuation and might also hold funds, ETFs or Investment Trusts alongside.

Rodgers1

Thanks, so it's not unusual to have a combination of both then, it's just that so much of the advice seems to focus on either choosing just funds or just picking stock yourself. I hear what you're saying about not having one stock disproportionately high in value to the rest of the portfolio. Appreciate your help.

badger09

Rodgers1 said:

Hi,
I'm an inexperienced investor but have enough understanding to know I want to invest long term in S&S ISA.I already have a small but adequate amount of cash and a half decent work pension scheme For the last year I have held two funds and a handful of individual stocks and am looking to put them into an ISA this month. My question is am I in the minority in having a combination of individual stocks and funds or do most choose to either invest in funds OR individual stock?  My idea is  to have a couple of funds as the base of my portfolio and then have 4 or 5 stocks that I have more control over buying more or selling when the time is right if necessary.
I would appreciate any help on this, sorry if it seems an obvious question.

I think the consensus from experienced investors would be that inexperienced investors should avoid investing in individual company stocks, simply, because they are unlikely to be able to consistently predict which companies will do well. Hence it is safer to invest in funds, which invest in 100s, or 1000s of companies, thus minimising the risk of picking mostly those which do badly.

Rodgers1

I understand about the inexperienced angle but do you think there is any harm in having about 10-120% of my overall portfolio in individual stocks and the rest in funds and cash? 
My thinking is that there have been some problems with the higher risk funds anyway in terms of reputation and success in recent times so I thought why not take a risk with 10-20% of my portfolio by picking my own stocks eg I'm looking at things like Diageo, Disney, Experian, Unilever to hold for the long term and maybe add to at a later date. I feel like I have more control over that aspect of my portfolio rather than buying a high risk fund and then finding out there are issues with the fund or fund manager anyway at some point.
I'm really trying to get an idea of whether this is a ridiculous concept or whether other relatively experienced investors also have a mix of funds and individual shares?

masonic

At one time I held a combination of individual company shares and funds, until I convinced myself this indulgence in stockpicking was harming my long term wealth.

Rodgers1

Thanks. Does anyone have a different view of this and believe it is worth picking some of your own stock alongside funds?

carrollp

Rodgers1 said:

Thanks. Does anyone have a different view of this and believe it is worth picking some of your own stock alongside funds?

I can only speak from my experience. Over the last 25+ years I have dripped money into PEPs and later ISAs in various funds mainly Trackers in UK EU US and Asia therefore spreading the risk. Also Fidelity Special Situations and a couple of other accumulator funds where dividends are reinvested. With these funds my Portfolio on average has increased by around 8% per year over that time sometimes much more sometimes it goes down. I review them a couple of times a year and if necessary change my plan or even switch funds.
I also have some shares which I got from Standard Life for free and through a share scheme in work. The Standard life ones are around 50% of what they were when I first got them but I keep them for the Dividends and the work ones are now worth about 20% of what I have put in over 20 years. (don't ask). So as you can see my experience with Funds has been much better than the Shares although I never really actively managed a share portfolio. If you do want to hold shares you need to know what you are doing and be prepared to lose money.

eskbanker

Rodgers1 said:

Thanks. Does anyone have a different view of this and believe it is worth picking some of your own stock alongside funds?

If you're determined to find someone who agrees with you then you'll probably encounter one or two opinionated individuals on here who are living proof of the proverb about empty vessels making the most noise!

In agreeing with the above posters on this thread, I'd observe that investing in individual shares suits those not just with plenty of experience but deep pockets too, in that transaction costs are disproportionately draining for those dabbling with small pots.

Also worth adding that there are negligible prospects of an individual having any sort of edge over professional fund managers and those employed by institutional investors, who have access to way more analytical data than you or me, and the time, money and resource to conduct due diligence to the level required.

It's a bit like joining the RAF in the belief that it's like 'Top Gun', or trying to make a living from professional sport (or gambling) - the seductive fact that a few can do it shouldn't blind you to the realistic prospects of success, so by all means have a play about if you think it'll be fun, but if your objective is to make money then IMHO you're much better sticking to the percentage game....

Rodgers1

Thanks for all the replies today. I found them useful, I don't think I'm like Top Gun but I understand the sentiment and the sense in what you're all saying so appreciate the advice . I've got a couple of individual shares that I'll hang on to now as they've obviously dipped (Disney the main one) but other than that I'll go for 4-5 funds a bit like carrollp outlines and not try and be too clever or greedy.

badger09

Rodgers1 said:

Thanks. Does anyone have a different view of this and believe it is worth picking some of your own stock alongside funds?

I was going to say that you seem determined to keep asking until someone tells you its a good idea.

Rodgers1 said:

Thanks for all the replies today. I found them useful, I don't think I'm like Top Gun but I understand the sentiment and the sense in what you're all saying so appreciate the advice . I've got a couple of individual shares that I'll hang on to now as they've obviously dipped (Disney the main one) but other than that I'll go for 4-5 funds a bit like carrollp outlines and not try and be too clever or greedy.

No one is telling you not to do it. Its your decision. But most of us will say we don't think its a good idea.

If you want to test your stockpicking skills, there are several platforms which let you set up dummy portfolios. That way, you're only risking virtual money, rather than your hard earned cash

FWIW I hold some shares in a single well known UK financial institution, which are currently worth less than 40% of what I paid for them, and they're not even paying dividends.  You might have better luck.