Investment advice

kidmugsy

BillJones wrote: »

As someone who's worked in an investment bank for several decades, the only point I'd make is that what's "right" is pretty much completely determined by what your aims are. As you've not given much information so far, any definitive suggestions about asset classes, allocation etc. can be safely ignored.

Do your own research, and don't limit it too much. Learn about risks, about tax implications, and about how your own needs should suggest a route to take.

What feeble waffle. Give the lass some help, for heaven's sake. She's not 18 yet - she may not have any particular "aims". Any she might think she has could be uprooted in the next few years.

BillJones

kidmugsy wrote: »

What feeble waffle. Give the lass some help, for heaven's sake. She's not 18 yet - she may not have any particular "aims". Any she might think she has could be uprooted in the next few years.

Feeble waffle?

!!!!!!, if you can't understand how good financial advice works, please stop posting. This site is, sadly, blighted by posts like yours, where incorrect certainty is prized over the actual,correct advice, which depends completely on a person's aims.

bowlhead99

BucksLady wrote: »

lozzy1965 wrote: »

My portfolio recovered. Through the worst stock market crash in many generations I have still made an average of over 8% per year for the last 8 years, not by being lucky, but by investing sensibly and diversifying sensibly.

I don't think 8% is very impressive to be honest. My trackers have exceeded that level of return by a long way.

It depends what you are tracking Buckslady but if you are tracking FTSE 100 over the last 8 years you have not exceeded 8% at all. In Jan/Feb 06 the FTSE100 finally caught back up to its 1999 peak on a total return basis. Since then, its total return has gone up by 50-odd percent which annualised for the 8 years is a compound return of 6ish% a year.

So, if that is an example of the performance of mainstream largecap bluechip shares making the backbone of popular trackers (and the US S&P 500 calculated back to GBP has not done much better in that 8 year period) you must have a pretty high weighting in much more volatile trackers (e.g. smallcaps bought post-crunch) for your entire tracker portfolio to have exceeded 8% by a long way in that time period. I'd be curious to know what's in it, or if perhaps you are just looking at the flattering performance of the last 5 years ignoring the crash.

I would not invest in just a UK tracker on its own of course as it is a very specialist fund. Still, given UK has been a good performer relative to other world markets and the total return of the UK index is heavily linked to the FTSE100, if the FTSE100 return is only 6% it is surprising that the overall portfolio is a lot better than 8%.

lozzy1965 wrote: »

It has beaten inflation and I have input very little in research and knowledge.

[my underlining]
This is why the OP should absolutely NOT get into directly held individual shares.

With no disrespect to the OP, someone who is not yet 18 has likely not managed family finances and never been able to take a loan or a credit card, let alone got the knowledge how to evaluate the likely performance of an individual multibillion pound company relative to its competitors and its current price; this is something that full time professional investment analysts with decades of experience would still argue over. While Lozzy had a stockbroker father to help and was still probably not let loose with £50k at the age of 18.

If Lozzy's return has been derived with 'very little' input and knowledge from themselves, I am going to attribute that to luck which a 17-year old should not expect to replicate. Lozzy mentions she/he started at 18. However, also mentions 'getting back into' shares 8 years ago. So these are not the results of a first-timer. And the last 5.5 of the 8 years have been the strongest stock market bull run in recent memory when the FTSE100 doubled, the FTSE 250 tripled, and both bond and equity prices moved to all time highs. With 'very little knowledge and input from itself' a monkey could have made a killing and the same can not be said for the state of the market today.

Of course it is possible for people to educate themselves about shares investing but it is certainly more complicated and risky than funds investing, as a fund will have investment professionals (or computers, in the case of indexes) selecting all the underlying shares for you and all you need to do is pick what type of funds you want. And then get back to focussing on the many other challenges life throws at you at age 17-25.

Meanwhile Lozzy has already decided that a balanced portfolio can be had from concentrating on UK stocks only and if you get the ones paying the biggest current dividends they will probably pay you a nice return if you hold them forever. Unless they lost 95% of their value like Lloyds from 2007-2011, where Lozzy claims to have simply bought a few more of them when they got cheap and still made an overall profit. Whether this is true I don't know, but making it sound easy is not the best way of educating a 17 year old. Better to make it sound rather more difficult IMHO, so that most of the 50k is not squandered on unlucky stock market picks and is still around when they actually need to spend it on something.

lozzy1965 wrote: »

Northern Rock and...? Which consistently High Yield shares have gone totally bust in the FTSE250 in the last x years? And how many have given well above inflation dividends as well as increasing in value?
Another 2008 might occur, but how many generations since the last crash that affected solid companies?

OK so Lloyds has already been mentioned, back in early 2007 it was at 600p and the total div for the 2006 financial year was 34p (5.5%). The price then fell a bit over the next year so that the final div for 2007 going ex-div in March 2008 took that year's income to 35.9p which was about 7.75% depending what date you were looking at the share price. Great, a top dividend stock. By mid 2011 the shares were worth less than 30p each and dividends zero. They have doubled since so you are only down 90% from the 2006 levels and not 95...

RBS is a similar story. Used to pay decent dividends. Shareholders lost most of their money. Northern Rock, similar story.

HMV? In 2005 you could have paid 275p for them, with 400m shares in issue the company was worth over a billion quid. By July 2006 they had come off quite a bit, to 166p. At that point the total dividends announced of 7.4p represented a hearty 4.5% yield on the share price and with 17.4p of adjusted EPS the earnings were over 10% of the share price. By Jan 2009 they were raising money at only 122p to buy Zavvi. For the year to April '11 they didn't make any profits at all and the interim dividend of less than a penny was all that was paid out for that year. In 2013 the share price was no longer 275p or 166p or 122p , but 1.3p and the shares were delisted.

Mothercare, that used to be a healthy little group. Over the year to May 2010 it fell from its peak price of about 650p to 550p so that when the final dividend was announced it represented a better yield of 3% (about half its EPS). With the dividend growing from prior year up to 16.8p and sales growing too to over 3/4 of a billion pounds (not including hundreds of millions of international network revenues) maybe not a bad company to invest in?
Well, by 2011/12 the dividend fell to 2p. For 12/13 and 13/14 it was nil. The shares that were worth 650p or 550p or 450p can currently be picked up for 240p.

Of course, there are plenty of companies that have grown share price and dividends over those timescales. But there are plenty that haven't and if you are buying individual stocks they will hurt whether they actually go bust or just drop by 40-50% like Tesco and Morrisons in the last 2.5 years.

Fortunately these scare stories should not need to put off a 17yo who finds themselves with 50k in the bank, because they can simply allocate half to cash for a period until they are ready to reassess on the other side of Uni or whatever, and the other half or less to investment funds. Perhaps they could risk 5k of the 50k in individual companies - if they have the time and passion required to fully research what they are doing and want a lesson to look back on in later life when they have made some rookie mistakes with a relatively small part.

Buying the shares of individual companies would not be my recommendation though. It can be fun but it would still be fun with a couple of thousand pounds so no need to put the entire 50k at risk.

forgotmyname

Sorry.. bump to hide spam

Elizabeth__2

xylophone wrote: »

Are you likely to want to buy a house/flat before you are in your mid/late twenties?

Yes this would be a goal but not for a long time; I was considering emigrating to Australia in my late twenties.

ManofLeisure_2

lozzy1965 wrote: »

Northern Rock and...? Which consistently High Yield shares have gone totally bust in the FTSE250 in the last x years? And how many have given well above inflation dividends as well as increasing in value?
Another 2008 might occur, but how many generations since the last crash that affected solid companies?

If you were thorough in your research, I wouldn't have to tell you.

The fact of the matter is that advising someone to invest in individual shares when they have ''no'' experience of investments, is not sound advice in my opinion, and many others too.

BucksLady

Quote It depends what you are tracking Buckslady but if you are tracking FTSE 100 over the last 8 years you have not exceeded 8% at all. In Jan/Feb 06 the FTSE100 finally caught back up to its 1999 peak on a total return basis. Since then, its total return has gone up by 50-odd percent which annualised for the 8 years is a compound return of 6ish% a year.

bowlhead99

I have been investing in 4 different trackers over a period of about 10 years. I drip feed a sum of money into each one on a monthly basis.