novice investing £1000

inflationbuster

colsten wrote: »

It's insane to recommend 2 random shares to this person.

OP says:-

I know things can go down. It's what I'm willing to lose.
I'd like low to medium risk.


It's not insane to invest £500 a piece in two good value stocks that pay dividends. He's willing to lose but highly unlikely given how long the companies have been around. The stocks also have plenty of capital gains potential.

I stand by my suggestion.

colsten

inflationbuster wrote: »

OP says:-

I know things can go down. It's what I'm willing to lose.
I'd like low to medium risk.


It's not insane to invest £500 a piece in two good value stocks that pay dividends. He's willing to lose but highly unlikely given how long the companies have been around. The stocks also have plenty of capital gains potential.

I stand by my suggestion.

I think you misunderstand, The OP didn't say they are willing to lose their entire investment.

You may well stand by your suggestion that a novice investor should put all their money into just 2 companies. You would also stand to lose all your professional qualifications as a financial advisor if you did, and your reputation as a credible poster on the MSE forum certainly will not gain by making totally ridiculous suggestions to novice investors.

....

inflationbuster

colsten wrote: »

I think you misunderstand, The OP didn't say they are willing to lose their entire investment.

Highly unlikely but continue with the hyperbole that you can lose all you money across two long standing companies. It's rare FTSE100 companies go bust.

colsten wrote: »

You may well stand by your suggestion that a novice investor should put all their money into just 2 companies.

1. As opposed to one fund? It doesn't matter if that fund is diversified as you're putting all your eggs into one basket

2. If you have £100K obviously you're not going to invest the lot across 2 stocks, you'd build a portfolio.

colsten wrote: »

You would also stand to lose all your professional qualifications as a financial advisor if you did,

I know a financial advisor that invested £200K of my friends money in two corporate bonds back in 2007. Still earning his 9% plus yield. So disagree with you there.

colsten wrote: »

and your reputation as a credible poster on the MSE forum certainly will not gain by making totally ridiculous suggestions to novice investors.

You're clearly getting emotional now.

Temrael

inflationbuster wrote: »

1. As opposed to one fund? It doesn't matter if that fund is diversified as you're putting all your eggs into one basket

I'm still learning about this stuff but, wow... just... wow.

Taking Vanguard LifeStrategy as example, with a Fund you are putting your money in thousands of baskets. These "baskets" are the thousands of companies, across multiple sectors in regions all across the world. Add to that, that in anything but the 100% LS you are also adding in Bonds from around the world too.

See here.

Now the two shares you list could out perform that but it will never be medium risk, surely? If they have a bad run your portfolio will drop like a stone. If the same companies have a bad run and you hold them as only a tiny fraction of a Fund then any losses would probably be offset by gains by other companies across the globe (as on average and over the long term markets tend to grow).

I appreciate you are a trader and may well be very successful at that but you surely see the difference?

eskbanker

The notion that 'long standing companies' are intrinsically more stable or safe can't be left unchallenged! Companies like Woolworths, Comet, Enron, etc, etc, could all have been described as 'long standing' but it didn't seem to offer them much protection when problems arose....

redux

Ignore advice about particular shares until you've got a firm foundation in mutual funds and have learned a bit about how to pick individual shares (some people never do).

I would recommend start with monthly savings in one or two investment trust savings schemes.

jimjames

Temrael wrote: »

I appreciate you are a trader and may well be very successful at that but you surely see the difference?

Apparently not. Especially with the incredible statement that 2 individual shares is less risk than one globally diversified fund.

inflationbuster wrote: »

Don't disagree.

I was paying 1.25% on a Santander offset mortgage so in hindsight l could have continued trading or left my money in the offset earning interest.

At the time though l thought well i've got enough money to continue trading so why not pay the mortgage as l couldn't then later lose the money in the markets if the worst happened.

It also appears to be a case of them actually doing the opposite of what they say themselves. They posted on another thread that you could lose money trading so paid off mortgage instead yet here it seems to be acceptable to recommend to a novice that they plonk their money into just 2 companies in one country.

jimjames

eskbanker wrote: »

The notion that 'long standing companies' are intrinsically more stable or safe can't be left unchallenged! Companies like Woolworths, Comet, Enron, etc, etc, could all have been described as 'long standing' but it didn't seem to offer them much protection when problems arose....

Even Tesco, not gone bust but massive rollercoaster. How many of the constituents of the FTSE100 from 1999 are still there now? It's certainly a very different index to then so buying 2 shares cannot be seen as a buy and forget strategy for 10-20 years.

So many examples where shares can go wrong if you aren't diversified. Accepted they can also rise massively too but that's part of the higher risk/reward.

inflationbuster

jimjames wrote: »

Apparently not. Especially with the incredible statement that 2 individual shares is less risk than one globally diversified fund.

I posted an image of my iWeb account; that's a snap of 1 of my portfolio's with two mentioned stocks purchased recently that outperformed said fund since inception in 2 months medium risk. Just because you don't know how to buy and sell stocks doesn't mean other people don't. Simply suggesting you just invest your money into a fund and not investigating other medium risk ideas is not telling the full story.

Putting your money into one fund is putting all your eggs into one basket, a plain and simple fact. Just because it's a fund you still need to diversify.

Funds can lose significant value as any stock.

jimjames wrote: »

They posted on another thread that you could lose money trading so paid off mortgage instead yet here it seems to be acceptable to recommend to a novice that they plonk their money into just 2 companies in one country.

Of course you can lose value in the markets (be it stocks or funds). Who said you cant? I had a mortgage a few years ago, paid it off with profit made in the market and used remaining profit to continue trading the market.

As l said above, depending on the money you have you would increase the number of stocks you'd invest in. So if you have £100K you'd most certainly increase the number of stocks to reduce risk, it depends how much you invest as to how many stocks you'd spread your money across.

JohnRo

Talk about digging a hole..

inflationbuster wrote: »

As l said above, depending on the money you have you would increase the number of stocks you'd invest in. So if you have £100K you'd most certainly increase the number of stocks to reduce risk, it depends how much you invest as to how many stocks you'd spread your money across.

Not if you buy a fund that does that for you.