novice investing £1000

redux

inflationbuster wrote: »

How do you know l didn't trade these at less than 60p? Easily proven, just need to log into IG Markets account.

You just come across rude here, possibly frustrated?

It is frustrating reading poor advice

You may be brilliant at picking stocks that are ripe for upward revaluation in the short term, then selling that and moving on to the next.

But it's not about you, and you've failed to match what you are saying to someone else's different circumstances.

catoutthebag

Thank you for yor comments.

When I created this thread, I did not realise the debate it would stir.

It is interesting reading all the viewpoints though.

Doing 5 minutes of reading, I would want to invest £1000 in VGLS 60% to increase my risk forbetter potential gains. I think this is a smart move. I heard this Charles Stanley fella is good.

Ideally, I don't want to top it up. I have just started a mortgage, so could top up £25/month...£50 would be a stretch.

I save £275 into a private pension. I have several thousand spare n cash (emergency). No cc, debt or loans. But I do want to make some mortgage overpayments, and I am self employed, which adds a little uncertainty.

I can't find the answer: what are the fees attached with montly amounts added, and is £50 the minimum amount? If no, would it work out too expensive to put in £25/month? And can I stop/start payments any time?

All the best

ColdIron

£50 is the minimum payment if you use the regular monthly savings option at CSD and there are no transaction charges for this. £100 is the minimum amount for ad hoc top up payments so you could do this every 4 months, again there are no charges for this

Aegis

inflationbuster wrote: »

I prefer to manage my own portfolio of stocks and have easily beat said fund since inception, it's why l prefer stocks over funds.

I've just put together your proposed portfolio to assess the level of volatility that someone might expect from your "medium risk" recommendation. Over the past three months the annualised volatility score is apparently 123.62%. To ensure this isn't a calculation error due to the constant pricing of equities, I ran this against my personal investment trust portfolio, which I consider to be above high risk from a retail client perspective. My portfolio came in with volatility of 15.29% over the same timeframe.

Over six months, that volatility comparison is 80.48% vs 12.09%; over a year 57.26% vs 12.88%, and over longer terms it settles at about 43-45% vs 12.5-15.5%. In short, what you recommended is anything but medium risk over the long term based solely on the potential for dramatic stock movement (ignoring for the moment the chances of single companies going bust or running into other major issues).

In exchange, what would the returns have been for investing some time over the past 5 years? This:

3 months ago: -12.77%
6 months ago: -31.22%
1 year ago: -21.08%
3 years ago: -44.23%
5 years ago: - 65.99%

In short, this is a portfolio where one of the major contributors to performance has fallen relentlessly for the past five years. You may have great reasons to believe this is going to rise rapidly now, but you haven't stated them here, nor did you have the decency to point out that so far this has been a terrible investment for the vast majority of people who were unfortunate enough to buy it any time since 2010. It's also worth bearing in mind that you're recommending this to a novice who almost certainly won't know what sell-discipline is and therefore won't be able to decide whether to exit this high risk holding even if there are several warning signs going off.

By my reckoning, barring very short term outlooks, your portfolio would have underperformed the Vanguard 60% Equity fund for purchases made any time more than three months ago (I can't confirm shorter than that because the analysis tool I'm using is designed for investment rather than speculation) and would have generated far more volatile performance figures over that timescale (this fund's volatility hugs the 5% level more or less since inception).

If you were in a regulated position, this would have "mis-sale" written all over it and you'd be responsible for any incurred losses due to your advice if the client panic-sold out at any time. Your excuse may well be that it's "only" £1000, but if that's the case then you should think very carefully about that position. This might well be someone's first £1000, and it also might be their last if they have a bad experience because they bought a racy stock they thought was fairly safe and it tanked.

inflationbuster

Aegis wrote: »

You may have great reasons to believe this is going to rise rapidly now, but you haven't stated them here, nor did you have the decency to point out that so far this has been a terrible investment for the vast majority of people who were unfortunate enough to buy it any time since 2010.

As for 'decency' l disagree. Did you miss the fact l had the 'decency' to post links to the FT, which provides extensive information on said stocks that allows one to check prior performance? Did the person posting about the fund do such a thing?

Aegis wrote: »

It's also worth bearing in mind that you're recommending this to a novice who almost certainly won't know what sell-discipline

Same goes with a fund that underperforms.

Aegis wrote: »

By my reckoning, barring very short term outlooks, your portfolio would have underperformed the Vanguard 60% Equity fund for purchases made any time more than three months ago

You're reckoning is of course incorrect as l invested in these recently and have outperformed said fund in months.

Aegis wrote: »

If you were in a regulated position, this would have "mis-sale" written all over it and you'd be responsible for any incurred losses due to your advice if the client panic-sold out at any time.

These stocks were posted recently so if OP bought now and made him money 6 months down the line would they be classed as a mis-sale?

Since OP has not commented any further this is my last post on this topic.

Aegis

inflationbuster wrote: »

As for 'decency' l disagree. Did you miss the fact l had the 'decency' to post links to the FT, which provides extensive information on said stocks that allows one to check prior performance? Did the person posting about the fund do such a thing?

The fund hasn't fallen by over 50% from its peak, therefore nothing like that needed to be pointed out.

Same goes with a fund that underperforms.

It's quite difficult for a tracker fund to underperform enough to care about if the fees are as low as Vanguard's. The LifeStrategy range is designed to hold a representative sample of the global investment markets, therefore you get the average of those markets plus reinvested dividends less fees. As such, you don't expect to have to worry about underperformance as much as if you'd bought shares or active funds.

You're reckoning is of course incorrect as l invested in these recently and have outperformed said fund in months.

Which doesn't matter at all when looking at long term performance, but it certainly does matter if you're going to denigrate an investment which is sensible to professionals and experienced amateurs alike. What you're claiming now is akin to doubling your money in your first hand of blackjack and calling yourself an amazing investor because you've made 100% return compared to those who "only" target rates of 5-7% per annum. You're only looking at ultra-short-term data, which is meaningless in long-term investment terms, especially when you ignore the fact that to get those short-term returns you have selected something much higher risk than the OP was willing to take on.

These stocks were posted recently so if OP bought now and made him money 6 months down the line would they be classed as a mis-sale?

Yes. Suitability is a requirement regardless of whether an investment makes money. I can't recommend lottery tickets for my clients and they don't magically become appropriate because my client happens to come out ahead.

Since OP has not commented any further this is my last post on this topic.

Try not to make such totally unsuitable recommendations in future. Your own investments are your business, but what you recommended in this thread was totally unsuited to the OP.

enthusiasticsaver

RF is a contributer to investment threads OP. I would agree that if you are new to investing and the £1000 is the only money you have then you should be looking to a fund as someone else has suggested. Passive as they tend to be low charges, multi asset if possible and well diversified as this will reduce the risk of losing it and one of the Vanguard LS funds will fit the bill as will other multi asset funds but the Vanguard ones are popular. Investing in 2 individual stocks as suggested by inflation buster is very risky, you may do well but you might equally lose the lot so be aware of that before investing.

jimjames

Aegis wrote: »

Try not to make such totally unsuitable recommendations in future. Your own investments are your business, but what you recommended in this thread was totally unsuited to the OP.

Unfortunately you're wasting your breath.

The posts also included such gems as "buying 2 shares halves the risk compared to buying one global diversified fund"

It's impossible to have a reasoned discussion with some people.

Fortunately the OP appears to have understood the salient points made by others.