Am I going into trading too soon?

Radiantsoul

chronicsaver wrote: »

The Retail stocks example, was just an example. I was only trying to highlight a point here that you "can never beat the professionals." The majority of the time, they have the edge over you but that's why you don't go and recklessly punt on every opportunity your eye meets.

You might have an edge, if you play in certain spaces, if you research and work really hard with spreadsheet models, etc. Even then you probably will find your cost of borrowing and trading exceed theirs by a margin greater than your edge.

Nanpy

Hey _Super!

I inherited about 70k when my dad passed away. Coincidentally this was around the time BP crashed in price. I watched it sink and decided this would be my opportunity to finally invest in some shares. I bought three grand's worth and over a few weeks made a good return on my money.

Encouraged I poured most of the 70k into various shares, and mostly AIM.

About a year later I reckon I'd gotten about a 40k education. Never really regretted it as it was easy money for me in the first place. I've grown a lot more cautious with the money I earn myself, so these days I have the majority of my investments in a Vanguard Lifestrategy 60% fund and play around with maybe 50k spread across a few companies, generally banks as there's always something knocking them down.

Avoid AIM and stick to blue chip companies. Beyond that you're taking a gamble - you're not smarter than the market. You said it yourself, you're pitting yourself against tens of thousands of professionals.

I'd definitely encourage you to try "active" investing. It's fun, but you need to remain sanguine and at worst it'll convince you why passive investing is your reliable friend, unlike "active" investing who's your wild and crazy friend, the one always trying to get you to do coke.

_Super

That is also another reason why I would like to try trading because I like the idea of being active in the market.. as a hobby.

I've been on a compound interest calculator and worked out that if I save £15k a year for 20 years I'll have about £650k based on a 7% return which of course is not certain, I might get 15% return 1 year and then -10% the next.

As I get older and my career progresses I could save a lot more than £1250 a month but but there is no way to store this in a S&S ISA.

bowlhead99

_Super wrote: »

As I get older and my career progresses I could save a lot more than £1250 a month but but there is no way to store this in a S&S ISA.

This is true although you can also use pensions wrappers, which you'll want to do as your career progresses and starts to put you in high rate tax. And there are other tax incentivised investment schemes such as VCT / EIS. And the same funds that can be held inside ISAs and pensions can also be held unwrapped, to make use of your annual capital gains allowance.

So, the fact that you ran out of space in an ISA wrapper does not mean that you have to go and trade individual shares and pay tax on the profits.

As mentioned upthread there is no problem having a hobby. Understanding companies and financial markets can be interesting as well as financially rewarding. The comments upthread about daytrading being unsuitable for someone with life savings of £15k still stand, even if you plan to earn more life savings as the years go on. But this doesn't mean you have to abandon the plan of, at some point, buying (and later selling) shares in individual companies.