Complete newbie to Shares, Penny Shares - Thoughts?

steampowered

I think you've missed the point.

The four shares were given by one of the posters as example of "losers", in an attempt to scare the Op from investing.

The point I made was that - even if the Op had chose those shares which another posted chose as their examples of disaster cases - he would still have made money. Even if he chose all four of the disaster cases!

The point was never to demonstrate whether the Op might have done better investing in a tracker. Obviously that would be the case if all four of the Op's shares were "losers". The point was to demonstrate that the prophecies of doom and gloom made by some posters are ridiculous.

Comparing an investment with another investment, and then describing the investment as a "cash loss", is wrong and very misleading. It is not a "cash loss". The Op would have made a profit, not a loss. I agree that the Op would have made more profit by choosing a different investment over the four "losers", but that isn't the point.

I do not agree that a tracker fund is the best way to invest. Any tracker will automatically include some right lemons that you'd never choose otherwise. You are also giving up a good chunk of your investment return to fees. But that is a debate for another thread.

Frankly, and most importantly for me, it is just less interesting. Very few people are going to bother taking an interest in investing if the only thing at stake is pretend money. If the Op takes your suggested approach of using play-money, he is unlikely to learn a thing.

The difference is that you are suggesting they learn how to cook by growing their own wheat first, or SCUBA by building a respirator, NO ONE starts to learn how to do DIY by building a house (a diversified portfolio).

You start small and do more over time. You put up a shelf before you learn to build a house.

Investing a thousand quid a pop into four diversified shares is hardly jumping into the deep end.

Under your proposed approach, people would either never bother investing, or they would end up investing large amounts having never had their own money invested before (play money just isn't the same).

martinsurrey

steampowered wrote: »

I do not agree that a tracker fund is the best way to invest. Any tracker will automatically include some right lemons that you'd never choose otherwise.

And that is my point.

A FTSE 250 tracker only contains 250 of the most valuable 350 companies listed in the UK.

You are suggesting that you or OP, knows more about investing than the entirety of the UK banking and pension sector.

Fees for trackers are hitting a historic low, some can be had for as little as 0.1%

Last post from me on this as we'll never see eye to eye.

I'll leave with articles about Warren Buffet, one of the most respected and richest investors, and he agrees with me, unless you know something the market doesn't you cant beat a tracker mid term/long term

https://www.yahoo.com/news/investing-warren-buffett-10-challenge-155114511.html

http://fortune.com/2016/05/11/warren-buffett-hedge-fund-bet/

Malthusian

steampowered wrote: »

Learning to invest is no different from learning to do DIY; learning to cook; learning to read financial statements; learning to drive a car; learning to SCUBA dive; learning to read Shakespeare or any other skill you could care to name.

The best way to learn almost any skill is by doing it. You start off small with modest sums of money and get better over time.

If you see someone about to nail their own hand to a wall, do you let them plunge a nail through it so they can "learn their lesson", or do you stop them, then show them how to hold the hammer correctly? Do you expect them to be better at DIY with a broken hand?

At least with DIY and other such things, doing something wrong and learning a painful lesson only takes a minute. With investments it takes five years or longer - however long it is until the next crash and recovery. Five years of lost returns is a long time.

You don't get better at investing by starting off with a small sum of money and making it even smaller.

Investing into a diversified portfolio of high quality shares is not like drowning in a pool. If people invest sensible amounts into a few different companies across different industry sectors, and holds those shares for a reasonable period, they are very unlikely to lose money. If they do lose money it is unlikely to be a lot.

To eliminate the material risk of choosing next year's BPs and Tescos, the OP would need to diversify across at least 20 shares from different sectors. (The exact number is an academic argument but 20 is as good as any.) Why bother with all that effort - and the expense of dealing costs on a small investment spread over 20 different shares - when there are such things as tracker funds available?

FWIW I agree that the OP should not bother with fantasy trading. As you say, people make very different decisions when there's no money on the line, so at best it's worthless for teaching someone about real-life share trading - at worst it instills a false sense of confidence. More importantly it's a deathly boring game. Invest in a diversified range of tracker funds and play Football Manager instead.

pearl123

These are cheap per trade £5.99. I've used them and were fine.
http://www.x-o.co.uk/

jimjames

martinsurrey wrote: »

Fees for trackers are hitting a historic low, some can be had for as little as 0.1%

Some are even lower than that. Best I've seen at the moment is 0.06% for a UK and US tracker.