Newish to investing.

Ridethewave

so how about making an example of me to highlight the dangers making it a sticky thread and lets see where it goes. I have an open mind but lack experience. I have a thick skin can also play devils advocate..... have nothing to prove but 10k to lose, so please convince me. Once convinced I will see the light and change my portfolio.

Thanks John

Ridethewave

Ive sold my tech and china stocks which represented about 60% of my total. these have been the stocks that have been dropping recently.

Dunston how did you come up with the 70% figure? and over what time frame?

fun4everyone

Ridethewave wrote: »

Once convinced I will see the light and change my portfolio.

First off I think you have come to the right place to start with. That's because £10,000 is not an amount that a good IFA would be wanting to take charge of. You also seem willing and able to read and learn.

You need to learn about risk, the 70% figure you were quoted is correct. Before you start putting five figures into investment funds you need to understand whats going on. Look at the graphs from the dotcom crash January 2000-March 2003 and the GFC June 07-March 09. See what would have happened to your current spread then. Stuff like that will happen again, that much is guaranteed. You will not be able to predict when. Even without huge events like that your spread will very regularly suffer 10-20% drops. You will not be able to predict when or when it is about to turn around.

For the amount you have I would just pick 1 or 2 funds and be done with it. If it was me I would take a global developed world passive fund and possibly an active emerging markets fund on the side. That's just me though. Picking 10+ active manged funds to cover various areas is for £100k+ imo. You are creating stress and complexity without any need for it.

Ridethewave wrote: »

Ive sold my tech and china stocks which represented about 60% of my total. these have been the stocks that have been dropping recently.

That just shows you have picked funds above your personal risk tolerance. You should stay invested through thick and thin once you have made your choices. Selling because a high risk investment lost a little bit is lunacy - you shouldn't have been in it in the first place.

Linton

Ridethewave wrote: »

Ive sold my tech and china stocks which represented about 60% of my total. these have been the stocks that have been dropping recently.

....

This is the one big mistake that all new investors seem to make. It's called "buying high and selling low". Think about it - wouldnt it be more sensible to do things the other way around?

If you want your investments to be 60% tech/china a fall is the time to buy some more. You only sell when tech/china grows significantly higher than 60%. This is a process known as "rebalancing".

However 60% in tech/china is very risky - you should plan to invest more broadly. If you want to put a slightly higher % somewhere, that's fine, just dont go overboard.

Ridethewave

Linton wrote: »

This is the one big mistake that all new investors seem to make. It's called "buying high and selling low". Think about it - wouldnt it be more sensible to do things the other way around?

If you want your investments to be 60% tech/china a fall is the time to buy some more. You only sell when tech/china grows significantly higher than 60%. This is a process known as "rebalancing".

However 60% in tech/china is very risky - you should plan to invest more broadly. If you want to put a slightly higher % somewhere, that's fine, just dont go overboard.

Thanks for that. Although a newbie here I'm not totally new to markets. I do understand that it's better to sell high and buy low.

I have sold those units and made profit on each one. I am still 2% up over the last 3 months...
I had got to the point of being happy with my choices having studied past graphs including the previous crashes etc.... however having joined here and read the above posts... and seeing those units dropping quickly... and getting the feeling from articles online that another crash is due..and what with trump/korea/brexit likely increasing volatility .I thought it better safe than sorry to reduce my exposure somewhat and spend more time studying and asking questions etc.

John

fun4everyone

Ridethewave wrote: »

and getting the feeling from articles online that another crash is due

You think the people writing those articles can predict the short term future direction of the markets?

Perhaps there is another reason they write such click bait.

You have to understand when you are being fed a load of nonsense about anything financial. It happens all the time, ranging from newspapers or websites simply wanting clicks/reads to someones ill informed opinions being dressed up as fact.

If you predict a crash in everything and anything constantly you will be right some of the time.