Small amount for invesment - should i stay with funds or more to shares?

ArchBair

I generally prefer very well established Investment Trusts to funds but would not really consider individual shares even though my wife and I have a combined investment portfolio of around 500K.

DairyQueen

Dazza_a89 wrote: »

i have been told from a friend a friend

With friends of friends like these you don't need enemies. Single-share investing is more akin to gambling than investing and your foolish mate-of-a-mate is talking out of his backside. Unless you have a big chunk to invest, and can therefore afford to take a punt with a small percentage, don't go there.

In the scheme of S&S investing £6k is a small sum. It suggests that you are just starting-out. If that's the case....

There are a few S&S investment guidelines that I have ignored to my cost in the past:
1) Don't invest for anything less than 10 years.
2) Consider how you would react if your investment lost 40% overnight.
3) Diversify, diversify, diversify (across all sectors and regions) - the antithesis of the horse's backside recommendation.
4) Keep charges as low as possible.
5) When (not 'if') the market drops, don't sell.

If I was starting-out now I would invest my first tranche in a passive, low-cost, global fund - e.g. Vanguard, ishares, Blackrock. Cheap, easy, time-saving, no expertise required. A good foundation on which to build and learn, or just to build if you are not a DIY enthusiast.

Direct share investing is the most sophisticated form of S&S investing and even those paid handsomely for their expert management often fail to beat their index.

The most successful DIY investors I know are humble (including many people on this forum). They use a basic principle: i.e. invest only within the parameters of your current knowledge.

May I suggest that the people here are likely to give you solid advice as their experience has been tried and tested. These are real people, not those writing squawks in the money pages of the tabloids, nor will you find them pontificating in the pub.

elephantrosie

Alexland wrote: »

There's no amount of money I would would want to invest in individual shares again. Unless I had enough money to start my own fund and even then there would be others with better economies of scale.

how much have you lost in individual share picking? have you identified your mistakes?

elephantrosie

BananaRepublic wrote: »

Exactly. To reduce risk you need to buy shares in a decent number of companies, and unless you know what you are doing, you could lose a lot of money. Shares take time and effort, you need to research lots of companies, and have selection criteria that work well enough to make it worthwhile. I’m lazy, I stick to funds.

same reason here why i have not invested in individual shares.

Alexland

elephantrosie wrote: »

how much have you lost in individual share picking? have you identified your mistakes?

Thankfully the market was rising so I didn't lose money but my gains were lower than I could have achieved in a well diversified fund during the period. Yes my mistake was amateur share picking. I have worked in companies where even the management don't understand the future performance so what hope does the average outsider have?

Alex.