Can you help out an idiot please?

eskbanker

LobsterMemory wrote: »

No, it's not individual shares that's very, very high risk, it's lack of diversification. And you can gradually build that diversification up by investing small amounts in individual shares if that's the way you want to do it. It may or may not be the best way but it's a way.

Don't get me wrong, I'm not saying that buying individual shares is something that nobody should ever countenance doing, but simply that it's a risky and expensive approach for newbie investors, such as those who cheerfully and candidly declare that "I've never invested in Stocks and Shares in my life. I have no idea what I am doing", so would stand by my recommendation to such folk to buy collective investments, despite other options being available.

Buying shares in 150 companies is obviously better diversification than just one or a handful, but it's no match for the thousands that are readily accessible from (funds of) funds, and would obviously entail a massive amount of research as well as higher cost and risk. Accumulating what you feel to be an adequately diversified portfolio 'gradually' also introduces a timing aspect that doesn't apply if buying a ready-made product.

So, I'm not saying that I'm right and you're wrong, just that I believe my approach is better suited to OP, and most others in their situation....

sevenhills

eskbanker wrote: »

Buying shares in 150 companies is obviously better diversification than just one or a handful,..

I did that 20+ years ago, so maybe your point is right, its the right thing to do for the OP.
But after a few years I thought that there was more to investing than getting a 10% yearly return. If you are earning £££££££, what is the point in earning a £100 return on £1,000, £75 above bank interest rates?

MaxiRobriguez

Op doesn't know what they're doing as they suggest, so buying individual companies isn't the right way to go. Not only will they have no idea why they are buying that company, or how to analyse the fundamentals, potential market scenarios in the future, they also will probably make poor decisions when it comes to the sell as well.

Cheap index tracker and be done with it. It's hard to go wrong with them.

Apodemus

sevenhills wrote: »

I do this, but its a high risk strategy.
I enjoy following the different companies, I keep them long term if they perform poorly, if they do well, I sell them and buy another.

Each to their own, but I would prefer to “ride my winners and cut my losses”. In my experience the long-term dogs never get any better.

tiger_eyes

I'd recommend the book I Will Teach You To Be Rich by Ramit Sethi, which (despite the clickbait title) is a simple, helpful primer on basic investing. Make sure to get the UK version if you're going to read it.

Snakes_Belly

I would start with a regular saving plan into a tracker fund with a company like M and G. It's flexible as you can add lump sums and the charges are low. You can also take out a savings plan via an ISA and still do a cash ISA with another provider.

Flobberchops

tiger_eyes wrote: »

I'd recommend the book I Will Teach You To Be Rich by Ramit Sethi, which (despite the clickbait title) is a simple, helpful primer on basic investing. Make sure to get the UK version if you're going to read it.

Georg1o wrote: »

Is that safe?

Well, unless you're a haemophiliac and are prone to paper cuts...?

thecakefairy7

Thanks again for all the advice.
I'm not sure if it makes any difference but I have no other debts apart from a small mortgage which is fixed for another 2 years, so no option to pay off without penalty, will have about £60k savings (this is redundancy due but I have another job), a final salary pension which is now closed but I paid into for 33 years, another newish pension which I will continue paying into and I just have a small flat with the usual outgoings.
I was looking at this as a sort of side line to other types of savings, with the view to making a little more than the 0.3 - 0.5% my bank offers. I obviously know that is not guaranteed but this would probably be £10k max, so I would still have money if it all went wrong but, like everyone else, I'd be gutted to lose it but completely understand risk.


Not sure if any of that helps?

BLB53

I've never invested in Stocks and Shares in my life.
I have no idea what I am doing, despite reading everything I can regarding the subject.

It can be fairly straight forward but it's important you understand what you are trying to do and have some sort of plan to keep you focussed.

I suggest get hold of a copy of Edwards' book 'DIY Simple Investing' and see if it makes sense. Also it's important to have some idea of your tolerance to risk as investing is very different to cash savings. But good luck with it if you decide to give it a go.

AlanP_2

thecakefairy7 wrote: »

Thanks again for all the advice.
I'm not sure if it makes any difference but I have no other debts apart from a small mortgage which is fixed for another 2 years, so no option to pay off without penalty, will have about £60k savings (this is redundancy due but I have another job), a final salary pension which is now closed but I paid into for 33 years, another newish pension which I will continue paying into and I just have a small flat with the usual outgoings.
I was looking at this as a sort of side line to other types of savings, with the view to making a little more than the 0.3 - 0.5% my bank offers. I obviously know that is not guaranteed but this would probably be £10k max, so I would still have money if it all went wrong but, like everyone else, I'd be gutted to lose it but completely understand risk.


Not sure if any of that helps?

Hopefully not being rude, but if you have 33+ years of pension behind you I guess you are over 50.

Have you considered putting some of the savings (redundancy money) through a pension to benefit from the tax breaks on offer?

As you can access it at 55+ you wouldn't be locking it away for too long, although there are things to consider before accessing it to minimise any negative impacts such as reduction on contributions allowed to £4k a year from that point forward if even 1p of taxable income is taken.