Funds vs individual Shares

kjs31

I’ve never been very successful with shares (I’ve either bought or sold at the wrong time or just simply bought the wrong thing so have tended to steer clear). I do have an investment ISA worth about 50k mostly via shares from my workplace (they aren’t that great either but hey ….). I will just keep them for the dividends I think and I’m looking to reinvest the dividends into something else rather than withdraw them. 
 

In June 2020 I decided to purchase 4 lots of shares with the 2k of dividends I had in there. I just went for 4 shares recommended that day by Motley Fool (not the best strategy I know) 😉. I’m up with 2 and down with 2 and overall my 2k has become £2039 (at least I’m up not down 😉). Should I be looking to offload the poor performing ones and buying into something else? 

Then I had almost 5k in dividends sitting there doing nothing so last week decided to buy funds rather than shares. 1 put 3k into Vanguard INV FDS US EQ IDX GRP ACC and 1k into Vanguard INV FDS FTSE DEV EURP EX UK EQ ID G. I’m slightly up on the US one and slightly down on the Europe one (under 1% with each). As a very inexperienced investor is it better to stick with funds rather than pick individual stocks? I was going to stick the remaining money into Microsoft but seems I need to complete a form to purchase shares in the US. 

Albermarle

As a very inexperienced investor is it better to stick with funds rather than pick individual stocks?

Definitely yes .

This could be of interest.

Passive investing Archives - Monevator

FatFred66

kjs31 said:

 I was going to stick the remaining money into Microsoft but seems I need to complete a form to purchase shares in the US. 

In my non-expert opinion you've probably got more than enough Microsoft in your US Equity Fund already. 5.55% of that is Microsoft - with another 18% of it spread between Apple/Google/Amazon/NVIDIA/Tesla/Facebook - the so-called 'Magnificent 7', or 'The Emperor's New Clothes' as I think of them. You might as well invest in Bitcoin (or cowrie shells).

Just my opinion.

Notepad_Phil

kjs31 said:

.... I do have an investment ISA worth about 50k mostly via shares from my workplace (they aren’t that great either but hey ….). I will just keep them for the dividends I think and I’m looking to reinvest the dividends into something else rather than withdraw them.  ...

This is just an opinion from someone off the internet who has no idea of your personal situation, but in your shoes I would be very careful about having large amounts of assets in the same company that I worked for. If that 50k was just part of a 500k portfolio then I would be more easy about it, but if it made up a big part then personally I'd be worried that one day the company might fall into difficulties and potentially I might find myself both unemployed and with an investment that is not doing very well.

When I was in workplace schemes like this I would quite happily buy the shares but then reinvest into other assets such as a global all share equity index. Note you don't need to withdraw the money to do this, most platforms will allow you to sell shares, funds etc and keep the cash within the ISA so that you can then purchase other shares, funds instead.

P.s. funds are the way to go for most people.

dunstonh

In June 2020 I decided to purchase 4 lots of shares with the 2k of dividends I had in there. I just went for 4 shares recommended that day by Motley Fool (not the best strategy I know) 😉. I’m up with 2 and down with 2 and overall my 2k has become £2039 (at least I’m up not down 😉). Should I be looking to offload the poor performing ones and buying into something else? 

Buying shares requires knowledge of the companies you are buying in.
Buying from a tip on MF is just plain silly

A good performing share in one period, can be the worst in the next or vice versa.

kjs31

dunstonh said:

Buying shares requires knowledge of the companies you are buying in.
Buying from a tip on MF is just plain silly

A good performing share in one period, can be the worst in the next or vice versa.

Yes it wasn’t the best strategy really. I did feel quite positive about 3 of the stocks and ambivalent about the 4th (the one that has dropped the most) but it’s not 1000s of pounds so I’m not overly bothered. Think I might well stick to funds from now on but avoid bonds. Been burnt by those in my pension accounts which is another saga altogether 😉

kjs31

Notepad_Phil said 

This is just an opinion from someone off the internet who has no idea of your personal situation, but in your shoes I would be very careful about having large amounts of assets in the same company that I worked for. If that 50k was just part of a 500k portfolio then I would be more easy about it, but if it made up a big part then personally I'd be worried that one day the company might fall into difficulties and potentially I might find myself both unemployed and with an investment that is not doing very well..

Apart from my pension I have most of my savings in cash as it’s always felt safer to me, so don’t rely on the work shares really. They have dropped so much over the last few years I kind of leave them there and forget about them in truth. I had originally intended that the dividends go towards my retirement income at some point but it’s not looking like they will do much more than fund a holiday when that point comes. I think I’ll just stick the dividends into funds and hope for the best 😉. 

kjs31

Thanks all. Any suggestions of a third fund to buy into on top of the 2 noted above? I think I’ll sell the poor shares which will leave me just over £1000 to put into another fund. 

Richard1212

I am a great believer in buying individual company shares------rather than  using "Funds".

But, as everyone has already said, you have to do a lot of hard-slogging work and investigation to start off your portfolio. Assuming you gain more expertise , far more than Motley Fool ( !!! ), it is then best to hand over to a portfolio manager for day-to-day time-consuming detail. Of course, it all depends on how rich you are : you have to cut your cloth etc.

But now that I have a very large portfolio across 9 market sectors and it is managed expertly, I am even more sure that I was wholly correct in purchasing individual shares rather than trusting to Funds that I have no control over in terms of my or my advisors' own investigations and expertise.

InvesterJones

kjs31 said:

Thanks all. Any suggestions of a third fund to buy into on top of the 2 noted above? I think I’ll sell the poor shares which will leave me just over £1000 to put into another fund. 

If in doubt just stick to one cheap global index fund.

wmb194

Richard1212 said:

I am a great believer in buying individual company shares------rather than  using "Funds".

But, as everyone has already said, you have to do a lot of hard-slogging work and investigation to start off your portfolio. Assuming you gain more expertise , far more than Motley Fool ( !!! ), it is then best to hand over to a portfolio manager for day-to-day time-consuming detail. Of course, it all depends on how rich you are : you have to cut your cloth etc.

But now that I have a very large portfolio across 9 market sectors and it is managed expertly, I am even more sure that I was wholly correct in purchasing individual shares rather than trusting to Funds that I have no control over in terms of my or my advisors' own investigations and expertise.

It actually isn't that hard to build your own 'fund' e.g., find one or more you like and simply buy some or all of shares in the companies of which it's or they're comprised. With the zero commission brokers it's as cheap as it's ever been to do it.