Buying Shares

No harm in having a go, but just one stock/£500 is leaving a lot to chance, especially if buying small/micro-cap.


I've also gone for the risky portfolio of individual stocks option, but will not put any more than 2% of my total net worth into it - the rest is in cash/funds/property. Only just started at the end of last month, but already got £13.8k invested (out of 20k) in 14 stocks, mostly small-mid cap US biotech.



It seems I got in at the right time as the sector has been consistently strong since I started (more luck than anything), and the portfolio is already showing a profit.



I'm not sure if I've made a mistake by splitting my cash between so many stocks - perhaps it might make more sense with biotech to have more shots at getting one good share?



Share prices in biotech, can go up (or down) by huge amounts, especially at the small cap end of the spectrum, so I only need a couple of winners, or even one will do, if it's a big winner.


Anyway, with biotech being so volatile, I've been buying in small chunks (to £/cost average), sometimes as low as £250 a trade, but with most things on their way up solidly right now it may have been better in hindsight to plonk the whole lot down in one go. Still some holdings have ended up only at the £400-600, although most are in the 800-1200, and the max initial investment has been £1600 - that was my first buy (virgin galactic) which was a bit of a punt (and my only non-healthcare related stock), and I got a bit carried away with it!


The plan was originally to have some holdings at the ~£3000 mark, but it hasn't worked out that way, partly because of the rising marked, and partly because I have found more interesting stocks which I suspect are undervalued by the market currently.



I have been studying/observing the sector (and various stocks) for some years now, so well aware of the risks, and as well as the more risky stocks I also have invested in much less risky stocks (more healthcare oriented, which is a defensive sector) to balance out the portfolio a little. It's the only sector I understand reasonably well, so for me, investing outside of the sector is more of a punt.


If the OP does not know the company/sector it's a risky long shot - better to keep the money till there is enough saved up to make it more worth while, and in the mean time invest virtual money in portfolio + read up on the companies/sectors of interest as much as possible. That would be a better way to dip in a toe IMO.



At the end of the day I'm prepared to loose close to 100% of the value of my stock portfolio, but I'll do my best not to loose anything. All the risks I take are calculated - though sometimes poorly so!


Disclosure/disclaimer: I'm only an amateur who loves biotech/healthcare, especially right now it's suddenly starting to show signs of life (after being down trodden for a few years), but even so it's a risky prospect, and especially in the form of individual stocks, so please do not hold me responsible if you loose money by investing in biotech after reading this. IMHO it's not a bad sector to to buy/hold right now, but stick to funds (on a long term horizon) if you are not sure what you are doing!

For small amounts like that you'll find far less risk and far more reward in matched betting. It's not the money maker it was 10+ years ago where £1000+ profit a month was easily achievable but you should be able to double that £500 in a couple of months with an hour or so each weekend.