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    • MonroeM
    • By MonroeM 10th Mar 18, 10:42 AM
    • 148Posts
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    MonroeM
    Individual Shares Legal & General etc
    • #1
    • 10th Mar 18, 10:42 AM
    Individual Shares Legal & General etc 10th Mar 18 at 10:42 AM
    I still have a bit of spare cash left in my ISA allowance this year (5K), and I want to have a dabble in individual company shares. At the moment I am currently swaying towards buying into Legal & General. It is a well established company and has a good yield but before I take the plunge does anybody else have any views of other companies they would favour so I could do some further research? Any thoughts on this would be really appreciated. Thanks.
Page 1
    • Alexland
    • By Alexland 10th Mar 18, 10:51 AM
    • 2,388 Posts
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    Alexland
    • #2
    • 10th Mar 18, 10:51 AM
    • #2
    • 10th Mar 18, 10:51 AM
    Who knows what is lurking under the surface of even respectable companies? Of all the people likely to know the DIY investor is one of the least informed so at a disadvantage. I would stick with well diversified global funds.
    • ColdIron
    • By ColdIron 10th Mar 18, 11:07 AM
    • 4,148 Posts
    • 5,230 Thanks
    ColdIron
    • #3
    • 10th Mar 18, 11:07 AM
    • #3
    • 10th Mar 18, 11:07 AM
    Personally I wouldn't, I'd stick to the collective investment plan

    The only company shares I have ever bought were British American Tobacco. When I gave up fags I put my first year's worth of savings into them to make me feel better about it. I continue to hold them for the dividend but wouldn't add to them or be tempted to buy any other company shares

    There might be a case for dividends but I recognise that my stock picking ability is no better than anybody else's and don't have the inclination to put in the (ongoing) research effort that it requires
    • bowlhead99
    • By bowlhead99 10th Mar 18, 12:51 PM
    • 7,828 Posts
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    bowlhead99
    • #4
    • 10th Mar 18, 12:51 PM
    • #4
    • 10th Mar 18, 12:51 PM
    I want to have a dabble in individual company shares. At the moment I am currently swaying towards buying into Legal & General. It is a well established company and has a good yield but before I take the plunge does anybody else have any views of other companies they would favour so I could do some further research?
    Originally posted by MonroeM
    With respect, you need to have a much better reason to invest in an indvidual company than it is well established and has a good yield.

    For example, on the London stock exchange, there are over two thousand listed companies. You might only want companies that are 'well established', so you could filter it down to the ones which have been listed on the exchange at least ten years (and in most cases a company listed for ten years will of course have been in existence well before they listed).

    By filtering for some arbitrary date you will miss out businesses which have been going a long time (e.g. Royal Mail has quite a history, but less than 4.5 years of being available to buy on the stock exchange). But when casting your net you have to start somewhere and at least if a company has been listed for a decade there will be a decade's worth of share price and dividend info, publicly issued financial statements compliant with the listing rules, regulatory news announcements made by the company, analyst comments etc.

    So, the 'over two thousand listed companies' becomes 1203 companies to choose from if you only want the ones which are 'well established' using that arbitrary measure of 10 years of public information which, let's face it, is more information than you are going to read anyway.

    You might think that being even more 'well established than that' (e.g. L&G being established in the 1800s) is important... but as an investor in their current business, it is not. For example there was an HMV store on Oxford Street in 1921. Over 80 years later in 2002, the company was taken public. But if you had been invested in HMV Group in the period 2002 to 2012 and failed to sell by January 2013 - you would have lost all your money when it entered administration with nothing left over for shareholders. Being a 'well established' business, didn't save an owner of that business from loss.

    So anyway, to keep things simple and just using the measure of 10 years of continuous public listing on the London Stock Exchange as a mark of being well established and having lots of available data, we have just over 1200 well-established companies to choose from (700 main market, 500 AIM).

    The UK is probably under 6% of the world's stock market capitalisation; there are a lot of other companies out there which you could invest in. If we scaled up the 1200 well-established companies here by 100/6, you'd find 20,000 well-established companies around the world. Obviously some countries' stock exchanges are less well established than the UK and some markets are harder to research or invest in as an individual sitting in a chair in the UK who doesn't speak all the languages in the world or have a broker that offers more than about 20 markets. So 20,000 companies to choose from is maybe optimistic.

    So OK, let's say there are 1,000-10,000 candidates for investment by reason of being 'well established companies'. Your only other criteria for selecting Legal & General was that they paid a good dividend last year. Well, there will certainly be plenty of other candidates in the 1,000-10,000 well-established companies out there which can pay dividends; and there are plenty of other companies which don't pay high dividends but have good businesses and a lot of assets or revenue supporting their share price.

    So if your criteria for picking that company is that it should be well established and pay a good dividend, the choice is vast. With some research you or we could name tens or hundreds of companies meeting that easy criteria but it is not going to help you narrow down what you want to invest in unless you have some particular things you want to look out for, more than the basics of the company existing and you having heard of it.

    Personally if you already have your fill of funds investing and want to up the risk by picking something more specialist, I would just look at specialist funds or investment trusts. By picking a boring large old home-grown dividend-payer like L&G ; rather than a racy new foreign non-dividend payer like Netflix, you have shown that you probably don't want too much excitement or risk, even though you want to get into individual shares.

    If you don't really want volatility and the chance of going bust, it doesn't make a lot of sense to buy your own researched portfolio of individual stocks because you don't have hundreds of hours per week available to put into stock reasearch and selection, like the companies that run investment funds do. Don't feel insulted by the people telling you to stick to collective investment schemes.

    Have you researched all the collective investment schemes out there to know that none of them are any good at adding 'a little something different' to your portfolio and your next purchase must be an individual company?

    If you have 5k here are a few names of investment companies / investment trusts with scope for capital growth or income or both, which can be used as part of a diversified portfolio - are you fully satisfied that you have adequate exposure to the types of holdings or strategies they offer?
    Harbourvest Global Private Equity
    Pantheon International plc
    International Public Partnerships
    Tritax Big Box
    Target Healthcare REIT

    Recommending individual companies is much harder than that and a call for 'tips' on companies which might be a good investment, is often damaging to ones wealth.
    • Tom99
    • By Tom99 10th Mar 18, 1:50 PM
    • 2,067 Posts
    • 1,392 Thanks
    Tom99
    • #5
    • 10th Mar 18, 1:50 PM
    • #5
    • 10th Mar 18, 1:50 PM
    I have bought individual shares in the past but always in a portfolio of at least 10 different companies to spread risk.

    The only time I have been heavily weighted in one company was the one I worked for and the shares dropped 95%!
    • Alexland
    • By Alexland 10th Mar 18, 1:55 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    • #6
    • 10th Mar 18, 1:55 PM
    • #6
    • 10th Mar 18, 1:55 PM
    I have bought individual shares in the past but always in a portfolio of at least 10 different companies to spread risk.
    Originally posted by Tom99
    One of the problems is that DIY investors don't tend to have a particularly good understanding of what is happening outside their home market so even buying 10 shares would struggle to get much geographic spread. I know a few who just end up with a mini FTSE100.
    • Tom99
    • By Tom99 10th Mar 18, 2:11 PM
    • 2,067 Posts
    • 1,392 Thanks
    Tom99
    • #7
    • 10th Mar 18, 2:11 PM
    • #7
    • 10th Mar 18, 2:11 PM
    One of the problems is that DIY investors don't tend to have a particularly good understanding of what is happening outside their home market so even buying 10 shares would struggle to get much geographic spread. I know a few who just end up with a mini FTSE100.
    Originally posted by Alexland
    I agree and don't exclude myself from doing basically that. I also have a FTSE100 tracker so can easily compare my current portfolio, the results are similar but at the moment the tracker is ahead.
    • Alexland
    • By Alexland 10th Mar 18, 2:19 PM
    • 2,388 Posts
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    Alexland
    • #8
    • 10th Mar 18, 2:19 PM
    • #8
    • 10th Mar 18, 2:19 PM
    I agree and don't exclude myself from doing basically that. I also have a FTSE100 tracker so can easily compare my current portfolio, the results are similar but at the moment the tracker is ahead.
    Originally posted by Tom99
    If you have built a miniature subset of the UK stock market wouldn't you be better avoiding a FTSE100 tracker and holding something more global? You can still compare your share performance with the fund or index results.
    • Tom99
    • By Tom99 11th Mar 18, 6:17 AM
    • 2,067 Posts
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    Tom99
    • #9
    • 11th Mar 18, 6:17 AM
    • #9
    • 11th Mar 18, 6:17 AM
    If you have built a miniature subset of the UK stock market wouldn't you be better avoiding a FTSE100 tracker and holding something more global? You can still compare your share performance with the fund or index results.
    Originally posted by Alexland
    I have other investment which do that and am happy with the total now in UK shares.

    At the time I thought it boring to just invests more in the FTSE100/250 trackers, hence the portfolio.

    The portfolio is certainly more interesting to look at and there have been some major movement up and down. It is also nice to see 2 or 3 dividends roll in each month.

    But overall, as I said above, I would have been slightly better off just sticking to the tracker.

    Another downside is the drop in dividend tax free amount from 5,000 to 2,000 which I was not expecting. So I have been bed and ISAing some individual shares which is a lot more expensive than bed and ISAing one or two trackers.

    I am only relating my experience to the OP as an example not as any sort of recommendation.
    • MonroeM
    • By MonroeM 11th Mar 18, 10:15 AM
    • 148 Posts
    • 43 Thanks
    MonroeM
    I mentioned L&G as an example mainly because my Father has been a long term investor and has been happy with his holding in them but points duly taken from everybody. Thank you.
    • Alexland
    • By Alexland 11th Mar 18, 10:27 AM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    They are probably a good company but so were AIG that my mum was buying through the 90s until she lost a lot of money in 2008 when they failed to recover.
    • Thrugelmir
    • By Thrugelmir 11th Mar 18, 11:13 AM
    • 58,459 Posts
    • 51,836 Thanks
    Thrugelmir
    before I take the plunge does anybody else have any views of other companies they would favour so I could do some further research?
    Originally posted by MonroeM
    Holding differing views is what makes markets. Do your own research. Make your own decisions. That's what makes investing a fun hobby. Providing you only stake what you can afford to lose.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • steampowered
    • By steampowered 11th Mar 18, 11:14 AM
    • 2,492 Posts
    • 2,409 Thanks
    steampowered
    Personally I quite enjoy buying individual shares and have done quite well out of it.

    If you buy shares with good fundamentals for the price you are paying, you are unlikely to go far wrong.

    Obviously if you buy an individual share over a tracker - you could do better than the tracker, or you could do worse than the tracker. That's life.

    While the reduction in risk achieved through diversification via a tracker is a good thing, it does mean you end up investing in trash alongside the gems.
    • Alexland
    • By Alexland 11th Mar 18, 12:15 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    But at least you avoid concentrating risk into gems that turn out to be trash.
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