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Can you learn how make money by investing?

2 replies

NotAnotherMojito · 20/07/2023 08:13

Just that really - I don’t mean Stocks and Shares ISA but making own decisions somehow?

If anyone has been successful (enough to make an income comparable to salary), please advise what are the best resources and platforms to learn? Thank you.

OP posts:
DontEatCrisps · 20/07/2023 08:27

Yes of course you can learn. I'd start off by subscribing to something like Investor's Chronicle. There are also lots of good books on investing.

You can choose your own shares within a S&S ISA- the ISA is just the wrapper that keeps your investments out of tax.

I was also struck by you mentioning making an income- you need to be very clear whether you are talking about investing or trading https://www.investopedia.com/ask/answers/12/difference-investing-trading.asp Trading is much harder and riskier and less suitable for a novice. You can of course make an income from investments but this is a much slower process. I've been investing for years and so far have a pot of about £200k which I could take a modest income from if I wanted- it has taken time though.

Investing vs. Trading: What's the Difference?

Investing refers to long-term buy-and-hold strategies that earn returns as the investment grows. Trading refers to the buying and selling of securities seeking short-term profit.

https://www.investopedia.com/ask/answers/12/difference-investing-trading.asp

BarbaraofSeville · 20/07/2023 08:43

There are lots of highly paid experienced traders (the kind of Mumsnetters and their DHs in their 'big jobs') who do this for a living. Only a minority of them make a better return than index tracker funds.

If you want to make an income, rather learning to be a trader, you'll almost certainly be more likely to be successful by just buying diversified tracker funds in a S&S ISA.

But there are apps to help you trade now. You're basically wanting to buy and sell for a profit, so need to buy low and sell high. I think the 'quickest' way to do it is to repeatedly trade, so buy share X, then sell when the price has risen and you can make a profit, then use that larger amount of money to buy some different shares, which you then sell, then so on.

But you have to account for the cost of trading, so can't start too small or else this will wipe out your profit. The time period is hugely variable. There's such a thing as day traders, who buy and sell within the day, to exploit variations in the market, but they're working with huge amounts of money and it's very risky. Get it wrong and you could lose thousands.

Others will keep the shares for longer, to wait until they can make a profit, but obviously that lengthens the time it takes for your income to grow. But that might introduce dividends into the mix. I think some traders time their share purchases to qualify for dividends, to make money that way.

I think that trading would also be subject to capital gains tax if you exceed the allowance, and the shares are not in an ISA, so that's also something to make sure you understand.

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