Have you ever invested in shares?

[YogaMama66]

Have you ever invested? I’m thinking of making a modest (10k) investment in the stock market and fancy Apple. Done some research and established my medium risk comfort level. For context, I’ve been organising my finances recently, and thought I’d like to try it out. I know investments can go down as well as up!

Actually, if OP does not need the money, the best time to invest is when the market is shaky. Any short term volatility is just paper losses and does not affect the OP as she waits for the upswing.

I'm not convinced. It's difficult even for the experts to time the bottom of the market. I was writing a report on stock market crashes a few weeks ago and there were something like 30 short lived rallies in the Nasdaq during the global financial crisis crash. It took 4 years for the Nasdaq for recover its losses.

I'm a big fan of investing in equities. As others have said, you're losing money in real terms in a savings account given inflation is so high. I have an interest only mortgage backed by my ISA investments and I typically make 25-30% a year.

But two things make me nervous when friends ask for investment advice, Bonds had their worst year in pretty much living history last year, falling by 30% globally (as did the Nasdaq in the U.S.) and 40% in the U.K. It was the first time bonds and equities fell together in 30 odd years. That makes a traditional balanced portfolio difficult without the safe haven element.

Secondly, I speak to fund managers regularly for work and they're nervous. The message from a few is that double digit returns from equities are unlikely for the next few years at least. They seem more confident in U.K. valuations than the US but it's not easy money at the moment. Inflation needs to come down in the U.K. and we need to bounce out of recession, if we hit it (as forecast). Yes, the likes of Tesla and Nvidia have performed well this year but that's on the back of big losses last year.

But monthly investing is definitely one option. It allows you to drip feed your money in and get the average in price over a longer period. And I'd go for an actively managed U.K. and global fund with £10k, with a few more interesting side investments.

It is more tax efficient to invest within the ISA structure where gains are tax free. Look at investing in a stocks and shares ISA that is involved in shares tech industry. By investing in a fund you spread your money over a number of companies reducing your risk to exposure.

Good for you for being adventurous but single-share investing is super risky.

As others have said, 10K isn't worth an IFA.

I would put it a Stocks and Shares ISA, in an index tracker fund.

That's of course after paying any debts and overpaying your mortgage as much as allowed. But you knew that!

One option is to try to see where growth can happen.

Recently Japanese equities have been doing very well after decades of stories about how Japan is doomed etc.

So it is often "doomed" regions where returns can be made rather than chasing returns in places that have had successful decades recently -- at least if you hold in the long run, with a highly diversified set of equities. Because now stocks in currently stagnating economies are cheap, and if you can wait multiple decades there is a lot of potential upside.

So right now, with the war in Ukraine and a lot of doom stories about Europe, sticky inflation etc. I might suggest looking at European+UK equities — something that tracks the Stoxx Europe 600 index in an Isa wrapper.

Of course, the doomsayers of Europe might be right after all... there are no guarantees.

There is another school of thought that all chasing after extra returns is a bad idea - nearly everyone fails to outperform the market. Therefore according to this you should just buy an All World index(not just a world) tracking etf and get exposure to global economic growth.

I would not put your whole amount in a single stock. Diversify. Do a lot of research beforehand, the financial markets are currently bullish but there’s a lot of nervousness amongst investors as the indicators suggest an incoming recession. There’s big gains, but there’s also a very big risk of huge losses.

We do use a stockbroker, but wouldn’t for £10k. Imo it’s not worth it for that amount. Our portfolio is divided between low, medium and high risk stocks. Mutual funds are generally safer, individual stocks riskier.

I’ve got around £10k of Apple shares via a HL ISA but I’ve got the same in a few other companies as well. If I only had £10k I wouldn’t put it all in one company but buy £3k or similar in 3

I agree that monthly drip feeding is a less risky than a 10K lump sum investment. I disagree about going into an actively managed fund because of the higher fees for a relatively small amonut like 10K. A low fee passively managed global equities fund will serve the OP better.

Equities are not without risk, for sure, and when I started my regular investments 20 years ago, it went down and seemed to stay down but I wasn't checking regularly so just accepted that that was the nature of equities. Eventually it did come up and over the last 10 years (barring the last few) had a tremedous upswing. Granted those years are behind us, I recall reading a study that over the last 20 years or so, there were brief but big surges in equities. If you wanted to make money in equities, you had to be in equities and in the market during those times. So buy and hold rather than trade in and out of equities. It is difficult to time the market which is what you seem to be doing here. I understand you work in investing and your and fund manager's advice makes sense in your context in that you have to justify your keep. I am guessing your investment horizon is shorter because most clients would not be so patient for returns if they are paying for investment advice.

It boils down to OP's risk appetite and when she needs the money. However, these things are a given: 10K is not a big enough amount to hire an IFA, she does not have enough expertise to stock pick and probably not enough time to actively monitor her investments.

I disagree about going into an actively managed fund because of the higher fees for a relatively small amonut like 10K. A low fee passively managed global equities fund will serve the OP better.

I'm all for being careful about fees but some of the active funds more than earn the 0.25% to 0.5% difference in annual management fees.

There's a tendency to focus on the fact that most passive funds outperform actives on average (particularly in the US as it's so well covered by analysts). But investors don't tend to look at the degree of outperformance of those active funds that do.

I've just looked at 5 years returns on Trustnet for the U.K. equity sector. Highest (passively managed) ETF was 20%, highest active fund was 42% (and 28 active funds beat that ETF return). You've got to try to pick the best performing fund managers, granted, but I wouldn't suggest anyone dismisses active funds solely on the fees.

That's UK equity though. Not global diversified fund.

The point is that OP does not have the expertise to choose the right fund managers, who don't always get it right consistently anyway. Baillie Gifford is now the worst performing actively managed fund I have in my portfolio. An actively managed fund that invested in Nvidia would be soaring and no passive fund can compete with those returns at this point, but how is OP to know which active fund to choose and she would have missed the Nvidia boat by now.

I agree that the fees of 0.25 to 0.50% of active funds are not huge compared to passively managed funds. No I don't dismiss actively managed funds but I don't make it the backbone of my investments either.

Could you explain more what you mean by BH likely cashing out?

Sure. BH is a collection of cash generating businesses (e.g, insurance companies) and a holding co for shares Warren Buffet fancies. The shares, famously, never pay a dividend as Buffet reinvests the profits.

There is a school of thought that, when Buffet dies, the company will get reorganised and BH shareholders would get a big payoff from the proceeds.

I'd love to hear how the investing on Trading 212 is going Lady Lola - any regrets or all good? I want to invest and am watching Damien too at the moment. Thanks.