Investing in shares...(and maybe a fund)?

[ilovereading]

Just that really. I've never done this before, but am intrigued to try this out for the first time, with a little money that has come my way that I don't need for a while. I know there are risks involved, and I've always been cautious, financially... but I have never made any money to speak of just by being cautious and economical.

If there's anyone out there who has a lot more experience and some wisdom in this field, I'd love to hear from you before I perhaps do something silly. Just one or two tips from your own experience, perhaps, to keep me on the straight and narrow?

[jim8888]

Years ago I decided to start managing my own money and it was the best decision I ever made. I think I learned two big lessons. First, clear all your debt (outside of the mortgage). Secondly, invest regularly - monthly - in Index Tracker Funds. These maybe sound complex but they are as simple to invest in to, and withdraw money out of, as a normal bank Savings Account. You do kind of have to set your sights for saving in the medium to long term, say over five years, but it's worth it. I personally invest across Index funds in the UK, the US, Europe, Asia and some Global indexes. Charges are minimal compared to "managed" funds and in the long term Index funds outperform about 98% of those run by highly paid fund managers. I would stress to everyone that doing this is dead simple. Have a look at the Fidelity website which is where most of my investing/saving goes. And look at the Motley Fool and Monevator websites for great advice. As for buying and selling individual shares, it can be fun but be prepared to win some, lose some and eventually discover that you too are part of the 98% who generally cannot beat the market!

[SnowBells]

I invest but only for the medium to long-term (min. 5 years). But I also work in finance. I invest in funds because I know the fund managers personally. They are all long-term investors. While their investments can go up and down on a monthly basis (luckily, mostly up), over the long-term, they do go up.

Can be hard for those who don't work in finance - but then again, my mum (a housewife) was a lot better in investing than my very professional dad.

[atwitsendbutpaddlinghard]

After the party but ...

Don't buy what you don't understand.

Don't invest what you can't afford to lose.

Read Thisismoney.

Monevator monevator.com/investing-for-beginners-why-do-we-invest/

[Want2bSupermum]

I have gold and silver. Shares are hard because you have no control. I still own shares though and I am a firm believer in dollar cost averaging. I take 33% of our savings and invest this amount every month in the tracker. I do it mid month as I figure others are doing this at monthend. The rest is invested in businesses that are proven. I do not touch shares of companies that have not yet turned a profit. I didn't buy Facebook or any of the other tech related stocks as no real operating profits.

I am an accountant so able to read numbers. Another easy rule to follow is to avoid investing in companies where they have negative cash flows from operations. You will see this on their statement of cash flows. If that is negative and cashflows from financing and investing are positive I get nervous about the long term prospects of the company and normally walk away. There are always exceptions but I do listen to my gut which tends to be right more often than not.

[ilovereading]

Don't know why pound sterling signs come out as question marks?!

[ilovereading]

Thanks Rufus, I am getting their email updates already into my Inbox - ('Money Morning' I think it's called? for Money Week) - so was looking today at this, and it had a feature from someone called Tim Price, with a link to click to see if your money is at risk - which I did... EEEK! This scared the bejesus out of me. He's saying (in a very lengthy video) that a massive crash is def. on the way, and the only way to stay safe is to subscribe to his special 'inside-info' mag which gives insider tips etc ... all at a cost of 99, BTW! He seems to be hinting strongly that, unless you invest in a very specific gold mine in Mexico (as opposed to bullion), or else in certain Japanese stock, we are all doomed.... I was almost convinced, apart from the small detail of having to part upfront with 99....

[Rufus200]

If you want an easy read financial magazine, I read money week, which also has an app so can be read on a tablet. Explains everything that is going on in the financial world.

Get 4 issues free
//www.moneyweek.com/freetrial

[ilovereading]

I have none of this knowledge, hence my wariness! As for those gold price charts - they seem pretty random to me, TBH. Thanks for the useful link.. it all helps.

[PigletJohn]

If you had some way of knowing when it was going to go up, and somehow could forecast better than the pro traders, yes, you could buy low and sell high.


Have you?

Which of these ups and downs could you have correctly forecast?

[ilovereading]

Thanks for this DoctorTwo. Have to say I am a bit mystified by all the ups and downs of gold . Is it that banks (or governments/institutions/peope) rush to buy gold when there is an imminent crash? - when, for some reason, it seems to become the must-have security. Then, at other times, it seems to become less 'valuable'. Can't really get my head around the concept... still wondering whether it's wise to buy some when others don't seem to set much store by it

[DoctorTwo]

Something weird is happening to the gold price. Despite the afternoon fix at $1142 (£715.54) the US Mint is pricing it at $1456.00 (£912.89) due to 'unprecedented demand'. They're also quoting a $28 premium on silver and have run out of Silver Eagle 1oz coins. Something serious is about to happen.

Gold and silver prices from this link. Price premiums from Planet Ponzi.

[ilovereading]

So grateful again to all posters, and do please keep on posting your tips and insights. I'm now getting keen to stop being a financial ignoramus and have started to buy the FT ( though it's a job to find one in this neck of the woods). A massive thanks too to Mumsnet for such a good forum with such high quality posters :)

[ilovereading]

A thousand thanks to all since I last posted for sharing these insights, wisdom and benefits of experience. Despite some controversy I think every point has validity - it must often be a question of careful timing (possibly also seasoned with a dash of pure luck) as to what succeeds, when.
I find it inherently nonsensical that if I was cast away on a desert island, a fresh spring and some coconuts would do more to actually sustain my life than a bunch of share certificates or a bar of gold! - How odd that our society attaches so much value to such things. But it does, so at this late stage in life I am curious to explore the financial world tentatively, and initially, on a very small scale. I have bought a small number of the shares which my father swore by and stuck to over decades, just to see what happens there; considering one of the funds mentioned upthread; and toying with the idea of a (very small) gold bar...! But only with money which I could put aside for a long while, instead of spending it on treats or luxuries.

[Goldenlab]

I am Goldenlab's husband, she knew i would like to comment on this thread! First of all if you have a mortgage pay it off, then make sure you have sufficient savings in traditional bank/building society accounts with various fixed terms that cater for when you might need/not need the money. These should ideally be in a tax free environment making use of your annual ISA allowance. Only then would I consider investing outside of that.

If you do have money available after that then I would advise you to be very cautious and invest via someone like Hargreaves Landsdown who are the largest in this field. I would strongly advise you to only invest in funds as it takes years and years to develop the skills required to invest directly in shares and even then you will make mistakes, this learning curve/experience is both costly and could give you sleepless nights.

The best advice for which funds to invest in would be UK High Income funds such CF Woodford UK Equity, whose manager has an excellence track record of performance over the long term. Again do this making use of your ISA allowance of £15,000 per annum currently.

Stocks and shares can be a minefield and there is strong debate over whether markets are over valued or not so be very careful. Perhaps invest your available money over a period of time and then you can see whether this is for you or not.

[PigletJohn]

Or maybe it won't.

I bet all the mugs who bought gold three years ago, or six months ago, believed it was going to go up.

If you think you can find someone who will pay you more than the spot price for your gold, try to snatch their hand off.

Nobody knows what will happen when the Chinese banking crash comes, we only know it will be worse than the last American/European one happened.

[DoctorTwo]

The price of gold is actually still fairly high today. It is worth what somebody will pay for it

Upthread the OP stated she was being quoted a higher price than the spot price for actual gold, which indicates that gold is underpriced. At least your second point was accurate. And pretty soon, when western banks crash, gold will be $7000+ per oz.

[PigletJohn]

The price of gold is actually still fairly high today. It is worth what somebody will pay for it. If somebody tells you it "ought" to be worth 7000 an ounce, or a million, or ten cents, thry are talking rubbish. The price is not connected to any particular value, nor to what you, or somebody who's got some to sell, thinks it "should" be.

[DoctorTwo]

The price of gold is low because it is being manipulated by the Fed introducing hundreds of thousands of ounces of futures contracts. As China is the largest buyer, holder and miner of gold their banks are well protected against the crash that is inevitable due to the pyramid system created by the western banking system.

Also, Russia and India are hoarding gold, thus insulating their currencies against the crash. The Fed won't let anybody in to check their gold, and have told Germany their gold cannot be repatriated for seven years, suggesting they don't actually have it in their possession.

[PigletJohn]

Opinions differ on gold as an investment.

It has no particular value, and goes up and down according to whim. It brings no income and costs money to store and insure. Over long periods the return has been be less than other forms of investment. Occasionally it goes whizzing up or crashing down. For example if you look at a long-term chart, it is about the same $ as it was 5 years ago, but is about a third lower than it was three years ago. In which time inflation has reduced the value of the $. Over the last five years the FTSE100 went up by more than 20%. Over thirty years it went up by about 600%.

Between 1984 and 2004 gold hardly moved, but again, inflation eroded the value of the $ it was measured in.

When Gordon Brown flogged some, it had been a rotten investment for 30 years.

With the benefit of hindsight, you can see that if you had bought low and sold high, you would have made a tidy profit. Without hindsight, the mug punter usually buys high and sells low.

Nobody knows what will happen when the Chinese banking crash comes.

[whitechocolatestars]

You've had some great advice on here, I just wanted to add a couple of points too.

Before anything, I would say make sure you have fulfilled your ISA allocation. You can open an ISA wrapped portfolio through some providers which allow you to move in and out of different funds but not single stocks. This means anything you make is tax efficient.

diversifying your exposure / risk is the best way to ensure that your investments largely move in line with market activity. We all want to outperform the market of course but I think this is where the dangerous game starts if you don't have much experience. It's true that investments can go down as well as up!

Any stock picker will tell you to stick to a market you know. To pick companies yourself and outperform the market takes time, insight and more than a little luck. You'd find it hard to diversify across sectors or geographies and intelligently pick stocks that will even keep in line with the market let alone outperform without significant background knowledge. Even the best fund managers have an area of expertise that they are famous for and build their funds around it.

For that reason I would recommend starting with mutual funds. The three mentioned are great, I also like Artemis. Buying through a platform like HL allows you to invest in a wider range of products than if you were to invest directly because they can pool large amounts of retail investment into a single position.

If you do buy funds, don't forget that if you decide to diversify across geographies, you also have to take into account currency exposure and movements so you need to have a view on the long term currency rate as well as the macro economic climate of the region.

ETFs are a good way of accessing funds that track indices such as the FTSE 100 without the high manager fees, ishares have a huge range that have done very well.

Lastly, my advice would be don't try to be too greedy! Play it cautiously as you get to know the market and don't try anything too risky that you don't really understand. Stick with well established economies and companies and avoid anything that historically has high volatility unless you're absolutely certain.

Good luck!

[DoctorTwo]

It would appear I got it slightly wrong on the price of gold. According to this article discussed on the Keiser Report the real price of gold without manipulation is $7000 per oz. Also factored in is if central banks were required to back their currency with a tangible asset.

[Parietal]

if you have only a little money, don't get individual shares. get a low-cost tracker fund (e.g. www.nutmeg.com/). put money in and then do nothing for 5 years. either the markets go up or the don't. but your money will do the same as the whole market, so you are not tied to the whims of one company.

[DoctorTwo]

US Fed ends QE. Markets are probably going to be volatile for a while. A new round of it will start soon enough because it has to, otherwise the entire pyramid collapses sooner than it would with endless bailouts.

[ilovereading]

Hi everyone, thanks so much for all this - I am humbled by all your wisdom and commonsense. Alas my internet has crashed so I can't say much now - in a town cafe, unsecured wifi and DS wriggling next to me. Please keep posting and I'll check back in a day or two. V. Grateful for all this help, you are all stars! x

[Rufus200]

AIM is the London Stock Exchange’s international market for smaller growing companies, can also now go in ISAs. With the current drop in the market my AIM shares are all down, some by 80%! It really is gambling in the AIM, there is no rhyme or reason why shares go up or down in it!

I would avoid the AIM but if you really want a go look for some shares in fracking companies. Igas or Egdon are two that have been very high this year but now low so a good price to buy in at. Fracking in the USA has caused the worldwide oil price to drop by 25% in 4 months because the USA does not need to buy middle eastern oil and is now supplying itself.

If I was starting my portfolio this is what I would buy today
J Sainsbury or Morrisons
Friends Life
Centrica or SSE
Glaxosmithkline
Vodafone
BP or Royal Dutch Shell B
HSBC
BAE

Then the 3 accumulation funds mentioned above