share purchases medium to long term thoughts
Discussion
have been playing about with T212 recently and have a nice assortment of wierd and wonderfuls tucked away and maybe £1000 in value sitting and currently sitting down 3% overall on what i've put in over the last month
looking to perhaps put £50-100.a week in going forward and looking for some suggestions on should i buy using invest or isa options for medium and long term holds
and would anyone care to suggest decent companies to look at that will provide a decent dividend return year on year as well as have a decent potential to increase in value
looking to perhaps put £50-100.a week in going forward and looking for some suggestions on should i buy using invest or isa options for medium and long term holds
and would anyone care to suggest decent companies to look at that will provide a decent dividend return year on year as well as have a decent potential to increase in value
The value of any share is what the expected value is in a year's time minus a percentage (which is higher for more risky shares).
Lots of clever people in the city with access to more information than is easily available to individuals would have analysed the accounts and statements issued by traded companies and calculated the expected value and risk, and if you do better than them it's purely chance, unless you have inside information which would be illegal.
Therefore I'd invest in a tracker fund - this will spread the risk over many investments (so if one does badly another might do well). You're wasting your money with a managed investment fund (where the shares are picked out) as clever people in one bank are not likely to be better than the market as a whole on average unless they take on more risk, and you're paying the clever people's city salaries out of your investment.
Lots of clever people in the city with access to more information than is easily available to individuals would have analysed the accounts and statements issued by traded companies and calculated the expected value and risk, and if you do better than them it's purely chance, unless you have inside information which would be illegal.
Therefore I'd invest in a tracker fund - this will spread the risk over many investments (so if one does badly another might do well). You're wasting your money with a managed investment fund (where the shares are picked out) as clever people in one bank are not likely to be better than the market as a whole on average unless they take on more risk, and you're paying the clever people's city salaries out of your investment.
I'd echo that.
It's one thing having a bit of a punt with small amounts but at some point the pot is large enough that you really feel a single share taking a massive hit (WireCard anyone?).
Personally I use active funds but if I were starting over and wanted an easy life I would almost certainly look at low cost passives.
I can't think of a reason not to use an ISA wrapper.
It's one thing having a bit of a punt with small amounts but at some point the pot is large enough that you really feel a single share taking a massive hit (WireCard anyone?).
Personally I use active funds but if I were starting over and wanted an easy life I would almost certainly look at low cost passives.
I can't think of a reason not to use an ISA wrapper.
Glasgowrob said:
just really looking for a few ideas to put money into
i'm thinking about generally safe bets like shell diageo zeneca etc, but curious if anyone can shed any light on shares that can offer a decent dividend return as well
Dividends seem to divide opinion but look at the holdings of investment trusts like City of London, Troy Income & Growth or Finsbury Income and Growth for some ideas.i'm thinking about generally safe bets like shell diageo zeneca etc, but curious if anyone can shed any light on shares that can offer a decent dividend return as well
Once you've done so ask yourself why you wouldn't just buy the trust and benefit from backing some of the field rather than trying to pick the individual horse.
Personally I'd look beyond the UK and look globally and look at total return.
I read a piece recently which on the subject of dividends pointed out that with many companies there's a case to argue that they're bribing shareholders with their own money.
b
hstewie said:
hstewie said: I read a piece recently which on the subject of dividends pointed out that with many companies there's a case to argue that they're bribing shareholders with their own money.
But to counteract that what’s the point of owning a business that doesn’t returnUltimately the value is that it will eventually return more than the initial investment money to its owner
Other wise it’s a Ponzi scheme.(but that’s a whole
Other conversation)
itlab said:
But to counteract that what’s the point of owning a business that doesn’t return
Ultimately the value is that it will eventually return more than the initial investment money to its owner
Other wise it’s a Ponzi scheme.(but that’s a whole
Other conversation)
The argument goes that a good business can do more to increase its value by investing those returns in itself and growing than it can by giving them out to shareholders.Ultimately the value is that it will eventually return more than the initial investment money to its owner
Other wise it’s a Ponzi scheme.(but that’s a whole
Other conversation)
If you look to the US dividends are broadly speaking less of a thing and broadly speaking there is more growth.
Terry Smith (of Fundsmith) is an advocate of investing for total return and taking what you need.
bhstewie said:
hstewie said: I'd echo that.
It's one thing having a bit of a punt with small amounts but at some point the pot is large enough that you really feel a single share taking a massive hit (WireCard anyone?).
Personally I use active funds but if I were starting over and wanted an easy life I would almost certainly look at low cost passives.
I can't think of a reason not to use an ISA wrapper.
Sure but any portfolio is going to diversify risk, obviously putting it all on one share is likely to be foolish.It's one thing having a bit of a punt with small amounts but at some point the pot is large enough that you really feel a single share taking a massive hit (WireCard anyone?).
Personally I use active funds but if I were starting over and wanted an easy life I would almost certainly look at low cost passives.
I can't think of a reason not to use an ISA wrapper.
Glasgowrob said:
i like the idea of a different stake every week and build up a nice varied portfolio over the course of a year or 2.
Have a look on the what’s your biggest gamble thread. It’s not all hopeless companies that aren’t going to increase there are a lot of tips for companies that have taken a huge hit over the last 3 months and could recover well. A lot of us are doing exactly what you want to do. Glasgowrob said:
i like the idea of a different stake every week and build up a nice varied portfolio over the course of a year or 2.
Why bother? If you buy a tracker you have a nice varied portfolio from day 1 that automatically rebalances itself without you having to do anything. Echo the comments above about the distinction between dividend and total return being a bit arbitrary. You should get the same overall growth, it’s just a question of whether you reinvest or not....
The great advantage of stocks and shares investing is that it’s divisible, ie if you need the cash you sell only as much as you need to generate that cash.
Glasgowrob said:
i like the idea of a different stake every week and build up a nice varied portfolio over the course of a year or 2.
Is this just a bit of fun or your main investment? If it for fun, go ahead, as long as most of your spare cash is being invested elsewhere. If it's you main investment, then don't do it. Invest in a fund or funds - Vanguard/Fundsmith/IM or one of many others. As a single investor you don't stand a chance against the institutions & most of them don't do brilliantly.Glasgowrob said:
i'm thinking about generally safe bets like Shell Diageo Zeneca etc
Shell B shares are currently £13.28; a year ago they were £26.47, a 49% drop. Still think you know what a safe bet looks like?bhstewie said:
hstewie said: The argument goes that a good business can do more to increase its value by investing those returns in itself and growing than it can by giving them out to shareholders.
If you look to the US dividends are broadly speaking less of a thing and broadly speaking there is more growth.
Terry Smith (of Fundsmith) is an advocate of investing for total return and taking what you need.
This. ^^^If you look to the US dividends are broadly speaking less of a thing and broadly speaking there is more growth.
Terry Smith (of Fundsmith) is an advocate of investing for total return and taking what you need.
Investing is all about returns and these can be in the form of dividends or increased share prices.
It is what you do with these returns that decides everything. If you don't touch them you have a growth portfolio, if you draw them down you have an income portfolio, if you do a bit of each you have a growth and income portfolio.
It is all about the absolute return. Dividends on shares can rise or fall and whilst the (redemption) yield on bonds is always flat, the actual (running) yield moves inversely with the bond trading price (until you are invested, then it remains flat and the sale trading price dictates the new value of your holding).
So focusing on the income aspect can sometimes be distracting from the overall objective.
Mr Pointy said:
Glasgowrob said:
i like the idea of a different stake every week and build up a nice varied portfolio over the course of a year or 2.
Is this just a bit of fun or your main investment? If it for fun, go ahead, as long as most of your spare cash is being invested elsewhere. If it's you main investment, then don't do it. Invest in a fund or funds - Vanguard/Fundsmith/IM or one of many others. As a single investor you don't stand a chance against the institutions & most of them don't do brilliantly.Glasgowrob said:
i'm thinking about generally safe bets like Shell Diageo Zeneca etc
Shell B shares are currently £13.28; a year ago they were £26.47, a 49% drop. Still think you know what a safe bet looks like?
JulianPH said:
It is all about the absolute return. So focusing on the income aspect can sometimes be distracting from the overall objective.
^^ Very much this. I'm generally an equities buyer and generally tend towards an optimistic view. However, right now I'm pretty cautious about the outlook for reasons which include,
- Global market levels look pretty fancy
- There's already been a big recovery since March/April
- FTSE impacted by reasons which include Brexit
- Covid19 uncertainties
- Time of year - although there are no hard and fast rules on this one. "Sell in May and go away."
rockin said:
JulianPH said:
It is all about the absolute return. So focusing on the income aspect can sometimes be distracting from the overall objective.
^^ Very much this. I'm generally an equities buyer and generally tend towards an optimistic view. However, right now I'm pretty cautious about the outlook for reasons which include,
- Global market levels look pretty fancy
- There's already been a big recovery since March/April
- FTSE impacted by reasons which include Brexit
- Covid19 uncertainties
- Time of year - although there are no hard and fast rules on this one. "Sell in May and go away."
I agree with your points above, though looking at the real fundamentals I only see Brexit and CV19 as being the biggest issues (and if I am wrong I could end up selling the Big Issue!).
Sell in May and go away does have a degree of historic fact, but so too do other periods in the year. It is easy to work out very long term averages, but they do not apply to every year, by a long stretch. For example, my flagship (PH Equity) is up nearly 20% (19,89%) since the beginning of May this year.
I am glad I didn't sell and go away!
Glasgowrob said:
i like the idea of a different stake every week and build up a nice varied portfolio over the course of a year or 2.
I suspect if you went to anyone in the financial industry (Julian leaps to mind as he's on the thread) they wouldn't suggest this.I'm sure it can be done but unless you want to put a lot of time and effort in and you know you have the stomach for some eye watering losses it's almost certainly quicker/cheaper/easier to just invest in a fund or trust that roughly aligns with your investment objectives.
Passive or active or whatever but I'd struggle to think of any benefit in sitting down each month and trying to pick which individual stock to put that months £100 into.
The problem with investing small amounts is that it is really difficult to make any money.
Let's say you buy 10 shares at £10 for your monthly £100. Depending on the platform you are using and ignoring the spread you will have a trading fee of £5-10. We'll be optimistic and say £5. So that's £5 to buy the shares and £5 to sell the shares. Your investment has cost you £10, so essentially, that share now has to increase by 10% just to cover your trading costs.
Gordon Gecko down the pub bought £10,000 of the same equity and the price would only only need to move 0.1% to recover his trading losses and anything more is profit. Move 10% and you are only just breaking even and they've made best part of a grand. Same company, same entry and exit points, very different outcomes.
A simplistic example I know, but the point is that it is better to save up your £50-100/month and buy once or twice a year, thus minimising your trading losses. Dripping £50 here and there into the markets is not an efficient way of investing.
What to buy is a whole other ballgame...
And remember, there are a lot of people who do this for a living. There are a fixed number of shares in circulation (ok - not strictly true) so for every share you buy, someone else is selling one. You are buying because you think the value will go up. They are selling because they think it won't. Who has the better information? Why are you right and they are wrong?
Let's say you buy 10 shares at £10 for your monthly £100. Depending on the platform you are using and ignoring the spread you will have a trading fee of £5-10. We'll be optimistic and say £5. So that's £5 to buy the shares and £5 to sell the shares. Your investment has cost you £10, so essentially, that share now has to increase by 10% just to cover your trading costs.
Gordon Gecko down the pub bought £10,000 of the same equity and the price would only only need to move 0.1% to recover his trading losses and anything more is profit. Move 10% and you are only just breaking even and they've made best part of a grand. Same company, same entry and exit points, very different outcomes.
A simplistic example I know, but the point is that it is better to save up your £50-100/month and buy once or twice a year, thus minimising your trading losses. Dripping £50 here and there into the markets is not an efficient way of investing.
What to buy is a whole other ballgame...
And remember, there are a lot of people who do this for a living. There are a fixed number of shares in circulation (ok - not strictly true) so for every share you buy, someone else is selling one. You are buying because you think the value will go up. They are selling because they think it won't. Who has the better information? Why are you right and they are wrong?
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