Good investment??

[kentmotorcompany]

Lets say I have got the idea in my head that now is a good time to invest long term in large blue chip companies.

I dont really have the first clue what I'm doing. Although my thoughts are this:

Invest £5,000 spread over say 5 big companies whose share prices today are a fraction of what they where 12-18 months ago.

RBS for instance? Its share price today is 10p, from a peak of 600p. I realise its nearly state owned now and wont be worth much for a long time, but in 2-5 years???

What do you think would be a good long term investment for 2-5 years?

[2something]

It's probably a worthwhile bet, if you can afford to lose the money.

I reckon it's halfway between a bet and an investment ...

[Fittster]

Why are you limiting yourself to 5 companies if you believe the whole market is under valued? Why not all the companies in the FTSE via an ETF?

[SimonV8ster]

Whats an ETF ?

[Shadytree]

First rule of investing...

"Don't buy something just because it looks cheap... It's cheap for a reason".

[Fittster]

SimonV8ster said:

Whats an ETF ?

http://en.wikipedia.org/wiki/Exchange-traded_fund
http://uk.ishares.com/about/about_etfs.do

Basically they allow you to buy one share that tracks an entire market (like a unit trust). There are many different ETFs covering different markets and commodities.

[Fittster]

Shadytree said:

First rule of investing...

"Don't buy something just because it looks cheap... It's cheap for a reason".

Is there no place in the world for contrarian investing?

[jeff m]

Fittster said:

Shadytree said:

First rule of investing...

"Don't buy something just because it looks cheap... It's cheap for a reason".

Is there no place in the world for contrarian investing?

Isn't any investment contrarian at present

UK resident, maybe half in a UK index fund half in a global fund. If, as you state, you are not familiar with markets, five individual shares is not a decent spread.

Or do a little learning about P/E ratios and look for some that have not cut their dividends (too much)then consider individual shares.

[kentmotorcompany]

Thanks guys. I'll do a bit of home work on some funds.
So if I can buy some shares that track the FTSE and similar funds for other major foreign markets. Where would I buy these from?
I assume the people I buy them from would take a fee/comission?
What other downsides are there compared to buying my own shares outright?

[ACEparts_com]

www.bullbearings.co.uk

Good fantasy share account. Im only down £100K this year. result. Looking for a virtual bail out

[jeff m]

kentmotorcompany said:

Thanks guys. I'll do a bit of home work on some funds.
So if I can buy some shares that track the FTSE and similar funds for other major foreign markets. Where would I buy these from?
I assume the people I buy them from would take a fee/comission?
What other downsides are there compared to buying my own shares outright?

Downsides of fund investment, apart from commision is the management fee.
I'm in the US so I am no longer converscent with UK fund managment fees but for an index fund in the US a managment fee for an index fund would be about .3%, for a global .85 to 1.2% per annum.
UK will probably be higher, although many US funds have no load up front.(and they have to make their money somehow)
Try the FT and see if they do reveiws on funf managers.

There are also churning indexes (turn over of shares within the fund) which can affect the performance.
It is worth doing a bit of reading even choosing a fund manager.
I can't really help you with that because I am so out of touch with UK stuff.
When I left UK prominent fund managers were Gartmore, Aberdeen and Fidelity whether these companies even still exist I have no idea.