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Newbie into shares investment
Alan Cooke
Posted: 27 January 2018 11:32:48(UTC)
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Hi there,

I am wanting to start investing in shares for the medium to long term. I do have investments already but handled by an investment company (basically my pension). I will have some funds available soon and rather than invest with a company as above I want to have a go myself. My knowledge/experience in choosing where I buy shares and why is negligible, so I need resource , advice, reading material etc so that I can start to make some fairly informed decisions.

That being said I am well aware that share investment is not exactly without risk. That being said I would rather know why I either made money or lost than be ignorant on both counts. So any links to resource material that, as far as is possible, is trustworthy will be appreciated. Any 'first step' advice will equally be appreciated.

I look forward to hearing from you as to how best to get started.

Cheers

Alan
1 user thanked Alan Cooke for this post.
Aminatidi on 10/04/2018(UTC)
AJW
Posted: 29 January 2018 11:12:15(UTC)
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Find a good core managed fund or world index tracker, and add region/sector-specific funds over time as you drip money into your portfolio.

Hargreaves Lansdown is an excellent starter for noobs. [EDIT - this is a platform for buying and selling funds, shares, etc)

Consider a stocks and shares ISA.
2 users thanked AJW for this post.
Alan Cooke on 29/01/2018(UTC), Aminatidi on 10/04/2018(UTC)
Mr Helpful
Posted: 29 January 2018 11:56:40(UTC)
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Suggested reading list, designed to cover a broad spectrum :-

'The Informed Investor' by Frank Armstrong
'A Wealth of Common Sense' by Ben Carlson
'Investment Trusts' by John Baron
'The Most Important Thing' by Howard Marks

Should take about a couple of weeks to read.
The good advice in previous post will then be fully understood.
If able to digest those books, will soon be advising us all on how to invest!!!
2 users thanked Mr Helpful for this post.
Alan Cooke on 29/01/2018(UTC), Aminatidi on 10/04/2018(UTC)
King Lodos
Posted: 29 January 2018 16:46:48(UTC)
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I'm going to sound like a salesman for Fundsmith, but the easiest would be to open an ISA with Fundsmith and just start investing into it regularly.

https://www.fundsmith.co.uk

(Long, long-term, I still recommend Vanguard – as Terry Smith's in his 60s .. he might still be investing in 30 years time .. But Fundsmith is a very easy choice, as you can read about the companies you're invested in, they're very high quality companies, and the literature and videos they do are a great education, and cut through a lot of industry nonsense.)
4 users thanked King Lodos for this post.
Alan Cooke on 29/01/2018(UTC), Alex Peard on 29/01/2018(UTC), Aminatidi on 10/04/2018(UTC), Raj K on 10/04/2018(UTC)
Mark Spencer
Posted: 10 April 2018 04:25:20(UTC)
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Hi Alan,

Warren Buffett, who you have probably heard of, says that the first rule of investing is never to lose money and the second is never to forget rule 1. One can often apply basic principles one has learnt in one's own financial life to investing, for example, an individual would know how much debt is appropriate on one's home. You would apply this to investing by not buying a share (company) whose total debt relative to total assets, is more than say, 30%

Investing might seem complex, however it is not as complex as many think. However, there are a few key areas that must be understood.

If accounting is not your field, a good book to read is "Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports". A stock is a share of a company and the companies performance, profit and financial strength are all presented in financial statements - after reading this, you will be able to understand if a company is good and worth investing in.

Another key area is financial ratios - the above book will also cover some very important topics about ratio analysis. There are also sites such as Investopedia and the like which are great resources for clarifying and reinforcing these topics.

Finally, one must understand Competitive Analysis - the competitive environment in which a company operates will, together with its financial ratios, determine its worthiness as an investment. For example, Paypal is the leader in mobile payments - due to what they call its "first-mover advantage" and the security of its platform, it has a strong competitive advantage.

The best book on this topic is Michael Porters "Competitive Strategy - Techniques for Analyzing Industries and Competitors".
.
I also recommend books like "The Warren Buffett Way" which will acquaint you with the common sense, no-nonsense principles that are the bedrock of investing

Once you have read these - and they are not overly long or technical books so you will cover them fairly quickly - you will be ready to move forward and work out why markets go up and down, why there is a herd mentality in markets and how to separate fact from opinion.

Cheers
1 user thanked Mark Spencer for this post.
Aminatidi on 10/04/2018(UTC)
Alan Selwood
Posted: 10 April 2018 11:56:12(UTC)
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Though the previous poster has made a very comprehensive answer, you may well, as a beginner, want to piggy-back on others' share selections first, while you find out more of the details so that you can confidently pick a small range of shares yourself.

If buying individual shares, do in any case try to deal in meaningful amounts to avoid dealing costs being too high a percentage of the total capital deployed - for individual shares, try to buy at least £2000 to £5000 worth of each company, and of course in order to reduce risk you will want between 6 and 30 of these, minimum. So a share portfolio where you pick each share manually will have in total between £12,000 and £150,000 to cover the risk element of individual companies you choose either stubling badly or collapsing altogether.

Types of holding method will mean either a tracker fund (but you will glean very little about what they invest in that takes your learning forward, since they just buy everything in their selected index) or a unit trust or Open-Ended Investment Company (= 'OEIC') or an investment trust.

I would suggest you consider (among others) :

Fundsmith Equity Fund (T class if bought direct, or I class if bought via a 'platform' - usually about 28-30 shares that are very large, established, with headquarters in the USA and/or Western Europe, but often with sales to global markets. All companies in the portfolio are selected for their strength and market-leading dominance by the founder Terry Smith and his team.

CFP SDL UK Buffettology - a fund you would buy via a platform, run by Keith Ashworth-Lord, whose method is to choose companies that have ticked his selection boxes for about 6 different factors. He has long experience, and used to be the senior analyst for the shares magazine 'Analyst' in the 1990s.
Like Fundsmith, he tends to come near the top of the pile for results.

MFM Slater Growth - a fund run by Mark Slater, the son of Jim Slater, and co-author with Jim of 'The Zulu Principle'. If you want income rather than growth, there is a Slater Income fund too. Buy only via a platform. Predominantly UK shares, and carefully selected for potential growth at an attractive price. Again, a good long-term track record.

Among investment trusts, do have a detailed look at Independent Investment Trust, run by Max Ward (who used to work for Baillie Gifford). Note that he expects to wind this trust up when he retires, and he is not a young man!) but his share selections have been outstanding, and you could learn a lot by reading up the details of the companies in his top ten in, for example, Investors Chronicle.
(See http://www.moneyobserver...-Investment-Trust/ITIIT and http://www.independentinvestmenttrust.co.uk/ for more info.

I hope the above (opinion, not advice!) helps.

5 users thanked Alan Selwood for this post.
Tim D on 10/04/2018(UTC), andy mac on 10/04/2018(UTC), Mark Spencer on 10/04/2018(UTC), gillyann on 10/04/2018(UTC), Aminatidi on 10/04/2018(UTC)
Mark Spencer
Posted: 10 April 2018 12:37:19(UTC)
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I absolutely agree with Alan Selwoods' suggestion to look at the picks of long-term top performers.

You will soon see how they covered the bases of excellent management (Jeff Bezos and Mark Zuckerberg being good examples as their companies are like their children), strong competitive advantage and good price in making their decisions.

This method is an excellent learning platform and will generate good returns if you take the time to understand their picks.
1 user thanked Mark Spencer for this post.
Aminatidi on 10/04/2018(UTC)
Aminatidi
Posted: 10 April 2018 14:35:15(UTC)
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One thing that stuck in my head when watching a recent Fundsmith AGM video was Terry when asked (again) about what if/when he retires did point out that on that day the fund will be worth exactly the same the next day because it's a bucket of shares in the companies not in him.

It stuck in my head when the question of whether you're buying the companies or the person (LTI leaps to mind where if Lindsell & Train should ever decide to retire I guess it'll have an "interesting" effect on the share price).
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