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First investment
Andreas Espersen
Posted: 16 October 2017 12:15:54(UTC)
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Joined: 16/10/2017(UTC)
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Hi There

My name is Andreas and I am 20 years old.

I have saved up quite a lot of money over the last 2 years for someone my age and I am now at the point where I don't know what to do with it.

I want to invest some of it in stocks in order for me to have something to fall back on in the future. I want to make money and I know it takes time.

So my question is how do I find my first investment, I am completely new to this and want to learn, I know of the consequences of losing money which is why I want advice instead of just investing for the sake of investing.

If anyone could spare any of their time to help me, it would be much appreciated.

Kind Regards
Andreas
2 users thanked Andreas Espersen for this post.
c brown on 20/10/2017(UTC), Dian on 20/10/2017(UTC)
william barnes
Posted: 20 October 2017 12:23:51(UTC)
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Hi your vague.
How much are u investing,for how long and are you adding to it and also have you taken out an is a or supposed etc ?
Gav
R kunzmann
Posted: 20 October 2017 12:39:42(UTC)
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Hi Andreas,

You're probably in the same place I was five years ago - I knew I had to take charge of my money to make a success of it; I did't know the difference between an open ended fund vs. closed ended investment trust, or even that there was a difference between a share and a mutual fund. The best advice I ever got from my parents was open a money market saving account, buy a property and pay into a pension. Problem is, the first pension I got into was a horror story.

Since then I've learnt a lot and can proudly say I've had a better 5 year performance on my own SIPP than quite a lot of active fund managers without taking outsized risk, and having learnt the difference between speculation, investing and trading, I am now also doing well in trading (after a couple of false and poorly disciplined starts).

I suggest rather than soliciting investment ideas, you should rather ask how can I educate myself to come up with my own investment ideas. Asking others for a tip is generally a very bad idea. Ask: where do I get as well educated as I need to be before taking the plunge. You will first have to establish how involved you want to be in your investing, what risk appetite you have and what you should do to optimise your wealth before getting into the stock market (e.g. pay off a credit card)

Beginner level
It’s a bit of a cliché, and I was highly skeptical about the book, and I dislike the “I’m such a great investor” attitude, but at its core the book imparts some really good basic principles to approaching your own wealth and how to generate new wealth. It’s a great starting point for someone that simply wants to become a bit more self-aware about investing; it also has some great starting principles for property investing. It’s Rich Dad, Poor Dad by Robert Kiyosaki.

There’s also a really good podcast called The Meaningful Money podcast, which gives easily digestable advice on all the best decisions you can make in terms of preserving and creating wealth, dealing with tax, and the basics of long-term investment. It’s UK specific, but the principles are universal.

Intermediary level
If the above makes you more interested in investing and the financial markets, what the best pension structures are, and what kind of investment products to stay away from, Investing by Glen Arnold is a good choice

If you really become interested in the stock market and how it works The Intelligent Investor by Benjamin Graham is considered the best book ever written. He was Warren Buffets mentor and taught him everything he knows about the stock market. The 4th edition was updated after the financial crisis and provides really interesting case studies from the crisis showing what sort of products and stocks people should have avoided like the plague.

Once you've read all of those things, you should be able to screen thousands of stocks, trusts etc. for your own investment ideas.

Enjoy the learning experience; it has been incredibly liberating for me.
R
1 user thanked R kunzmann for this post.
Sara G on 23/10/2017(UTC)
c brown
Posted: 20 October 2017 12:42:46(UTC)
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Well done!! Do you have a stocks and shares Isa? Tax free £20k a year. Research the various platforms for costs. Have you learnt about funds, ETFs & investment trusts? Will you be investing monthly?

Fe trustnet, Morningstar, Investors Chronicle, Interactive Investor & Money week all have interesting articles & ideas.

My suggestion as a 1st investment is SMT. Scottish Mortgage Investment Trust. It is on a small discount at the moment.

Hope it helps.
King Lodos
Posted: 20 October 2017 12:46:50(UTC)
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Well it's a very good idea to get in the habit of always owning stocks .. With so much uncertainty over jobs, automation, politics in the future, it's the only way to ensure your wealth grows with the global economy.

The simplest answer is to own the whole stock market .. You could buy the HSCB FTSE All World index, which is a low-cost fund, and gives you 2609 global stocks, including Apple, Microsoft, Amazon, Facebook, Google, etc.

For an ETF version (may be cheaper depending on your fund platform) you could buy Vanguard Total World Stock Index Fund .. It takes a highly skilled (and possibly lucky) stock picker to outperform the World Index over the long-term .. At your age, the best bet would be to keep buying the whole stock market, and ignore any ups and downs .. When it falls 50%, be happy, because it means you're buying cheap .. Time and long-term compounding will be your friends .. I'd say there's zero point messing around with individual stocks, and hot funds and sectors come and go
5 users thanked King Lodos for this post.
c brown on 20/10/2017(UTC), Guest on 20/10/2017(UTC), Jenki on 20/10/2017(UTC), Tim D on 20/10/2017(UTC), Rickenbacker Al on 20/10/2017(UTC)
Cherian CHERIAN
Posted: 20 October 2017 16:50:19(UTC)
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Joined: 20/10/2017(UTC)
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Hi Andreas

I am impressed you have saved up enough money to think of investing in stocks and shares.
At 20 years age you are entitled to an ISA allowance of £20000. Make all your investments within the framework of an ISA. The biggest advantage is you would not have to bother informing the taxman of your ISA investments.

Initially I would think that you could go for a portfolio of Investment Trusts. Most investment platforms have low or no charges for holding shares. There will be stamp duty and flat rate investment charges. So I would suggest a minimum investment of £ 1000 at least in each fund to minimise charges. In another forum Betty gave a list of 10 investment trusts. I also own 6 of those Trusts and they have served me very well too.

1. Scottish Mortgage IT.
2. Fidelity China Special Situations IT.
3. Baillie Gifford Shin Nippon IT or Baillie Gifford Japan IT.
4. Independent Investment Trust.
5. TR European Growth IT.
6. Monks IT.

This covers most of the dynamic sectors. Global, Global Technology, China which will be the biggest economic power in the world in less than 10 years, Japan and Europe. The domestic markets are covered by IIT.

May I suggest 2 Unit Trusts which are in all the top 10 for 5 and 7 year performance tables.
Old Mutual Mid Cap or Old Mutual Smaller Companies.

I hope this will stimulate you to research the above mentioned funds. I eagerly await any comments.
Tyrion Lannister
Posted: 20 October 2017 17:10:03(UTC)
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King Lodos;52166 wrote:
Well it's a very good idea to get in the habit of always owning stocks .. With so much uncertainty over jobs, automation, politics in the future, it's the only way to ensure your wealth grows with the global economy.

The simplest answer is to own the whole stock market .. You could buy the HSCB FTSE All World index, which is a low-cost fund, and gives you 2609 global stocks, including Apple, Microsoft, Amazon, Facebook, Google, etc.

For an ETF version (may be cheaper depending on your fund platform) you could buy Vanguard Total World Stock Index Fund .. It takes a highly skilled (and possibly lucky) stock picker to outperform the World Index over the long-term .. At your age, the best bet would be to keep buying the whole stock market, and ignore any ups and downs .. When it falls 50%, be happy, because it means you're buying cheap .. Time and long-term compounding will be your friends .. I'd say there's zero point messing around with individual stocks, and hot funds and sectors come and go


But he wouldn't own the whole market would he? He'd be heavily biased towards large cap stocks in the US and Europe.

So what about small caps and Asia for example? Both have the potential to significantly out perform in the medium term.

Andreas, there is no one stop solution, sure buy a tracker as suggested by KL but don't be under the illusion that this is representative of the whole market.

My suggestion, buy a global tracker first, e.g. VWRL, and build around that at some stage. I'd suggest FCS and FAS.
Law Man
Posted: 20 October 2017 17:20:20(UTC)
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The previous posts address the points. To be more specific:

(1) wrapper: use an ISA, unless you are very long term and do not need to withdraw before age 55 (in which case consider a SIPP).

(2) asset: keep it simple. A world equity index tracker.

(3) assess the charges. For a one off purchase, consider an ETF: one dealing charge and no stamp duty.

For regular monthly payments, check the charges: there are none with an OEIC fund.

However, once you hold over c. £10,000 in total, the platform charge will be greater for an OEIC fund than an ETF or IT.
King Lodos
Posted: 20 October 2017 17:38:01(UTC)
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Tyrion Lannister;52181 wrote:
But he wouldn't own the whole market would he? He'd be heavily biased towards large cap stocks in the US and Europe.

So what about small caps and Asia for example? Both have the potential to significantly out perform in the medium term.

Andreas, there is no one stop solution, sure buy a tracker as suggested by KL but don't be under the illusion that this is representative of the whole market.

My suggestion, buy a global tracker first, e.g. VWRL, and build around that at some stage. I'd suggest FCS and FAS.


Until China overtakes the US, then you'll automatically own more Chinese large-cap stocks .. and that's what makes it such a simple solution: you'll always own more of what does well.

The real key is that (to all intents and purposes) everything in the market should be priced along the same axis of risk vs return .. And the more efficient the market gets, the tighter all that pricing becomes, and the less value there is in simply owning smaller stocks (they'll tend to do about the same once risks are taken into account).

In recent years we've seen the US market largely driven by FANG stocks .. And companies like Google and Apple can be a lot like Small-Cap or Venture Capital funds, because they're buying up so many small companies, and giving them huge resources .. And now China's getting companies like this (Tencent, Alibaba, Jd.com), they might start sweeping up thousands of start-ups .. And then the question is: do you just own 6-8 huge Tech firms, knowing you're getting exposure to all the best start-ups and micro-caps, or do you own market, knowing today's leaders might not be tomorrow's? And I think that depends how active you want to be



andy mac
Posted: 20 October 2017 17:51:07(UTC)
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Keep it simple

Open an ISA with vanguard and select Life strategy ....
This gets you started but remember only 1 stocks and share ISA per year (£20K max)

Set up an HL ( hargreves Lawnsdown) account and set up virtual portfolio othe platforms also do virtual accounts then you can start buying and selling (virtually) so getting used to different things shares / funds/ETF/ITs

What you will not see are the costs

What is your approach to risk take the risk test offered by HL and others

You will make mistakes but spending time doing research etc will pay dividends ( if you want them !!!)

You also need luck so good luck
Keith Cobby
Posted: 20 October 2017 20:04:05(UTC)
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I would start by opening an investment trust ISA with either F & C or Baillie Gifford.
Jay Mi
Posted: 20 October 2017 20:11:31(UTC)
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Joined: 11/03/2017(UTC)
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What ever you do decide to invest in, reinvest the dividends to compound it over many years.

When prices drop, stay invested and keep investing. If you sell up when it's down, you might be selling at the worse time and miss out on future gains.

Learn from mistakes that you make.

Do your own research, just because something is 'Tipped' it doesn't always make it a good or suitable investment.
1 user thanked Jay Mi for this post.
Tim D on 20/10/2017(UTC)
Dian
Posted: 20 October 2017 22:27:09(UTC)
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Please don’t invest now if you are new to the market. You can wait until heats disappear from overvalued markets. Do not touch overvalued markets until you get some experience. Overvalued markets are due for fall. Firstly try to get some ideas reading some good investment books. These days I prefer to go behind quality companies. That doesn’t means I will pay high prices even for quality companies. Value and growth are two factors which I will take into account these days.

http://www.businessinsid...tries-and-competitors-8

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Mr Helpful on 21/10/2017(UTC)
King Lodos
Posted: 21 October 2017 00:38:25(UTC)
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Dian;52204 wrote:
Please don’t invest now if you are new to the market. You can wait until heats disappear from overvalued markets. Do not touch overvalued markets until you get some experience. Overvalued markets are due for fall.


I think this can be bad advice, Dian .. People were saying this back in 2012 – and they were saying it in 1990 .. And as a result, a lot of people sat on the sidelines while stocks kept going up – some famous fund managers actually retired before they ever got back in the market.

The problem is, stock valuations are always relative to what you can get elsewhere (principally from government bonds) .. And while government bonds are yielding so low, stocks are still very cheap.

In isolation, stocks are historically expensive – but that's because bonds have almost never been this expensive .. The last time they were close to this expensive was around WW2 .. So then it becomes a big bet on whether bond yields rise or fall .. And because we don't know – and we're terrible at guessing – it makes sense to invest in both outcomes: always hold some stocks, and always hold some cash and other assets

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Dian
Posted: 21 October 2017 02:55:14(UTC)
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KInd Lodos wrote.

Quote:
Always hold some stocks

Thanks Kind Lodos.This way we will never miss the biggest gain in the market. By experience we know stocks are going to gain in the long run. But I found some assets have skyrocketed like some stocks and property. They have to come down. Experienced investors will rebalance portfolio when they find risk in their investment and will rotate for next promising ones. When I was new I made lot of mistakes. I read few great books. It helped me to plan my investments by minimizing mistakes. Great investors know where to park their money. These days I am looking for great value.
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King Lodos on 21/10/2017(UTC)
King Lodos
Posted: 21 October 2017 03:18:27(UTC)
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Well the Efficient Markets perspective would be that in fact *everything* is priced correctly, and nothing is too expensive or too cheap.

And this sounds kind of crazy (and it's probably not quite true), but if we could reliably say what's too expensive, we could short it and make really big 'market neutral' returns .. But, in practice, that's really hard to do.

It's possible we spend the next 30 years with interest rates near zero, in which case stocks might never be this cheap again .. It would be unusual, but then, looking at the total return of the stock market, look at how much of the time it's actually at an all-time high, and never drops below it again – it's really the normal state of things:

http://www.econlib.org/library/Enc/art/lfHendersonCEE2_figure_041.jpg
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Tim D on 21/10/2017(UTC)
Mr Helpful
Posted: 21 October 2017 10:14:53(UTC)
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King Lodos;52205 wrote:
Dian;52204 wrote:
Please don’t invest now if you are new to the market. You can wait until heats disappear from overvalued markets. Do not touch overvalued markets until you get some experience. Overvalued markets are due for fall.


1. I think this can be bad advice, Dian .. People were saying this back in 2012 – and they were saying it in 1990 .. And as a result, a lot of people sat on the sidelines while stocks kept going up – some famous fund managers actually retired before they ever got back in the market.

2. The problem is, stock valuations are always relative to what you can get elsewhere (principally from government bonds) .. And while government bonds are yielding so low, stocks are still very cheap.

In isolation, stocks are historically expensive – but that's because bonds have almost never been this expensive .. The last time they were close to this expensive was around WW2 .. So then it becomes a big bet on whether bond yields rise or fall .. And because we don't know – and we're terrible at guessing –

3. it makes sense to invest in both outcomes: always hold some stocks, and always hold some cash and other assets



1. Come on now KL!
Since 1990 there have been cheaper markets and there have been more expensive markets.
The correct median to use difficulty is that anchor dragging issue.
Plenty of opportunities to slide in and out thereby gradually increasing and decreasing Stock weightings.

EDIT : If valuations mislead, then resort to identifying trend parallel offset divergences by borrowing TP's ruler?
That technique worked well for some last century.

2. The "where else can I put the money?" can be a dangerous road to travel.

3. Yes. A nuanced suggestion which all can follow.
So the OP might gradually, repeat gradually, build a limited Stocks exposure, but also reserve plenty of Cash ready for better value Stock pricing?

EDIT : IMHO also, that day of improved value pricing will arrive.
In the interim, as always, for years if necessary, patience.

EDIT : No info as yet has been offered on the subject of Bonds or Fixed Income Alternatives, presumably as the OP is at such an early stage of investment career?
Such options might alleviate the anxieties of those champing at the bit, to get the money invested?
Tim D
Posted: 21 October 2017 10:32:30(UTC)
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Mr Helpful;52222 wrote:

So the OP can hold some Stocks but also plenty of Cash ready for better value Stock pricing?


Except if you're young (and with reasonable expectations of being employable even through downturns) then your "cash ready for better value" is your future earnings.

I was fully invested and making regular investments for all my career, and the main impact of the aftermath of 2001 and 2008 was for me to review the situation, say "OMG everything's really cheap it's like being able to send money back in time"... and make a major increase in my savings rate (as % of earnings) to take advantage. The idea of keeping significant cash in reserve (besides "cash savings") in the portfolio is something I'm only coming round more to now having "downshifted" and having to admit my big paydays are probably behind me.
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King Lodos
Posted: 21 October 2017 13:51:06(UTC)
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Mr Helpful;52222 wrote:
1. Come on now KL!
Since 1990 there have been cheaper markets and there have been more expensive markets.
The correct median to use difficulty is that anchor dragging issue.
Plenty of opportunities to slide in and out thereby gradually increasing and decreasing Stock weightings.

2. The "where else can I put the money?" can be a dangerous road to travel.

3. Yes. A nuanced suggestion which all can follow.
So the OP might gradually, repeat gradually, build a limited Stocks exposure, but also reserve plenty of Cash ready for better value Stock pricing?


1. It's debatable .. The UK's been consistently cheaper than the US since the financial-crisis, and every value investor's been predicting UK outperformance that hasn't materialised.

But of course a crude, market-wise metric doesn't take into account sectors, growth, risk, etc .. So if we assume markets have got everything right, there's not necessarily an edge in valuations. (Shiller's position would be that it's only extremes of valuation that suggest fear and greed might be taking over.)

You can test a market timing model based on CAPE ratios (and even with the benefit of hindsight, it's hard to outperform):
https://www.portfoliovisualizer.com/test-market-timing-model?timingModel=2

2. As Warren Buffett said, if we knew bond yields would still be around 1% in 20 years time, most stocks could justify PE ratios over 100 .. This whole post-crisis rally has really been a constant rerating of where we expect bond yields to be – as we've lowered our expectations, stocks have justified (completely rationally) higher and higher valuations.

A lot of commentators look at stock valuations in isolation, and that would just make you conclude markets are crazy and irrational .. But more likely it's crazy to expect something as complex and difficult to outsmart as the stock market would be driven by something as simple as a PE ratio
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Tim D on 21/10/2017(UTC)
Keith Cobby
Posted: 21 October 2017 14:56:00(UTC)
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This week has been the 30th anniversary of the 1987 correction. I was fully invested then and am now. Timing the market is impossible and investors have been waiting for the next correction for some years now. The best advice would be to invest monthly and benefit from pound/cost averaging.
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Mr Helpful on 22/10/2017(UTC), Guest on 22/10/2017(UTC)
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