Stocks and Shares - Any Advice?

If the words, Bull, Stag and Bear don't mean anything to your husband and his workmates they are playing with fire. This is not a good time to be risking your hard earned cash on the unknown. Only the real players are going to make money out of the current situation and they have personal knowledge of the market or they have a broker to advise. I'm sorry to sound negative but these are scary times with many established companies going under - hold on to your cash.

This ^^^^^^^^^^^

If you’re prepared to take a risk then suggest they start a share club. It needs to be set up officially as money is involved and after a while someone is bound to exit and would need paying. There’s lots of advise online so get them to research and hold a meeting to discuss. You can’t do it for them I’m afraid.

If you can afford to lose the money they go for it, if not then maybe think again.

Speak to your bank or an independent financial adviser. Get as much detail as possible on the workings of Stocks & Shares and the different types of risk. I worked in a bank for years and still would only say I have a rough knowledge. Speak to an expert

Best way to start is to set up a "Virtual Portfolio " with a company such as AJ Bell, Interactive Investor , or Hargreaves Landsdowne . This costs nothing and you can pick shares and monitor their performance before actually buying any .

Whilst doing this learn about the costs of share buying - Dealing Fees , Management Fees , Stamp Duty , Bid/Offer spread and how they vary between companies .

Then try to work out what makes shares go up and down - You will rarely get it right or we would all be millionaires , but at least understand why they do . Then maybe you will have a better chance of picking good stocks .

By no means a recommendation but I bought heavily into housebuilding stocks at the end of March . Taylor Wimpey , Barratt , Persimmon and IBstock as they had halved in price due to COVID and cancelled dividends . My belief was that any recovery in the economy would be led by construction and indeed the shares in this sector have now risen nicely since March .

Maybe there is no more value left at the current price ? Again if we knew for certain life would be easy .

Hi LeighReidAtanas

What you have just described isn’t investing, it’s gambling. That’s a very easy way to lose money. Making money is harder. With a global recession looming and many companies cutting their dividends (your income) now is not a good time to be buying individual company shares if you don’t know what you’re doing. Fun and interesting? Yes. A good way to make money? No.

Rather than investing real cash, it would be better that you set up an online dummy portfolio with say £100,000 in play money and split that across a maximum of 10 companies that you invest in, at any one time, that you then follow carefully. Talk with your friends about what you want to buy and sell, and run your dummy portfolio for a couple of years to gain some experience, before investing real money that you could lose. You’ll learn a lot.

Here’s something I wrote for a friend in her twenties (don’t miss the bit about Investment Trust Dividend Heroes at the end. It’s some of the best investment advice you’ll ever get).

Where should I invest a lump sum for the long term, say five or more years?

Do:

• Invest in the stockmarket, rather than leave the money in the bank earning a low rate of interest.
• Look to invest in companies that are already profitable, this helps to reduce risk.
• Look for both capital growth (an increase in the value of the share) and income (i.e. a payment to you, the shareholder, of some of the profit the company makes, via a ‘dividend’)
• Diversify your investment by investing in more than one company, and sector (e.g. Pharmaceuticals, Oil & Gas and Tobacco). Once your portfolio is bigger you can diversify in other ways too, such as by geographic region. Invest some in the UK, some in the USA, some in Asia etc.
• Invest for the long term, and re-invest your dividends. This means that you elect to buy more shares in the company with your dividend payments, rather than take the income as cash. Over the long term this is crucial to building up the value of your ‘share portfolio’.
• Learn about the benefits of ‘Pound Cost Averaging’ where you drip feed your money into the market (e.g. monthly) rather than invest it all in one go.

• Risk more than you can afford to lose.
• Put all your eggs in one basket (e.g. only BP, or only Tesco). There’s too much risk of something going wrong.
• Worry too much about fluctuations in the share price. If you invest (wisely) for the long term you should be able to ride out any dramatic falls.

One of the very best ways to reduce your risk is to invest in Investment Trusts, rather than individual company shares. Investment Trusts are a type of investment Company. OK, so what are investment companies? They are a way to invest in almost anything and spread risk. Investment companies only exist to invest. They make a profit by buying and selling shares, property and other assets. An investment manager decides what assets to buy in order to build a diverse, managed portfolio. When you buy shares of an investment company you make an investment that includes a share of all those assets. It’s a simple way of expanding your portfolio and to spread your risk. You’re not investing alone. Different people contribute money to the company. When you invest you become one of its shareholders. This means investment companies are a type of collective investment fund.

Read more about them, here: www.theaic.co.uk/guide-to-investment-companies/what-are-investment-companies

Which Investment Trusts should I buy?

Some of the very best Investment Trusts to invest in for the long term have a nickname – they are called Dividend Heroes. Why? Because they are investment companies which have increased their dividends (your income) every year for at least 20 years in a row. And that is heroic!

You can read more about them here:

www.theaic.co.uk/aic/news/press-releases/investment-company-dividend-heroes

And if you really want to gamble I think some of the pharmaceutical companies and Amazon will do extremely well out of the current crisis. But then you really shouldn't take investment advice from strangers on the internet!

Good luck!

Johnny

Because of Pandemic most of the UK shares are down....but things will go up when the whole economy will start to work again...