Beginner with £200

I am a very new (and young) investor, I only opened my account a couple of days a go. For now I only want to practice (obviously my goal is to make money) with £200 as a starting point. Currently I have 6 shares in 3i Infrastructure and I want to build a portfolio with a mix of long and short term stocks.

I would be very grateful if anyone could share some general advice or recommend some shares.

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Did you buy 3i because it’s at the top of the Discover panel? Probably not a good strategy.

If you only have 200 to spare, you can’t really diversify using single stocks, because many individual shares will eat up the entire investment. I would just chuck it in an index fund and forget about it. 3i Infrastructure is a fund, so you do get some diversity within it.

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This. Take a look at the likes of VWRL, which has more than 3,000 holdings. Personally, I’m only dabbling in individual stocks because I have a sizeable core of passive investments.

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Another vote for ETFs as something to consider. With only a small amount to invest it helps to diversify your portfolio with little effort

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You need to look at diversifying the investment. Don’t just jump it into one company.

An index tracker would be a recommendation.

Look at your bank balance and see where you spend your money, and what services you use (google search, Facebook account?, shop at Tesco, receive dairy milk Easter eggs?) for individual stocks. You use these things so they must be somewhat valuable as companies.

And as above, invest in collectives for the majority; tracker funds (S&P500, MSCI world, Emerging markets should give diversity), as well as investment trusts. Polar Capital invests some of the big tech companies above, could be good if you can’t afford the individual shares. Same as Scottish mortgage inv trust which has holdings in amazon (if you use/like amazon).
Hope this helps :slight_smile:

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We cannot give specific share advice.

However, echoing everyone else the number one rule is diversification. This is nearly impossible to do effectively under £1,000 without using funds. Another bonus is that there is no stamp duty on funds - which is a minor up front saving.

If you search for “ETF” under discover on freetrade you will get the complete list.

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Hey @MegaRhinoKing

Great to hear people starting young. I’m not sure what to suggest in terms of practice other than practicing how to ignore market fluctuations, and checking emotional reactions. This is easier said than done. I nearly panic sold when a share I had a few thousand of crashed a few weeks ago :see_no_evil: It’s worth checking out this video by Morgan Housel.

In terms of research there’s a book thread, and The ultimate list of investing books, podcasts and blogs which contain some great recommendations.

Additionally Freetrade have created some awesome articles on investing. Furthermore there’s a Weekend Read* email which breaks up topics into smaller weekly chunks.

Having said that, like the comments above say, the best way to invest is to contribute what you can every month to a low cost ETF. It’s very boring, there will never be a movie montage of it, but it works :slightly_smiling_face:

*Off topic: What happened to the Weekend Read email on 27/04?

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Finding value in a company as a customer is very different from the company being valuable as an investment.

An investor receives value when their investment provides them with returns. If a company is overvalued - because it is popular and new investors are investing in it out of emotion instead of financial sense - then it will not give good returns over the long term.

I echo everyone else: you should consider buying a broad index fund. “Practice” through the purchase of stocks on an essentially random basis is unlikely to teach you anything. You might get lucky with some of your stock picks. You’ll be unlucky with others.
If you end up like most unsuccessful investors, you’ll ignore the losses and only remember your winners. You won’t compare to what you could have achieved if you had just purchased the whole market. And so you will be doomed to underperforming someone who just buys VWRL and laughs all the way to the bank (on a very slow walk that takes decades).

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We decided not to send one, we felt you’d received enough emails from us already last week :wink:

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Yes I would agree, but a useful starting point nonetheless if you want to build your own buy list. If your friends use a music streaming service, and then you start using it because it’s a good product, and the company is valued on user and revenue growth, it may well increase in value. It may not of course, which is why you should research it yourself.

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Certainly. But I disagree that “I use/like them” is a good starting point. A good starting point is picking your favourite financial performance metric. And then maybe amongst those companies that satisfy your financial criteria, go with the one you like. I think the order there is critically important.

If your goal is to make money, you should not invest because you’re a fan. You should invest because it stands a strong change of making you money.

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It’s just a method I used when I started and continue to use now to a good degree of success. The topic is where to start and how to find options, this is my method and starting point :call_me_hand:

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Trying to figure out if having a favourite financial performance metric will improve my life :thinking:

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ETF’s for certain - moderate growth, diversification, steady and maybe some dividends to start seeing a return. I wouldn’t pull all the money into one stock.

Also when you say “long term” and “short term” would be worth knowing what that is, tangibly. It can vary and therefore influence your calls.

Hopefully my channel helps

https://youtube.com/infantinvestors

@MegaRhinoKing - one more thing which @saf has raised which is a really important point.

Imagine you invest £200 today and tomorrow it fell to £190. Then next week slipped to £180 and the following week £175. After 2 months it hovered in the late £170s before slipping again to the £160s. What would you do? It feels awful.

Between September 2018 and February 2019 the value of my portfolio dropped by over 20%. I sat on horrible “losses” for months. Today they are higher than the value at September 2018. However I never had any losses as I never sold. Instead I carried on buying what I could and some of those investments have jumped 25% as I had bought them at the bottom. Don’t fall to the panic selling!

I highly recommend you join a website (investing.com is a start) and create a portfolio of what you would do if you were given £10,000. Do what you would do if it was real. You will learn so much from it and won’t lose a penny. We had to do this at uni in my finance course. I still clearly remember some of the things I learned from that exercise.

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Very true.

People underestimate the emotional side of investing (i.e managing them) is probably of equal importance to your investment choices.

Feels easier to manage the longer you’re in the market and more diversified you are - but I wonder how I will react when the next recession hits. :frowning:

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Indeed.

Admittedly crowdfunded rather than publically traded, but Sugru is a brilliant example of this difference. A great product, used and loved by many - but the business all went wrong/was caught up in difficult circumstances and investors made a huge loss.

Responding to the OP now: It’s fair to say that having a company you’re interested in can be a useful starting point. But that’s all it is - a starting point. It’s important to investigate and do due diligence on quite how they actually stack up before investing any money in them.

My own journey at the moment is primarily ETFs, with some money thrown into indivdual companies here and there to see how I get on. In the future I’ll find I can either trust myself to take risks, or I should keep building my ETF portfolio instead - whichever I find actually works best for me.

Just jumping in here to ask what part of the investing.com website you use to do a “dummy run” of investing?

I don’t want to be an emotional investor (newbie) so that sounds useful to get some more context of what could happen

Just sign up for free and then under portfolio create a holdings and just add stocks. It also allows you to create multiple portfolios and watch lists if you want to try different strategies.

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