So I am new here and downloaded the freetrade app! Seems simplifier enough . I have been doing abit of research and I’ve read the best company’s to invest in are BIG company’s like amazon, Netflix etc?
Realistically how much would I earn from £100? Should I just let it sit until I’ve made some profit?
Hey, I am sure someone here can answer your question better than me but I give you my two cents.
As a common folk, I started with £100 in July 2019 and I kept increasing by little amounts each month/week.
There is not a short answer. I would say your expectation of profit should be related to three things :
1)the time you want to keep your investment going before take what you have earn. If you look in a month of a year window, very little. But in 10/20/30 years those 100 pounds if you are lucky may be worth x10 or x100.
type of strategy or combination of strategies you use (dividend or growth? individual stock or EFTs ? Bond or stock? Any specific sector? Trading, short term investing or long term?
Doozy of a question but I would echo what others have said. It really depends on your risk tolerance and how long you’re able to keep your money invested for. S&P 500 is one of the best performing markets & if you simply buy the market and hold it for as long as possible you maximise your chances of generating high returns.
Short term investing, trading stocks and trying to time the market are all quick ways of losing money. You’ll find lots of examples of people doing this successfully but make no mistake, they are the exception. Far more people lose money doing this than those who make money - you just dont hear about the people who lose money.
When I have started I was picking shares that I liked and could afford. July - November did not go very well and I was in loss (about 10%). I understood the importance of having a strategy, control your emotions and enter/reinforce positions when they are undervalued.
In November I switch from ISA account to Basic, so I had to sell all my shares and begin from scratch. This time with a strategy behind. For now things are going well, I have taken back the loss and made some profit. However I am aware that in few days/months I could be down again.
This is for say that you should have your own strategy. I am not in the position to give advice on what shares to buy. What I can recommend is to make it a learning process.
As others have said it really depends on how long you hold it and at what risk. Let’s keep things simple and look at a historical case:
Let’s say you had invested $100 in an SP500 index fund in 1970 (50 years ago) and left it untouched. Since then, the SP500 has averaged ~8% per year. Today you would have a grand total of
$100 * (1 + 0.08)^50 = $4,690
That is well above inflation levels for this timeframe. Similarly, $1,000 invested in 1970 would be almost $50k today, which is certainly nothing to sneeze at.
There are some disclaimers:
This assumes no fees
It’s in dollars, you need to take currency fluctuations into account when looking at the US market (e.g. SP500) in pound sterling
Historical performance is not a guarantee of future return