I am looking to buy stocks and will be building up my portfolio for longer term gains.
I am wondering how people on here currently invest their money.
Not necessarily what stocks you are buying but what spread of diversification, if someone is starting to build up a stock portfolio with Ā£500 per month regular savings do you just buy in one company to start with or spread that Ā£500 over 2, 3 or more stocks etc?
Iām trying to build a balanced portfolio with stocks spread out over multiple sectors and then some ETFs on top. Iām working with considerably less than Ā£500 but Iāve decided to spread out the purchases so iāll have a couple for each company or ETF that Iāve decided to invest in, until Iāve got them all. Then monthly iāll increase the number of shares in each.
Your best starting point will be here and if you scroll down halfway it directly addresses your main question:
Personally, as my pseudonym suggests, Iām currently ETF/Trust only as theyāre globally diversified in nature.
Also, an individualās risk appetite will influence their portfolio composition significantly. So it may well be worth having a think about your own 
I have never invested in ETF I assume with these you get a dividend return? And if so how is the dividend calculated as they hold various companies within them?
How many companies are you currently purchasing shares in?
I was thinking of starting to build with maybe 3 maximum 4 companies at the moment I will I have sufficient investment in them and then look to add others
Yes. In the stock universe right now, there are 2 ETFs (IUKD UKDV) dedicated to dividends which I encourage to research into their factssheets/KIDs if dividend income is what youāre interested in:
Others in the community who hold these will be better able to share their rationale for doing so as for me dividends are incidental and not really part of my investment strategy going forward.
I currently have 8. Thinking about 15 overall when Iām done and US stocks are added. About 10 will be core banking, utility, mining etc split between U.K. and US and then 5 because I like the look of them.
Hard not to get carried away though when new things are added. I suffer from āoh, itās new, I want it nowā syndrome 
What is your investment strategy, to increase share price and sell?
Looking for all options and ideas for myself
Itās early days for me to detail my strategy here given Iām a relatively new, young investor but I have my own private framework thatās is across asset classes & platforms. Super basically, itās buy, build & hold for 10+ yrs.
Regarding dividends being incidental, itās because they donāt guide my investing decisions and will be reinvested should I receive any.
@weenie detailed her strategy here in the community for example.
@Vlad has a strategy that appears more geared to high growth that he may repeat here for you.
Throwing my two cents. Just as @Diversify correctly pointed out, dividends are of no essence to me. I deliberately go with growth, mostly tech biased (about 50% of the portfolio). I was quite surprised to have gained 0.7% yearly dividend yield, expected about 0.
Yet, I am not much into ETFs and mutual funds, simply 100% individual US stocks (excluding my current Freetrade portfolio) by doing my own due diligence and picking. Whilst I am currently beating the benchmark (S&P 500), I am certain that it probably will not be sustainable in long-run. After all, about 90% individuals and institutions fail to outperform the market, and once I realise I am one of those, I will switch 50% MSCI World and 50% S&P 500 ETF forever.
At the moment, I just enjoy the experience of stock picking, which people often tend to do until they realise how ineffective that is. And even having read books and articles about index funds beating almost any investment strategy, I am just one of those stubborn ones that will only believe after failing 
This snippet from The Sunday Times today illustrates the impact that reinvesting dividends can have:
Thatās good viewing I think.
As I will be just starting to build my portfolio my biggest decision is how best to start investing my monthly amount, into what companies etc.
But on a previous post I seen of the UK companies paying dividends one of them are paying over 9% that seems great for me once I do some additional checks
Yes! This is one of the hardest investing truths to take on board. It seems totally intuitive to us that weād be good at investing because we all feel like we are smart and unlikely to act irrationally.
And conversely, other factors generally seem a bit counter-intuitive: that there can be a big difference between a good company and a good stock (eg compare Apple and Blackberry in 2017). That the market is made up of clever people and fast algorithms and so is quite hard to outperform long term. That logically the theoretical average investor should get the benchmarkās performance (because each trade is made up of a buyer and a seller), but after transaction costs theyāll get less. That thanks to loss aversion, itās actually rather hard to stay the course/buy the dip when the market is dropping. Etc.
And, I hope, also X% in a minimum risk asset like gov bonds, the X% reflecting your attitude/appetite/need for risk? 
Hell no! I am allergic to bonds and gilts!
I also believe that with a steadily increasing life expectancy, it will be absolutely acceptable to keep 100% in stocks even after retiring. I would be surprised if by 2050 we will not live for 100-120 years. This ultimately makes that ā100% less age for stocksā allocationā rule obsolete. Even taking 90 yearsā life into account, it is 33 years after the retirement age of 57 - plenty of time to live through the market fluctuations without turning to bonds.
How interesting.
Certainly true that longer retirements are a funding challenge. By 2066, ācohort life expectancy at birth in the UK is projected to reach 98.1 years for females and 96.1 years for males [ā¦ and] 50.0% of new born baby girls and 44.2% of new born baby boys are projected to live to at least 100 years oldāā¦ mind you life expectancy has flattened in the last couple of years, so I donāt think weāll get to 120 year expectancies as soon as that. My state pension age is 67, and ONSās current guess of my cohortās life expectancy is 86. I am not 100% in stocks.
But anyway none of that affects your point: for you, X% is 0%.
(ps: bonds sometimes do ok )
I listened to this yet but it sounds like it could be pretty interesting -
https://www.bloomberg.com/news/articles/2018-10-25/the-etf-story-podcast-episode-1-black-monday
Wasnāt a bad listen that, cheers. Although Iām not sure the thinkness of the report deserved several minutes discussion. Hopefully I remember to listen to the next 5 parts
I am a little late on this post but I was reading another one and thinking about diversification. And then I found yours here.
I am trying to build a portfolio with no more than 8 companies and trying to maintain a good balance between them. In your example, I would use Ā£500 to increase that one with less money invested or even fortify my best one.
In my portfolio I also have half money invested in recognised growth companies and another half in companies that I strong believe in their futures.
I donāt know, but I think more diversification reduces risk, but also gains. So thatās why I prefer to invest in a small number of stocks.
However, I am always open to change something in my portfolio or even add a new stock that I believe might improve that.
Thatās it.
P.S.: Any critical comment that could help me improve my growth as an investor would be welcome 
.
*sorry any mistake in my English, guys.
8 stocks is not a diversified portfolio.
It depends on exactly when you look but remember that only ~3-5% of stocks drive returns above government bonds (i.e. the ārisk-free returnā). In other words if you miss the top 3-5% stocks you are probably going to be worse off than if you assumed no risk at all. How confident are you that one of your 8 is in the 95th-97th percentile?
Expected return is a function of risk, the more non-correlated risks you can take on the better because you can receive the risk premium without increasing the overall risk of your portfolio.
Hi RGol,
What you are suggesting is the opposite of diversification, itās concentration. For most retail investors, this leads to worse returns. It can increase returns, if you pick the right stocks, but that is hard work, most professional investor fail. Most stocks underperform the market, and itās the big stocks that drive most of the market returns.
Diversification usually involves spreading across risk assets, stocks, bonds, cash, gold etc. You are suggesting being 100% stocks, thatās risk 1, a only a few, risk 2, and then growth and conviction picks, risk 3.
Diversification is an attempt to mitigate these risks, depending on your timeline and goals, generally by buying index trackers, or ETFs.
