Investing about £50 per month, is it worth it?

(Alex Warren) #21

why did you chose these stocks? Any kind of thinking behind them? Really want to know the way other investors think when buying stocks

1 Like
(Simon) #22

Honestly not much thinking behind it just from seeing what others had invested in.
The Vietnam is because I’ve been there recently.

In answer to what I’ve been most surprised about was Debenhams when it went up, but very little gain so I’ll just keep for now.

(#18 414) #23

Given my current personal circumstances I choose to invest in a broad SP 500 tracker in a service provider other than Freetrade.

Relax. I’m Android

As for their performance. I don’t spend much time thinking of it. What I do, since my personal circumstances so advise and dictate, is to apply what may be called a pound cost averaging strategy. I don’t plan to sell during the next couple of decades, hopefully for longer.

The only thing that worries me is is the possibility of a catastrophic event that would cause the bankruptcy of all the companies which comprise the SP 500. At the same time. Or in a limited time frame. How likely is that to happen?

Meanwhile I can only hope their performance is poor. So that I can buy more for less. In the mid 2040s I’ll may change my stance for this. And start hoping for their price’s to skyrocket in a 20 or 30 year’s bull market.

Meanwhile

1 Like
(Jon Dalton) #24

I find this interesting, as I’m currently investing £45 a month, with only a sum of £180 invested so far since early February (big spender, I know), but my strategy has been entirely different. I’ve got shares in 2 different funds, but the rest are individual stocks, some of which I’ve picked due to being a customer of theirs, others because they offer good dividends that I plan on reinvesting. A couple are long term investments like Vodafone and Centrica, they’re at good prices now, and over the next 10-15 years, I anticipate that they will rise. I too also have Debenhams but I see them as a massive risk, but it’s a small amount that I’m risking, that I can afford to lose. After about 5/6 weeks I’m up by a total of 3.97%, which is in the right direction, but not as high as I’d like. Granted it’s a better return than my savings account. Going forward, I plan to add a few more individual stocks. Then continue to increase holdings of each as I see fit, and clearing out those that are under performing.

3 Likes
#25

Not to pick on you in particular, I know many people do this. But it’s really worth being wary of making emotional investing decisions…

… and being sure you know what good prices are.

This video explains the situation far better than I can. A few minutes of watching could be one of the best investments beginners could make:

3 Likes
(Emma) #26

Is it an emotional decision or just picking based on companies you are familiar with and have confidence in due to experience? It’s a recommended way for beginners to start investing

3 Likes
#27

It’s an emotional decision, yes. Watch the video to understand exactly what I mean by that.

I don’t believe anyone would recommend beginners to invest this way. Experienced investors looking to follow a value-based buy-and-hold approach would want to have an understanding of the company they’re investing in, as well as the sector they operate in, to make sure that the apparent value they calculate today is likely to last (eg. the company hasn’t made all their profits due to a fad that will end in 3 months).

But understanding a company as part of this strategy is not the same as buying it purely because you’re familiar with it.

(Emma) #28

And that doesn’t exactly help first time investors get started. I’m not saying invest £20,000 in McDonalds purely because you like Filet -O- Fish but it’s good for someone new to just have a few pounds invested and learn from there. Or not learn. Up to them

1 Like
(Jon Dalton) #29

That is exactly what I intend to do. I don’t want to hijack this post so I’ll keep this brief, but I do appreciate all the comments and it’s given me some things to investigate and learn. I would say that I’m more of a half and half, there’s some “emotional” or familiarity in my current investment decisions, however there has also been research (although not to the standards of professional traders), most of my options are still recommended to buy, that said my instincts say not to buy any more Debenhams at this time.

1 Like
(Parrish Claxton) #30

I’m doing something similar to yourself. Picking companies I know are doing well and looking at what others buy. I also have half an eye open on the financial news. I’ve only invested £120 so far and month by month will add about £50. It would be great to hear what shares etc people are going with and are they getting good gains on their investments. These are mine so far -

3 Likes
(Emma) #31

This was doing better before Friday :cold_sweat:

Words cannot express how much Patient Capital are annoying me


2 Likes
(Parrish Claxton) #32

Your doing a little better than me by the looks of it. Saying before Friday I had gains on all of mine :confounded:

2 Likes
#33

If you’re picking based on what others are buying, and if those people are doing the same, you’re quite likely to be buying something that is now overvalued. The first few people to buy may (or may not) end up with good returns, but those who join after for no other reason than popularity, are likely to not do so well in the long run.
Eventually the bubble will burst and the stock price will drop down to a better reflection of the company’s actual value.

4 Likes
#34

Friday wiped me out!

Sad times. :cry:

#35

It does depend on volume though if @Pazza is following a few individuals it won’t impact shareprice in that manner as shares are being bought an sold every second for every stock.

But yeah if its some analyst that buys 500K worth of something and you buy after the fact then its inflated.

#36

That’s not quite what I was getting at. I was describing what would happen if everyone buying a stock did so because everyone else was buying it.

You might only be following a single person (your friend, who said it’s the next big thing, and they’re already made 15% profit!), and they in turn might have only followed a single person, but if it’s just one massive chain of people following each other, and none of the people in the chain stopped to analyse what the intrinsic value of the stock was and are just buying regardless of price, that price will be rising over time, most likely above the stocks value.

In general, buy low, not because someone else recommended something.

(That said, everyone reading this should definitely vote for my stock requests :sweat_smile:)

1 Like
#37

Yeah i hear you.

In essence DYOR, i guess in many instances following others can work out well though.

Etoro has a copy trades feature that allows you to just track another investors trades. people have made significant profit that way. Inherently, there’s nothing wrong with copying if factors like timing, size, and expertise are considered.

#38

I actually think Etoro’s copy trade feature is grotesque and dangerous. Yes, you can make profits copying a “successful” trader. But you can also make losses. Because it’s just luck. Etoro’s ability to surface traders who are doing well is most likely not surfacing those with talent, but only those who happened to have been lucky so far. Naive investers who don’t understand that past performance is not an indicator of future performance may not realise the danger they are in.

4 Likes
#39

I think to expect everyone to become a professional trader/investor is unrealistic.

The feature allows you to research into that investor, understand their risk levels, what asset classes, volume of trades, its literally no different to investing into a Fund managed by an analyst at a bank.

With regards to losing money, people should only invest what they’re willing to lose - everyone should know their capital is at risk with every investment - i don’t think that particular feature is accountable for that tbh.

2 Likes
#40

I think the feature strongly encourages the thinking of chasing the past performance of others. The mere existence of the feature would suggest to naive users that this is a reasonable thing to do, or else why does the feature exist, and why is it highlighting me traders who happened to have done well in the past year?

Yes, it’s really no different than going with a fund managed by an analyst at a bank. Which is also something you probably shouldn’t be doing, even after researching that analyst and what and how they invest. Because on a long enough timeline, their luck will run out just like with everyone on eToro.

However, at least the bank is able to take a little bit more responsibility over the handful of analysts it might have, compared to eToro encouraging you to chase the latest lucky trader. They literally suggest:

Finally, like any “team manager”, always be on the lookout for new trading stars to add to your copy trading portfolio!

So their suggested strategy is:

  1. Find someone who was recently lucky with their trades
  2. Copy them
  3. Discover that you lost money because they stopped being lucky (or as discussed above, because the stocks they’ve invested in to generate their good returns are now overvalued)
  4. Repeat steps 1-3

Can (or must) you use leverage to copy people on eToro? Because it would be even more disgusting if some high percentage of the 76% of eToro customers losing their money are these poor people following the above strategy.

1 Like