I just made my first investment into stocks (only Ā£300, oops). As Iām still learning the inās and outās of investing, I spread my investments amongst a few āsafeā dividend-paying ETFs, a couple of companies I see as undervalued (Coca-Cola HBC & Virgin Money) and then companies I personally use.
I want to catch a train? I use Trainline.
I want to look for a student house to rent? Rightmove.
I want to get a drink with my friends and some nachos? Wetherspoons.
Where do I keep my day-to-day money? My B account, now Virgin Money (which I believe will grow a lot following the merger and rebranding)
What branded clothes do I want gift cards for? Superdry and Ted Baker.
I felt like until I know more about investing, it was good to go for companies I can see myself still using in 5 years time. And things I use in a regular week.
Do you invest in companies you personally use the services of yourself?
Itās often cited as a good strategy. I think in the main itās fine, providing an investor doesnāt blindly do it - such as I bought a holiday? Thomas Cook. I need a suitcase/make up: Debenhams.
I personally still look at fundamentals and try and let that drive me. Just because I use booking.com for nearly every trip and uber daily and I still wouldnāt invest.
This approach is one of the main ideas in the famous investing book āOne Up on Wall Streetā by Peter Lynch. If you havenāt read it, youāll find it really interesting! Thereās a great summary video of it here: ONE UP ON WALL STREET SUMMARY (BY PETER LYNCH) - YouTube
My approach is similar and it works for me - I only invest in companies that I understand because I use them or have some personal experience of what they do. For example:
Apple is my biggest holding. I have been a customer since the original iPod and follow the company and commentary around it in great detail. Have been investing in them on and off for several years. With Freetrade, itās my biggest gainer at +60% since 31st Jan 2019.
Ocado has been quite volatile but up 33% for me. I have been a customer for several years and have done some consulting work in the online groceries industry. The bull case for them is that they are a technology platform rather than just a retailer, which I understand.
Netflix has been volatile and my biggest loss at the moment, at -7%. Iām a customer and have read a decent amount of analysis of the company so I am happy to wait for it to recover because I believe their strengths will persevere in the long term.
I only really invest in tech and consumer goods companies, because thatās what I know enough about to understand and feel confident about. I donāt invest in mining, banks, insurance, property, construction, etc because I donāt know anything about them.
Edit: As others have highlighted, use your personal experience and understanding of companies as a starting point - you need to look at the fundamentals as well.
For me, personal knowledge of the company is a factor, but it canāt be the only factor. The company might create a great user experince, but they are terrible financially.
As someone mentioned below, Peter Lynch is a great guy to read about regarding this. One of his bits of advice is invest in what you know, i.e. through your work or personal life, but you have to also research the fundamentals.
My own personal theory is that you can have an edge on financial analysts as they may only be looking at the numbers, but if youāre an expert fisherman you will know first hand the quality of rods from āFishing Rods PLCā, and the analysts would not have this edge.
I think youāve got to do both. If you really love a company you tend to be abreast of the news (or newsletters), youāre drawn to reading it, so you tend to know a little more about the company.
That said you need to combine it with a good check on the company financials. A great product doesnāt always equal a great business.
Does anyone invest in Unilever ? Any thoughts on them ?
Lots of Unilever products at home. Warren Buffet tried to buy Unilever but looking at the top 10ās of the fund manager big hitters it rarely features and I donāt see it in anyoneās Freetrade portfolios.
I only invest in ETFās and 1 investment trust but if I did invest in individual stocks Unilever would be on my radar.
Iāve got it in mine.
Solid dividend, somewhat high price right now but as you said, loads of there products at home and that goes for most people, so yeah, Iāve got it myself.
Personally, Iām looking at growth stocks. Weāre all pretty young on here, i assume (under 30), so not much benefit in sitting with an established giant.
Iām curious why do you think most people on this forum are under 30? Iād actually tend to think most of people here are between 30 and 50. Do you have any data? Itād be interesting to know the statistics on this.
