Scared of the Stock Market

From conversations I’ve had people are very wary of the stock market.
Many of the conversations have started with a groan at interest rates and savings accounts sparked by hearing the latest Bank of England rate decision on the radio news.
I will lose money, I wouldn’t know what to buy, never heard of an ETF, you need big money to invest are some of the common thoughts.
I really hope Freetrade etc spread far and wide and the educational aspect of this forum and Freetrade as a company.
To be able to dip your toe in with £1 and no fees means anyone can make a start like never before.
I genuinely feel gutted for people struggling with decent savings earning 0.5% interest or less.
Also investing can be a motivation for regular saving :desert_island:

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I think it’s a pretty intimidating space. I remember my first trade was filled with trepidation, especially all the horror stories of losing all your money etc.

What more do you think we could do as a community to make this place a bit more welcoming / newbie friendly?

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The Freetrade articles and community member company overview posts are great.
Maybe a beginners Freetrade 101 online course might help too. Plenty of courses out there, but a Freetrade specific one would be great.

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The potential of opening up access to capital markets allowing pretty much anyone with a smartphone to invest was at the heart of my decision to invest in :freetrade: as a business.

I think the app goes a long way to breaking down the perceived and real barriers to accessing the market, but I think there’s so much more that can be done to inform and educate, as well as introducing features that leverage an understanding of behavioural economics that encourage and help users save and invest.

To me that’s a win win situation for both the business and investors as more people use the platform to manage their investments and growth their wealth.

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Well said. I couldn’t agree more.

Whenever I tell anyone I’m investing into the stock market they immediately reply with “watch for your doing, it’s too risky”

I think they don’t distinguish long term stock investing compared to day trading or options.

That’s the importance of being educated and having at least some start of plan before you start.

It’s funny aswell when I’ve mentioned about property investments the reaction is completely the opposite, but when you tell them you can still invest into property through the market they go back to saying that’s too risky again :man_shrugging:t3::smile:

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TV and Film haven’t helped. Its all dramatic and shit or bust, but in reality its quite a sedate and nerdy pursuit.

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A bit of investing 101, or some links to articles like that, during sign-up may help a bit. As well as pushing new investors towards ETFs, rather than individual shares. Still, for most people it’ll remain somewhat intimidating - the U.K. just isn’t accustomed as the US to stock booking, as a nation we are more risk averse.

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My friends think investing in the stockmarket is the same as gambling.

“I’d hate to lose all my money,” said one friend. I didn’t mention that her company pension would be invested, for fear of her opting out!

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The other example I’ve had is a family member losing money due to a bad investment without diversification to minimise the loss if that happens, and then not being interested due to a fear that it is too risky.

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Its been a way of life for the middle/upper classes for an age, for the working class its been out of the question until now. What’s needed is across the board finacial education.

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Think @adam said it best in his most recent Podcast , saying everyone should have an investment account just like we all have current- and savings-accounts. It should be normal/easy/expected to open an investment account, just like it is to open a bank account, so everyday people can access the 8th wonder of the world.

Alas, ‘regular people’ really are apprehensive of, intimidated by and excluded from the stock market. This FT article says a lot:

Since 1990, the wealthiest have bought a net $1.2tn in company stakes, while the rest of the population has sold more than $1tn.

Neostockbrokers with great brands, like :freetrade:, have a hard task ahead of them but it’s a noble one imho.

Recently watched And recommend this Explained doc on Netflix too on capital income and the inequality around it:

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Totally agree with the comments in this thread, it’s a job of educating people, investing can give them more financial freedom.

When I first discovered investing on reddit a few years ago, I spent about a month reading about it before I put my first £1k into a vanguard fund. Even then I think I was very cautious of my hard earned cash. Most people will not spend the time to do all of that learning so they may never reach the point of actually putting some money in or they will just take a risky gamble like putting it all in one stock they saw on the news.

What I usually recommend to friends and family is to put in £10 into some companies that you like and you learn a bit more about investing over time. Freetrade and other challenger brokers open up this opportunity by having the option of zero fee trades and having a more user friendly platform for inexperienced people.

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I spent almost two years reading a thing or two before starting my investment journey.

Who wants to guess the name of the company I first invested in?

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Damn, haha. Berkshire Hathaway or one of the big tech stocks? What was it?

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Freetrade. In Round 3.
I was looking for a low cost online broker. I perceived Freetrade as a startup wanting to democratize investing and wanted to help to make it happen while hoping for a decent return. After that mainly Dividend ETFs.

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I wonder if this explains why UK stock market valuations are perpetually lower than that of the US

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When I started, HL were charging £12.50 a trade (they may still do, I haven’t looked in a while), meaing you need to clear >£25 + stamp duty to even break even. definitely not something an every day person can do with their spare end-of-month cash. 100% agree that some education is needed. I think a lot of people simply buy shares in companies they like or services they use (I know I did). Or just buy into a company that’s doing well and end up buying high (again, I definitely did this). If you have a family member or friend that can show you the ropes then you might be ok, otherwise it’s a nightmare to get started with any confidence.

You can educate yourself well if you utilise Google search, ask better questions - basically, invest in yourself which is a function of time, effort, etc.

And since the beginning of the 21 century, as the web grew even more, we never really needed a startup’s app to launch us into the world of growth and potential financial freedom: https://chrisreining.com/whats-the-best-investment/. People have done it with Vanguards for ages.

We have, however, been using aweful apps made by banks and insurance/funds/brokerages with bad UX.

And the power of Google search + even services like Degiro could do the job before Freetrade arrived.

Personal financial education doesn’t come as standard even at schools, business schools, etc.

Personal motivation and discipline are powerful things. Many rich people go bankrupt too because they lack financial education.

(EDIT - add Rich Habits link : 💰 Rich Habits - Tom Corley )

Some people, unfortunately, sometimes confuse day trading with investing. Been there and it can be fun.

Also, £1 is nothing when 0.45% is charged on USD stock trades because of FX. Separate USD accounts - possibly held with a local US bank - would be great (e.g. Revolut, Stake) - otherwise, it’s a pain. And @shane-aurora is faced with EUR-GBP-USD issues, which stops him from trading/investing on FT.

Smart move. I’m still learning this ETF thing.

Or, maybe, we can look at the composition of FTSE 100 and compare it with top companies on NASDAQ, DOW or S&P indices.

Most “hot” companies list in the US and Goldmans and Morgan Stanleys will underwrite their IPOs. If there are no incentives for large funds to invest in GBP specifically, underwriters would probably recommend to list in New York. Spotify is a Swedish company and they did a direct listing there.

The world wide web started in the 90s - so this explains this FTSE 100 vs S&P 500 chart:

CAC (40 stocks?):

image

However, this is DAX (30 stocks?):

(source - https://www.visualcapitalist.com/worlds-major-stock-markets-same-scale-1990-2019/)

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Freetrade is the best place to learn to trade. I remember starting last year, I panicked when shares went down, constantly checking, panicked sell and buy, annoyed when sold at a lower price… Been through it all, now I have more experience, I am going to enjoy the profits in the nearer future.

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