The Investment Newbie

So maybe drop the gilts on Monday for something else?

I had this money just sitting in my starling account not doing anything. So hopefully can a bit more than for 7p per month it was making. But not exactly expecting to make millions from 1k :slightly_smiling_face:

1 Like

It really depends on your personal risk threshold
In the bond market generally UK gilts or US bonds are seen as risk free

There is also something called an Aggregate Bond ETF which is a collection of investment grade government and corporate bonds. Well diversified.

1 Like

Its very much up to you. I started out investing with a Vanguard ISA with a small amount (about Ā£1000 initially) in the LifeStrategy 80% fund which weighs about 80% equity and 20% bonds. It was what i felt comfortable with at the time. It was a good 6 months to a year before i started being happy investing more directly in ETFs like VWRL and i personally was happy with a 100% ISA, but thats me, and im a long way off needing to consider reducing the risk further. Saying that, I still have most of my money in ETFs or trusts which both types invest in a range of companies to spread risk a little, plus the trusts i have im confident with their management of it. I have some single stocks but not a huge amount.

Gilts, honestly i dont know a lot about. They donā€™t earn a huge amount these days but are generally seen as safer, government bonds being the safest usually.

I did read something briefly not long ago about the consideration for changing from bonds to other types of equity investments focused on stability and income. but Id need to see if i can find the article again.

I like investment trusts and green ETFsā€¦ but thatā€™s me :smiley: You might want to look at aggregate bonds as @J4ipod94 suggests if you want to keep some bond exposure.

At the end of the day, thereā€™s no rush. And the trades are free, so if you refine your investments and you decide you want to change it slightly in a week or a month or a year thats all good.

Best thing you can do is invest regularly for the long term. My opinion is investing is the single most useful way of improving your wealth and your families wealth (and generational wealth).

2 Likes

Hi Newbie here

Iā€™m looking to make a withdraw on my investment. The money has been confirmed as withdrawable cash in the app and when I click on with daw it says to verifiy my account.

Can anyone tell me how to do that? Thanks

Did you top-up with Apple or Google Pay?
If so, youā€™ll need to add a bank account. This is ā€œverifiedā€ via a bank transfer.

Awesome thanks for that - just sent Ā£1 over now with the reference details they quoted

2 Likes

Hi . New to freetrade. Looking for tips for trading. What to look for and possible trends

Welcome to the forum :wave: The best thing to do is browse the site for a bit and get a varied range of views and then only you can make the choice that is best for you. A good start is to add little and begin with ETFs. The link below is very handy for new members and one about ETFs.

Ask your beginners questions here :hatching_chick: - First Time Investing :hatching_chick: - Freetrade Community

Passive Investors - Whatā€™s your reason for not putting all your funds into an All-World ETF? - First Time Investing :hatching_chick: - Freetrade Community

1 Like

Be an active member of the forum, read lots and engage with others and your knowledge of investing will increase!

3 Likes

If I had to give any advice itā€™s do your homework on companies. Itā€™s spectacularly easy to get caught up in hype over a company and then get burned when the bubble around it bursts.

Check multiple sources and also watch out for the timing of when early investors can bail out - DARK Trace is a great recent example of what can happen to a share price. I should know - its cost me a few K.

We live and learn - sometimes the only way to learn is to make mistakes.

1 Like

Hello!

So, just looking for some advice/guidance/approval from more experienced investors.

Iā€™m currently able to invest around 100-150 a month. I began this all with a Ā£100ish initial investment, split across the following:

1 share (Ā£48 at time of buying) in Vanguardā€™s S&P500
1 share (Ā£26 at time of buying) in Vanguardā€™s FTSE100
0.01 share (Ā£25ish at time of buying) in Amazon (lol)

Iā€™m looking to split my investments on a 70/30 basis between ETFS and individual companies that I personally believe will do well in the future.

As it is, I plan on using ETFs as a ā€˜savings accountā€™ that will slowly increase in value over 5-10 years. The individual companies are more of a gamble and are just there to give me a little bit of a thrill! Obviously I intend not to lose out, but of Ā£100 invested, only Ā£30 of that will be split across whichever companies Iā€™m investing in. Most likely things like Amazon, Alphabet, AO etc.

So, I guess Iā€™m looking for a few things here:

  • Which ETFs should I invest in to create a nice, diversified ā€˜savingsā€™ pot?
  • Whatā€™s the best way to split the investments so that I can get a clean 70/30 distribution? I only ask because not all shares are fractional, so it really makes it a pain in the ass trying to split Ā£100 up when I am committed to spending Ā£48 on my S&P500 alone!
  • As Iā€™m in my mid-20s, should I be willing to take more risks or look at investing in stocks that pay more dividends? If so, which ones?
  • Any tips for small, individual companies that you believe may provide growth over the next year? Iā€™m specifically looking for cheaper stuff around the Ā£2-Ā£10 mark

I hope this all makes sense!

Thanks :slight_smile:

2 Likes

I think this is a sensible approach

Your ETFs currently only cover 2 countries, which reduces your diversification, you may want to consider something more broad.

The simplest thing would be to just track the whole world:
Ā£VWRL - Vanguard FTSE All World

The next simplest would be to split out the world between emerging and developed (so you can pick how much of each you want of each)
Ā£VEVE - Vanguard FTSE Developed World
Ā£VFEM - Vanguard Emerging Markets

If you want to get even more custom you could look at splitting out UK and the rest of Europe, US, emerging and any other countries you want. This might be excessively complicated to manage/balance though.
Ā£VERX - Vanguard Dev Europe ex UK

  • UK (FTSE 100)
  • USA (SP500)
  • Emerging
  • Others (Japan etc)

I think without fractionals youā€™ll just have to make the best of it, if you end up 28/72% itā€™s probably not the end of the world

Risk is really a personal preference, if you opened the app and saw your portfolio had lost 30% of its value (as in March) how would you cope with that? If you are happy knowing that in the long run 10+ years you will be better off, then great - take on more risk.

If you wanted a bit more risk you could consider ETFs that give exposure to factors with greater risks.

Ā£VVAL - Vanguard Global Value Factor- This tracks companies which are priced cheaply and therefore considered more risky
Ā£WLDS - MSCI World Small Cap - This tracks smaller companies which are generally considered more risky that larger ones

or you could pick whatever individual companies suit your risk.

Iā€™d say generally ignore dividends when making decisions (see my freetrade thread on why) they shouldnā€™t have a material impact on your total return in the long run.

Iā€™m not going to recommend anything, Iā€™d say buy what you know.

I loosely follow the semiconductor market so some of my individual picks (ASML,TSMC, AMD) have centred on that, but donā€™t just buy something because a stranger on the internet likes it.

It doesnā€™t have to be massive professional knowledge of the sector, it can even something simple. For example my investment in BYND was just because I was a big fan of the Beyond Burger (especially after it was finally available in the UK) and knew plant-based foods were a big growth area. Being close to something means hopefully you can feel consumer sentiment shifting before it appears in earnings reports.

So far my worst decisions have been buying things I donā€™t really understand but following other investor sentiment / advice.

11 Likes

Iā€™m also relatively new but as some early learnings, I would echo what Cameron said about sticking to what you know closely (see Warren Buffetā€™s circle of competence), and not being baited into FOMO, particularly by what other investors are recommending.

2 Likes

For what itā€™s worth, asking for stock tips from random people on the internet is the equivalent of getting horse racing tips from the guy in the pub.

Buying shares just because they are in a certain price range isnā€™t a great idea, unless youā€™ve established that the price values the company at an unwarranted discountā€¦But if thatā€™s the case, why isnā€™t everyone else buying these shares and forcing the price upā€¦? I think youā€™d be better off putting that money into your ETFs or saving it until you can afford whatever you believe is a sound investment.

Some good advice above, digging into businesses/sectors you are familiar with what you know is as good a starting point as any.

2 Likes

I second this. Itā€™s a boring strategy, I grant. Youā€™re not going to win big. But you are (all things being equal) either going to (at best) grow steadily or (at worst) limit your losses.

But picking individual stocks when youā€™ve only got Ā£100-odd a month to invest? The odds are against you. Youā€™ve far more chance of losing it all through a few wrong picks than you have of making a fortune through a few right picks.

If youā€™re still determined to try and pick winners, I canā€™t recommend individual stocks. I can only recommend that you do your research, and (a) choose carefully, and (b) donā€™t commit more to individual picks than youā€™re prepared to lose.

3 Likes

How about buying 5 shares of T (AT&T) to start? Each share would generate 0.52 USD per Q. That is $10.4 USD per year. In 3 years one of 5 of your shares is free. That is of course if you buy at current price, and they will keep the same dividend. Still, not bad to get something for free.

Now I have to put a disclaimer here. I am certainly not an expert, this is just for entertainment purposes.

Before doing anything I would evaluate Tā€™s debt, viability that it always will be in business- who knows- might be someone will put in orbit some satellites and Tā€™s moat will be gone? Might be dividends will be cut, etc etcā€¦

Index funds are broad bet on economy. Held one of S&P 500 fund a while ago, sold out a bit early, but at the moment it is not that far away where I bought it. So in a few years it moved nowhere. With individual dividend paying stocks you could get something in return while you wait.

I am really disappointing that O is not available on freetrade. It pays monthly dividend, and at some point it went down ā€¦ Now it is going back again. IMHO it is quite safe REIT company- majority of the properties held were holding strong during shutdown.

But I am just a person on internets, so do your own diligence. It is your hard earned money after all.

The most diversified fund is something S&P 500 related. But why do you want to diversify so bad? Letā€™s say now, during Covid 5% of companies are literally doing the best ever. Probably 10% are on a verge of bankruptcy. 20% are doing ok- meaning not bankrupt, but not making a lot of profit. 10% are doing good. Of course, I just pulled these numbers of a belly, but the idea is that when diversifying to much you will get good and bad at the same time and sometimes bad will drag things down.

0.01 of Amazon will make you poor. How much will it go up- $1 per year? What is the point?

Might be worth a read : Monevator Portfolio examples

2 Likes

Sorry to be rude, but this is terrible advice. Iā€™ve included a couple of videos which explain why quite concisely.

A broad bet on the economy is much less risky than a bet on an individual company. A broad bet is basically a bet that companies will innovate and create better products and ultimately a more prosperous world, historically this has been pretty consistent, while throughout this individual companies have risen and fallen all the time.

Diversification is how you manage risk, thatā€™s why for most long term individual investors low cost index funds are the most sensible approach. Itā€™s not reasonable to expect stock pickers to consistently beat the index (unless the are over exposed to a particular risk factor)

Dividends are not free money, they are part of your total return paid as cash rather than capital gains. You should not be picking stocks because of the companyā€™s dividend policy, a high dividend yield should not be used as an indicator for greater future returns.

If you wanted to look at T you should evaluate the business and its risks (as you mention its moat looks to be threatened) and come up with an estimate of itā€™s total return. Then you could look at the dividend policy and see how much of that total return will be paid as cash (if thatā€™s relevant to you for tax reasons etcā€¦)

6 Likes

Again, I do not think it is a good idea to be putting the idea out to novice investors, or indeed any investor, that receiving a dividend in a down market is the same as selling shares you own at a loss during a down market.

The whole point of being in the market for the long-term is not to sell at a loss*, so if one needs income during a down market, dividends are one of the better ways to get there.

*Providing the company you own, or ETFs, are still viable and will likely recover.

5 Likes

Agree, for someone new to the game, its better to start off learning how stocks with dividends make you money rather than jumping head first into day/swing trading. Im still new to the game after nearly a year and I much prefer the peace of mind of dividend paying stocks (regardless if they introduce cuts or not).

1 Like