What should I invest in first?

Iā€™m new to actually investing, I just know a bit of terminology.

What kind of investments should I look into first?

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This blog might help

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Very informative, thanks!
Though, that post doesnā€™t actually tell me how to be a great stock investor, just how to be a sensible investorā€¦

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Weā€™ve got lots more blog posts where that came from :smile:

Thereā€™s a few more in this wiki that you might find useful Introductory wiki šŸ£

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Best of luck on the investing journey Ben!

Perhaps the point is that ā€œsensible investingā€ is something that can be taught, and it has fairly predictable results. Invest enough for a long time in diversified low cost assets, and youā€™ll probably do well.

But ā€œgreat investingā€, if you mean something that results in better returns or does it quicker, is both harder to teach and has bad as well as good outcomes because the results are unpredictable. ā€œAllā€ you have to do is pick investments that will do better and avoid ones that wonā€™t - the challenge is that that is very hard to do. As Raul says, Buffett can do this. But maybe most investors canā€™t!

Anyway, I started my investment jouney by reading Tim Haleā€™s Smarter Investing.

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:+1: I would recommend this book too.

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My conclusion after reading that and a lot of other books and blogs was:

  • for various reasons itā€™s hard to have an investment ā€œedgeā€ on the rest of the market participants. (And probably much harder than your intuition tells youā€¦ after all youā€™re a clever person right). So investing by picking stocks or picking investment advisors might not be as successful as you hope, net of costs.
  • luckily there is a way to all but guarantee a good investment outcome, though the problem is that itā€™s a very boring way to invest: :roll_eyes: low cost index-tracking. More: Checksies āœ…Ā #1: personal pensions

Thatā€™s pretty much what works for me.

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I would go further and say that, on a long enough time line, no investor can. The successful ones are just experiencing a string of good luck. If you had enough monkeys making random stock picks, one of them would be as successful as the most successful retail investor.

You canā€™t become as good as Buffet, because Buffet isnā€™t just picking stocks like you or I can. He has enough money to buy up controlling interests in companies, to make them succeed. His reputation alone means others will invest in those companies as well, raising the price. You canā€™t do this. Buffet probably made most of his own money initially not by picking good stocks, but by taking the money of other people to pick stocks for them. You also canā€™t do this.

Another good book to read is ā€œA random walk down Wall Streetā€. It shows how you canā€™t predict the future of the market from past behaviour (it acts, for practical purposes, randomly - donā€™t spend time looking at graphs!), and picking good stocks consistently is for practical purposes impossible, because no one can predict the future. Your best bet is to invest in everything (a world index).

To get back to @BenTen1010ā€™s question, you can:

  1. Invest sensibly, and pick an index
  2. Gamble on something, and luckily come out ahead of the market
  3. Gamble on something, and unluckily come out behind the market.

3 is much more likely than 2. And 2 doesnā€™t make you a ā€œgreatā€ stock investor. Just a lucky gambler.

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As a first investment an index fund is usually a good shout.

But I would say do some general reading/research into investing. Donā€™t rush anything, and donā€™t invest in anything you donā€™t understand - the stock market will be there tomorrow and the day after!

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If looking to invest in companiesā€¦

Look around your Kitchen, Bathroom or your Medicine cabinet. Look at the labels. Find out who the manufacturers are. Review their Income, Balance Sheet and Cash Flow statements. Are their dividends growing year on year?

Invest in what you know initially and learn.

Some examples:

Reckitt Benckiser - Durex, Neurofen, Dettol, Gaviscon
Unilever - Dove, Knorr, Rexona, Persil
Procter and Gamble - Head and Shoulders, Ariel, Downy, Tide
Heinz - Ketchup
PZ Cussons - Imperial Leather

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Donā€™t think itā€™s necessary to go through the financial reports if youā€™re new to investing, seems like that would put lots of people off. ETFs are a great way to start and then build of your knowledge if you want. Same with trusts.
Doesnā€™t need to be that complicated unless youā€™re investing large sums of money or want to casually drop terms like ā€˜market capitalisationā€™ into conversations to impress your mates

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An infrequently-discussed benefit of this investing philosophy is that you stop worrying about your investments (because youā€™re happy to accept the marketā€™s return) and you stop spending time and effort trying to predict the stock market (because you believe itā€™s random and opaque to you). Which frees up time for other things. :+1:

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