Hello
I have just opened ISAs for myself and my wife, I had initially thought that I would try to select shares using stock ranks as my first step filter. However, on reflection I am fairly limited in my knowledge and notice that a fund like Fundsmith seems to have even higher returns than the top ranked stocks.
Can a fairly ignorant individual like myself really do better than just regularly paying into a few funds?
Thank you
Ultimately it all depends on how efficient you believe the market is, how much spare time you have/how long you have until you need the capital and how much you have available to invest
My recommendation would probably be to get some passive funds evenly distributed between Europe, USA and Asia; maybe try and get some mix between bonds/equities to balance it out.
Perhaps you could add the odd actively managed fund if you have a lot of conviction to it, but just be wary of fees associated with these and make sure they’re consistently beating the benchmark…
It might even be worth creating a Fantasy Share Portfolio whereby you can do your DIY investments. See how you get on over a year whilst continuing to educate yourself!
I’d also recommend looking at the ‘learn’ section of Stockopedia: in particular the NAPS portfolio.
Good luck
GI
I ran a portfolio of such funds between Jan 2018 and Jan 2020, I was pretty happy with the returns.
Giving an overall CAGR of 15.45%, not too shabby IMHO for almost zero work.
Since retirering early 2020 (first week of lockdown) I've redeplyed into Investment Trusts to provide an income, otherwise I would have continued with the funds, rebalancing every year or so.
Keep an eye on costs, I had to move from Hargreaves to Interactive due to Hargreaves 0.45% charge on "looking after" your funds.
The answer to your question is no! Stick to funds until you are confident in your stock research skills. Most people (including, I would bet, most subscribers to stockopedia) would be best off just buying low cost tracker funds.
I personally am pivoting my ISAs to be about 65% low cost dividend-paying funds, 25% high quality stocks and 10% speculation over the next year or two.
I'm quite an experienced investor in stocks and guess what my biggest holding is? Fundsmith, partly because I've put a lot into it and partly because it's just done so well.
Don't be fooled into thinking that it's as easy as just putting everything in Fundsmith, although you could do worse than holding some. It really very much depends on what you want to do and your attitude to risk. If you want to stock pick go for it but be prepared to lose some money learning along the way. It might be the best thing you ever did though....
I started last May as an inexperienced investor. I think it can be done, but as doug2500 says you have to be prepared for risk and losing some cash along the way.
In the 8 months I've been doing this I have just about broken even. Some big mistakes where I just trusted the stock ranks without really thinking too much about the covid effect on them. I also trusted the stock ranks too much, my biggest fallers had overall 90+ stock ranks. I also had too many shares and should have started with a more NAPS like portfolio.
I have a long term plan and I've started to take profits along the way. This has helped me to keep afloat and I feel more confident now heading into 2022.
BUT my biggest gainers have been ETFs and funds. As spoken about above they can may might provide a useful way of spreading the risk.
Hi
I would say there is no right answer and no wrong answer.
You have to decide what is right for you and your wife.
I put my money in shares, my wife will only put money in cash or physical property.
There is no get rich quick answer otherwise we would all be in the Caymans lamenting back in the day when it was not overrun...
I think the lessons I have learnt over a few years, is you can do loads and loads of research, prevaricate and worry and finally take the plunge into something, and it might gain loads, do nothing or lose loads. You can do a blindfolded dart at the dartboard and same thing. Go figure. A really good company can fall in price, a really rubbish one can go up.
Key items for me are.
Holding cash is not wrong, it is a good thing, there will always be another opportunity from the one that got away. Learning to do nothing is very hard but a vital skill.
Position size, when starting out whilst it might cost more in transaction fees, and you might miss more on the winners, but you also can sleep at night. I think this is do not put all your eggs in one basket.
Funds have a place in your portfolio, whether this be Vanguard, such as £VUSA or Fundsmith or Scottish Mortgage Investment Trust (LON:SMT)
I still drip feed monthly into Fundsmith and Vanguard funds, as well as my company pension through Aviva (actually right now I am putting a lot more into there than into investments purely to get the tax benefit from salary sacifice), and then have the rest in single stocks and other more niche funds.
Learn what lets you sleep at night
Read as much as you can and then read more, think about what your rules are and write them up and stick them on the wall. If it does not meet your rules, don't buy it. SCVR is great in terms of information similar to these threads.
Always have your plan to sell when you buy, so price, profit warning, global pandemic and stick to it. I know things always seem to go up the day after you sell, but only buy back in if it meets the rules for buying. There is always another boat.
Don't chase, if the boat is gone, wait for the next one. You would not drive your boat off the pier at Dover would you?
Don't be afraid to ask and make discussion points.
Tommy
