How can I make good investments with shares?
The key with any investment is research and timing.
you need to understand the risks attached to all investments from cash to shares and also identify your time schedule and exit strategy.
no one can accurate predict in advance when to invest but you can look at historic trends. generally shares should be held for the long term, five years or more.
many people have made money day-trading but some of that success has been "accidental" rather than planned and controlled.
this is why when i recommend a portfolio of investments to a client is based on their risk profile, investment term, financial circumstances and a range of investments which have a good proven track record and not just simply jumping onto the bandwagon of the latest trendy or esoteric investment.
sadly many people have been caught out in the past with penny shares and boiler room scams because they have let greed overtake common sense. dont get me wrong, we are all driven by greed and greed can be good but if someone is promising you double digit returns in an investment you have never heard of, tread carefully.
one of the latest scams is encouraging people to buy plots of land on the basis that planning consent will be granted and a £10000 plot of grass will suddenly escalate in value overnight. on the whole its simply not true, sometimes it will be but thats a rarity, most of these scams have been in remote towns, far away from the investors home, where they have no local knowledge and worst of all in green belt conservation areas!
| 01.04.11 @ 19:31
The first thing to do is to decide what you mean by the term 'good'. With luck and guesswork you might be able to produce high returns, but without considering the risks you have taken you cannot claim that it has been a 'good' investment - not really. A good investment is one where you have chosen a level of risk for your overall investment and have produced a portfolio of different investment types (such as corporate bond, property, and various different types of share-based funds) and that portfolio meets your defined and well understood understanding of and appetite for risk.
The portfolio itself is then populated by funds with qualitative and quantitative data that suggests that the funds are likely to outperform the average of similar kinds of funds and, ideally, are likely to do so with below average risk. Quantitative data is based upon past performance and past risk statistics, and qualitative date is future-looking, and is based upon the views of teams of investment experts and strategists.
It is, of course, perfectly possible to do this yourself, but you would be wise to equip yourself with up to date knowledge of risk and return. You also need to understand the companies in which you invest, and the economic climate and prospects of that company, if you want to do a serious job - particularly if you are thinking of investing in the form of individual company shares rather than mutual funds.
There is no harm at all in doing this as a hobby, without advice, but do think twice if you are considering investing money than you can ill afford to lose, in which case there is no substitute for proper, authorised and careful financial advice.
| 01.04.11 @ 21:35
You can either aim for a long term return from time in the market - essentially what Mr Smith & Dr Carter are proposing, or you can try to out research the market, and make better decisions than large teams of professional equity researchers.
Believe it or not it is possible to do, very possible, but it takes hard hard work, and a high level of basic understanding. Generally people mistake good luck for excellent research, and poor research for bad luck - giving themselves the benefit of the doubt in both cases.
Unless you are an analyst, and enjoy several hours per day of research use diversified investments, take a strategic rather than tactical view, and seek the advice of an IFA on how to build your wealth from investing in shares. | 01.05.11 @ 13:16
Without sounding like I'm regurgitating what John, David and Darren have mentioned, shares, should be deemed as very high risk. On a risk scale, 1 to 10, 1 being low, then they are a 10 - but why? Because most retail investors have no idea when to sell. When they go up, they wait for that little more profit, but when they go down, they feel that it will only be a matter of time when they go up. Most retail investors have no idea about timing.
If you can afford to lose money in shares, then this is something you can explore, but it's only luck when you make a killing, let me assure you.
If your attitude to risk is lower than this, then I would recommend talking with an Independent Financial Adviser about a stocks and shares Isa and through this you will have a variety of shares within a fund, diversified and well researched by professionals. Try looking at the Invesco Perpetual Income fund or 7IM AAP Balanced Fund, if this is the case.
Otherwise, the very best of luck | 01.05.11 @ 17:07