Business -- 9 months ago
10 tips for starting your own share portfolio
Words: Charlie Thomas
Getting into the world of stocks and shares can be intimidating but, if you do it the right way, it can also be a very rewarding and additive pursuit. If you’re thinking of dipping your toes in the water, you’ve come to the right place. Here are 10 tips for starting your own share portfolio.
Think long-term
Like most things in life, you can’t expect to succeed overnight. Investing in shares is a long-term process and you should think of it that way. Whilst it is of course possible to capitalise on a share in a short space of time, it is not realistic to think this will immediately happen to you.
Do your research
This should be an obvious one, but you’ll be surprised at how many people jump into investing without knowing a single thing about it. Get to know the ins and outs before you impart with your hard-earned cash.
Ben Yearsley, Head of Investment Research at Charles Stanley agrees; ‘There are many different platforms to use to invest through, so pick one you are comfortable with and that has a charging structure that suits your trading and investing pattern; in other words don’t just look at the headline charge per deal. The Platforum or lang cat are both good places to get an idea of which platform you should invest through.
Build a strategy
It’s important from the get-go to decide what exactly it is you want from your share portfolio. ‘What do you hope to get out of your share portfolio? Are you looking for income or growth or a mix of both? This will start narrowing down what sort of share to look for – don’t forget there are over 2000 listed companies you can invest in in the UK. It’s quite a wide universe’!
Spread your net as wide as possible
Be a shotgun and not a sniper rifle. If you want to succeed, it’s vital to spread your risk over multiple companies in order to maximise your chances of getting a big return. Ben advises that ‘anyone starting a share portfolio should aim to have about 15-20 shares as a minimum in it, otherwise the risk in my view is too high as one particular share could have a huge detrimental effect on your portfolio. Obviously most investors won’t be able to start with that many, but that is where you should aim’.
Review your portfolio as regularly as possible
Once you’ve built up your portfolio, don’t just let it play out on its own. Make sure you review it every few months or so, to monitor which shares are doing well and which aren’t. If you’re not seeing improvement in particular shares then replace them with (hopefully) better ones.
Finally, here are some essential questions you should ask yourself, courtesy of Mr Yearsley:
– Why are you buying a particular stock?
– Why might it go up in price?
– Why might it fall? What could go wrong?
– Are you buying it just because you’ve seen a tip somewhere? Note if it is a small cap and has been tipped, the price has already probably gone up a lot!
– What will the catalyst be for the share price to go up?
– If it is something that has fallen a lot, what made it fall in the first place? Is the company irrevocably damaged?
– What is your price target? And have you set a stop loss (I.e. A price at which you will sell if it falls)
Become a Gentleman’s Journal Member?
Like the Gentleman’s Journal? Why not join the Clubhouse, a special kind of private club where members receive offers and experiences from hand-picked, premium brands. You will also receive invites to exclusive events, the quarterly print magazine delivered directly to your door and your own membership card.
