Over the last 18 months I have been investing in the stock market, it all started with one individual share listed on the FTSE 100. Since then I have read through a small library of books on investment, I’ve listened to hours of podcasts and continue to do so on a weekly basis…..However after imbibing all this knowledge, the thing I’ve discovered is….Active investing in the long run simply doesn’t work.
Active investing is defined as;
“an investment strategy involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to exploit profitable conditions.”
You’ll find 100’s of online sites claiming there are millions of dollars to be made from active investing. While technically I agree, most of the money is made by the companies peddling “the next big trade”. The big investment companies have multiple researchers for each investment they might decide to make. They can pull the trigger within micro seconds, we are just a small fish doing a bit of research outside of working hours.
Passive investing on the other hand is;
“an investment strategy that aims to maximize returns over the long run by keeping the amount of buying and selling to a minimum. The idea is to avoid the fees and the drag on performance that potentially occur from frequent trading.”
Essentially you are buying for the long-term and holding onto the stocks through the ups AND downs. Passive investors will often buy large funds rather than investing in individual stocks to smooth the ups and downs. The go to guys in that area are Vanguard, they have a long history and LOW fees. Almost all investors could do themselves a huge favour by looking no further than one (or a few) of Vanguard’s funds.
“So how do you invest your money” I hear you cry. Remember this is NOT investment advice. I can only tell you where my money is invested currently and how the investments have fared since they were purchased. I can tell you why I purchased them and whether that has turned out well for them and me.
Mistakes I’ve Made Whilst Investing
But firstly I’ve made some mistakes along the way, hopefully this list will help stop you making the same mistakes.
- My first investment was not made inside an ISA (a UK based tax efficient account). Since then they are all safely locked away inside an ISA.
- I didn’t do enough research into which share platform I would invest through. Whilst I could save a small amount of cash with one of the other options, I’m happy with the platform that Halifax have provided.
- I didn’t utilise the regular investment scheme Halifax offer to keep the fees down on the first stock purchase.
What follows is a spreadsheet of all stocks I currently own including the name, the price it was purchased for and the current value as of right now. It also includes the overall percentage growth, this does include any dividends which I have set to automatic reinvestment. Remember I advocate passive investing especially in large, good value funds.
|Company Name||Market||Avg Cost per share (p)||Latest Price (p)||Change (p)||Profit/Loss %|
|Valuation as at 11:44 on 22/9/2016|
BP: British Petroleum.
The oil price on January 31st 2016 was $29.78 a barrel. At the time I had a lot of friends in the oil and gas industry that were losing jobs or struggling to get work. To me this showed that this pricing was unsustainable, the smaller companies with less reserves of cash simply could not last which should mean the bigger players could Hoover them up at some point. I decided that this was a good time to get involved, cost saving measures would have to be taken across the whole industry which in theory could mean higher profits going forward. BP have a good record of dividend payouts so in the long-term this is quite a stable stock (as long as they don’t have another tragedy like the Deepwater Horizon).
GFRD: Galliford Try PLC.
The purchase of this share came about because of the physical collapse of a school during storm Gertrude, not the most logical reason to buy a share but bear with me. Edinburgh Council closed 17 schools as a safety precaution, the press had a field day stating these schools were built by GFRD. However it turned out most of the schools had the building work undertaken by a company called Miller Construction, Miller were purchased by GFRD 2 years before the incidents for £16 million. Whilst they became liable for getting the schools fixed due to the purchase their reputation was not as badly damaged as first thought. There’s a phrase in the UK “today’s news is tomorrow’s fish and chip paper”, this stems from the use of old newspapers to wrap up fish and chips to take home from the local fish and chip shop.
Anyway enough of the English lesson, the company were operating at a share price high of £16.59 before the incident, they dropped below £7.50 during the following months. This looked like good value to me so I bought using my regular investment in June, July, August and September. The group just announced a significant 21% increase in dividend payment due to a large increase in profits for the year.
One of the top 10 pharmaceutical companies in the world and the fourth largest company on the FTSE 100. I purchased these shares at the back end of last year, the share price was low, a lot of research I did pointed to the price being well below where it should be. The company pays out dividends quarterly so it’s nice to see shares being purchased without me having to do any additional work.
I won’t go through each individual fund on a one by one basis, generally these were picked for their fairly low fees and my desire to be invested in the whole world markets, most of money now will be going into these on a monthly basis. I’ll keep my eye out for other individual shares (I have a watch list) but unless something spectacular comes up I will continue to passively invest in the funds.
If you would like any additional information on my investments then feel free to drop me an email or leave a comment below.
Please remember the preceding post is for information only, I am not a financial adviser nor do I play one on the internet, all investments can go up and down so please be extra careful with your money.
I do not receive any financial compensation for any of the links on this page, feel free to click them but don’t forget to come back and see me.