Stock Investing for Beginners

You can try this

Interactive investor

I'm sure you know best but in, in passing, diversity is often a good thing and maybe a 100% stock investment is not so prudent right now?

This in no way constitutes advice.

A lot depends on what 'a small amount' is.

Bear in mind that:
(a) An impressive proportional gain on a small stake is still a small absolute gain
(b) Trading costs are a higher proportion of a small stake
(c) The fact that a company is making a good product or selling it well is only a minor determinant of its stock market performance
(d) You need to be very sure you are not buying above a share's value - the P/E ratio of the company seems to be the only reliable guide to this which is available to outsiders
(e) If you do't know what a P/E ratio is, don't dabble until you do

Fraser (twice burnt, forever shy!)

Dave

I am no expert in this area but have been an active investor for 20 years.

Some things to think about:

- Why do you want to invest in equities? Is it because you think they are going to rise in value? Or is it more about the thrill of the chase?
- How long are you prepared to tie the money up? If you are thinking about shares 3 to 5 years is the absolute minimum.
- What is your risk profile? In terms of assessing risk, whatever size of upside / gain you are looking for is probably similar to the loss /downside risk you will face in any investment. Only invest what you can afford to lose.
- It is usual to have cash reserves on top of any equity investments you make (in case you need funds in a hurry)
- Do you have any debt (including a mortgage) as you could be better off reducing your debt?
- Would you be better off paying into a pension?
- Have you considered any pooled investments e.g. investment trusts or unit trusts or products such as guaranteed equity bonds?

Anyway enough of the health warnings, what are the best sources of information.

- I find ADVFN.com and Moneyam.com useful for tracking real time prices and they do have some data on performance
- Ingore any 'tips' you get whether from newspapers, colleagues, friends or family except for identifying companies that are worth looking into further
- Read the FT (especially on a Saturday)
- Your broker may have an information source, I use Barclays and they have an online resource that is free to access with fundamental data.
- Look at the websites of the companies you are interested it, you can often get a load of information off them. Give the company's investor relations department a call if you still have questions.

There are many books worth reading.

For a general introduction to the subject Jim Slater's Zulu Principle books are pretty digestable

If you start getting carried away I would recommend 'Reminisences of a stock operator'.

I terms of a better understanding of risk I love 'Fooled by Randomness' by Taleb.

Finally I can only echo Fraser's comments - a well known / good product does not equate to a good investment. It is good to buy a company whose business you understand, but because you understand a company's business it does not make it a good buy.

Hope this is of some help.

Cheers

worm

I 2nd to consider a pension, there are some very good ones around at the moment. I know that my father has managed to average 30% gains over the last 3 years on his.

Plus you also get tax relief.

Alot of people now are paying all their salary into a pension, and borrowing off the mortgage to live etc . .


Regards