As someone who doesn't know their Arbs from their elbow when it comes to financial matters, i have always steered clear of stock markets and shares and all those kind of investments but as my pension pot is currently being used as a cookie jar, i really should looking into making sure that when i retire my income doesn't depend on the generosity of the tooth fairy.
Where to start though because the financial market is pretty daunting for someone whose only financial transactions are with shop assistants where i walk away with a tin of beans afterwards.
You can ask at your bank but bankers are about as trusted as the people who send out those emails telling you that you have won millions on a foreign lottery and banks tend to want to give a lecture on what exactly a share is and which markets are the best value when all you really want to know is what shares should i buy to make myself rich.
I have decided to depend upon the wisdom of the Internet but before i dip any toes into the shark infested waters of men who wear braces and shout down the telephone to each other, i plan to spend an imaginary £1000 and see where i am at the end of the year.
So who does the Internet tell me i should be spending my pretend grand on?
The name Vodaphone has cropped up a few times and the London Stock Exchange website puts the shares at 170p which is reportedly cheap and expected to do well so i'll have some of them.
Another name mentioned on several sites is oil company Amerisur Resources. Its shares are tipped to soar this year from the 47p they presently stand at so they go in the basket as well.
A strong tip from the Independent newspaper is Thomas Cook (48p) who apparently have weathered the storm of last year when they nearly went out of business but under the new Chief Executive, a revival in the company is forecast and the shares are undervalued. That's my third choice.
A share in Parkmead is presently 14p but they have poached a new CEO from another more successful oil company and they are expecting shares to top 50p each at the end of the year so they become my number four.
My fifth and final selection is Utilitywise at 94p, apparently they are undergoing a huge expansion in the UK and forecasts are for a whacking great increase in revenue and therefore share price.
My portfolio therefore looks like this:
Vodaphone 170.00 x 250 = £425
Amerisur Resources 0.47 x 277 = £130.19
Thomas Cook 0.48 x 286 = £137.28
Utlity wise 0.94 x 275 = £258.50
Parkmead 0.14 x 350 = £49
All together it comes to £999.97p and i will come back at the end of the year and see if my imaginary £1000 has made me an imaginary millionaire.
4 comments:
Lucy,
Stop. Invest in a mutual fund that matches your risk tolerance and let a professional do all the work. Start with as much as you can afford whether that is $1,000 or $10,000 or whatever. Set up an automatic payroll deduction to add as much as you can to the mutual fund each month. The mistake made by most women is that they don't take enough risk and end up not having enough income at retirement after years of saving and investing. In fact I suggest you start by estimating how much income you want in retirement, subtract your current income earning assets then that will help you understand how much risk you need to take.
Get a professional.
Q
Good advice from Q.
I particularly agree with his comment about risk. I think you're around my age, so you're definitely young enough to weight your portfolio more towards higher risk/ higher potential return investments for the next decade or so... Plenty of time to shore things up with a more conservative weighting down the line.
Of course, complicating matters of late is that exactly what is high risk and what is low risk has been muddied somewhat... but a properly diversified portfolio should insulate the wise investor against the occasional 'surprise'...
What is the difference between a mutual fund and just buying a portfolio of shares? Isn't a mutual fund the same thing?
A mutual fund is managed by a professional that spends 50 hours per week trying to get the fund to perform as good as possible within the risk boundaries declared in the fund. The other is managed by people like us..
Low risk means guaranteed return on investment and is federally insured. Low risk means low returns. Today that is a measly 1%. High risk means far fewer guarantees but over 10 years or 20 years a return of 6% to 10%.
Q
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