So my journey investing in shares, goes like this.
This time, I was determined to see through my quest of investing in shares (previous times, I gave up because I didn’t know where to start), so I reached out to someone who recommended an investment platform I could use. I also gathered a bit of information form https://www.moneysavingexpert.com/savings/stocks-shares-isas/ – not as much as I should have, but just enough to get started! I don’t recommend anyone else do that, rather it is advisable to do thorough research before getting into investing.
I however have gone about it the other way round and that’s only because that’s what works for me – if I don’t do that I end up not doing it at all – that’s how I get past procrastination! Once I am in it, I put the time in to do the research. This however could be costly, so I advise that you do your research before you start.
So I signed up on an investment platform and opened a stock and shares ISA (Individual Savings Account). Why an ISA you might ask – because you don’t pay tax on income or capital gains from investments in an ISA. There is a maximum amount you can put into an ISA each financial year (£20K in 2020/21) and any income/appreciation in value from your shares doesn’t get taxed nor does any dividend payments received. More details here https://www.gov.uk/individual-savings-accounts/how-isas-work
I set my account up and bought my first share at the end of Sept (in Apple) and then for my birthday, my gift to myself was a share of Tesla. I also decided that the below message was to me 😊
The choices of which shares to invest in were based purely on reputation of the brands than on any research. In my bid not to pay the higher fee of £11+ for each deal in the subsequent month (the platform I registered with has a reducing fee structure which meant I could only activate the lower fee of £8+ the next month if I placed up to nine deals in the month), I proceeded to buy other shares of less value. Some of my purchases didn’t make financial sense as the total value of the shares purchased were less than the charges I had to pay for the deal. Again, these purchases were not on the basis of any research done! Again, don’t do what I’ve done, do your research before delving in.
I then started my research! I stumbled upon a YouTube channel which I highly recommend https://www.youtube.com/watch?v=JLQ90diMOPU Lots of short, easy to follow and with no technical jargon videos; the videos take you through all you need to know about investing in shares. If you are interested in taking the plunge, this is a great resource for your research. I found there were several other YouTube channels doing the same, but this I found easy to follow and very realistic.
I also bought the book ‘Shares Made Simple. A beginner’s guide to the stock market’ by Rodney Hobson. I am about halfway through it; very basic and easy to follow/helpful to understand how the stock market works and considerations when starting out.
But guess what, while listening to one of Infant Investors’ YouTube videos about how to assess shares to invest in, he talked about EPS (earnings per share) and a few other ratios, how to calculate them and the implications of the resulting ratios; and just like that, I was taken back to my accounting classes!
How could I have invested without considering these!!! At each stage of my accounting studies, we were taught financial ratios – Liquidity, Debt, Investors and Profitability ratios. (any accounting student can attest to this, irrespective of what level you’re at in your studies, you learn ratio analysis. As your level of study goes up, the teaching is developed some more e.g. how to calculate each ratio, then what each ratio means, using the ratio to analyse a company, etc.).
Once again I am left reeling and asking the question: does being an Accounting and Finance professional translate to Financial Literacy?
I am finding perhaps it’s not necessarily the case or is it just because this is one of the many areas of my studies that hasn’t translated to practice (ratio analysis is not a significant consideration in the not-for-profit sector) that it didn’t occur to me to utilise this knowledge I spent so many years learning? Well, I’ve got that muscle switched on now – thanks Infant Investors’ for jogging that memory.
It is however interesting how when you don’t utilise a skill or knowledge, it gets buried, but then one small thing triggers it and it all comes floating to the forefront! Glad to have that part of my brain now switched back on. I have created a spreadsheet to begin capturing the relevant ratios of the companies I have invested in. Funny thing is, I don’t actually have to calculate these ratios, it is all there in the financials of each of the companies! So no excuse; all I need do is analyse what the ratios are telling me and review these alongside other non-financial information, and then begin to make decisions.
The decision for me in the first instance would be whether to hold all the shares I’ve invested in or sell some and reinvest the funds in other shares. This however will require investing a lot of time to do the research … game on 😊
This is a picture of what my investments looked like after the first month
As you can see, my initial investment round has yielded nothing but losses all round (some more than others)! I have however been assured that even if I had done my research before jumping in, it probably would have been the same as the markets have been very volatile (U.S. elections, increased covid-19 cases, Brexit, etc. all having an impact). Analysts forecast this will continue for a while, before stabilising.
I have gone ahead and made my November investments, having done a bit more research than before, but also topping up some of the lower valued shares, just to make up the numbers that would mean less charges next month!
I definitely need to do some research on whether maintaining my account on an expensive platform is the best thing to do, perhaps better to open an account with a less expensive platform? I however feel that for now as a newbie and the amount of the information available on this platform, I am currently in the right place.
I would love to buy a few Amazon shares though – but at over $3K per share… I’d have to work my way to that one! Reputation of the brand once again plays a big part in my interest, but it seems to tie up with what the figures are saying as well … so I’m going to have to figure out how to get there. Though I have learnt along the way that one could also invest in fractions of a share – will have to look into that as that might be my in-road to Amazon!
Do you notice that unlike my foray into forex investment, I am not running for cover in spite of the losses? That’s where interest comes in! The interest in this area (for whatever reason) keeps me committed to learning and doing the necessary research, to make a success at it.
Lots to learn as I go along and being able to put to personal use some of what I studied which had previously been buried away… fun times ahead.
Remember for the young ones, START NOW; you don’t have to have thousands of pounds to start.
Do you notice how even Warren Buffet started small, persisted and grew his investments over the years? So just start all (after doing your research of course)!
In future post, I’d share some of my knowledge on key investor ratios, what they mean and how I shall be using them in my decisions to buy or sell shares.
Until then, like, share and leave your comments.
Remember, do your own research before making any investment decisions.
📝 Originally shared under my first blog, bitalks; part of the journey that shaped Life’s Riches.