So I am used to being asked by some of my friends who know I enjoy “stocks and shares” about recommendations and thoughts, as well as bouncing ideas off each other. I continue to shout my disclaimer that I am not involved in the Financial Services, I am not a Financial Advisor, and you should always Do Your Own Research. I do however enjoy bouncing the ideas around but there you go!
Right, enough on the disclaimers, onto the meaty stuff! When I first started out doing this I had no clue and no rules or target allocation or what my portfolio should look like. I started it firstly as a bit of fun, and secondly, looking at all the funds they all seemed to contain the same top 10 stocks. Why pay them for holding them when I could hold them myself?!
I had no idea about ETF’s, no idea about Bond / Stock allocation, risk tolerance (although I am willing to take on what they class as “aggressive” – so over the top risk I am happy with as you will see from some of my stock selection!).
So what does trigger me to purchase? There are a few key things that will trigger me to buy:
- Too much cash sitting in my ISA Trading account. Once I get to a set amount I will start looking for something that seems good value and buy it – I just can’t help myself!
- Bad News. This really is a high risk and should certainly not be recommended for most people, however its worked well for me so far on average, but please do remember this can be a VERY easy way to lose money (I did on Northern Rock)
On the bad news side of things, my desire is to hang on to some cash so I can take advantage of it, but it doesn’t always work (I didn’t have any when the Costa Concordia sank, or I would have bought Carnival then). I did ok out of RB when Bart Becht stepped down. I bought in, held for a month or so and sold out with a 10% profit (post fees). In retrospect I should have held longer and I would have been even better off, but this comes down to me being happy with that profit. As with my caveat above, I have also lost money – Northern Rock the biggest that made me lose my entire holding there!
If I am really deeply honest, I don’t have a fixed rule even now. I am trying to get more structure into it, especially as its grown to a reasonable size now (I’m not yet an ISA millionaire sadly). So my latest thinking, that will no doubt change over time, is:
- 30% in ETF / Trackers
- 30% in Investment Trusts
- 30% in “Self Select Shares Portfolio”
- 10% in “High Risk” – AIM shares or other random things that grab my attention 🙂
At present I am some way off this – I am heavily overweight in “Self Select” and “High Risk”, however I don’t want to sell these, so I will simply look to increase other holdings to get to the above target. I do however firmly believe that this will reduce my overall performance in this ISA, but should also reduce my overall volatility.
I will be doing a number of posts on what I have bought over the years, and I will update my Portfolio page to cover what is in as I unveil the portfolio, and add to it.
The portfolio itself probably won’t change very much over the coming years, as from the new tax year all my subscriptions will be going into another provider to spread the risk, so it will only be reinvested dividends.
I would add that this really isn’t a great way for most people to invest – if I knew then what I know now would I do anything different? Probably. Why only probably? Like many, I love to dabble and try and pick out good investments – however its also good to have a stable base which I do think the Trackers help provide. This means you can have a steady tick in of income to help build the base, and reduce the impact of potential dividend cuts on the overall portfolio whilst still having your fun. So have your cake and eat it…
What about you – do you have a set allocation that you track and stick to? Or do you like to dabble?