View the article online at http://citywire.co.uk/money/article/a631615
Diary of a Dumb Investor: 10 big problems for novices like me
I have gleaned some investment truths. Some might even be useful for fellow greenhorns.
Watch anyone under the age of, say, 30 pick up a Sunday newspaper in the pub, on the train, in a café or whatever. As part of the standard multi-section purge, alongside the gardening section, the personal finance section will get ditched. Without fail. Guaranteed.
Pensions, mortgages and savings eventually skulk miserably into everyone’s lives, but investment will remain snubbed by most people.
It is, after all, not easy. Here's why:
1: Not enough money
Not everyone has a great uncle who’ll slip them 10K. I do. But it’s not enough – I have had to let some opportunities pass me by because I don’t have enough cash spare and don’t want to sell out of my other holdings.
2. Prohibitive fees
If you don’t have enough money the fees make it prohibitive to diversify – ie, if you’re a funds investor you might just have to get a few. Richer people can invest better.
3: Too much choice
I can’t concentrate. There is too much out there and I don’t know how to narrow it down. I flit between ideas and don’t always see them through. There, I’ve said it.
4. Not enough time
And because there are so many different things to invest in, you need lots of time to research them. It is incredibly time-consuming to research investments like shares. For that reason, collective investment funds seem sensible.
Therefore, add time-rich retired people to the list of investors with a big advantage, alongside the rich.
5. Lack of knowledge
I am amazed by how clued-up some of the readers are on this website are. Bravo!
To start investing you must understand what a share or fund (for example) actually is. Then, which ones to choose. If it’s a share you might need to understand the company’s own prospects, as well as the broader economic outlook. That’s tough.
Then you have to know how to go about investing in it – platforms, tax-efficient wrappers and the like.
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