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Is it best to diversify or to pick out shares?

Richard | 05/02/2017 | 3

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Richard's question in full

Hi Holly, I hope this finds you well. You gave me some advise the other week re funds. I have taken up your advise as below and also what you said in the Times last year regarding investing £10k, I now have a portfolio of about £30k in funds, I have done a lot of research and happy with what I have, accumulation, income with some risk attached over 12 or so funds. I have also set up a 'DD' to feed the funds each month, which seems to be recommended advice by many. I have taken out a Standard Life pension to top up my police pension in 12 years time when I hit 67 and can draw my state pension. I have signed up with HL as a platform provider, I know they are a bit more expensive but I like their site and the way they explain stuff. I have just had a good look on 'Boring Money' re investing in shares. I am particularly interested to know whether it is best to diversify and try and cover of a number of shares with investments or to pick out a smaller number and invest more. I cannot find anything, I have trawled thru the Tribe site too. Should I invest in say 20 shares with between 100/200 pounds or a lesser number with much more investments or am I better to put these monies into another fund ? Robotics, US Mid range companies, wait for Woodfords Income 5% bond in March etc, plus I would save on HL fees if I invest in another fund, whereas they will charge me for purchasing shares and topping up, I think ! I am tempted to leave shares alone but maybe I am missing a trick ! These are all long term investments, which I want to periodically check but leave alone. I am learning a lot and enjoying it, so thanks again... Best Richard

Holly Mackay's Response

Hi Richard

 

You will pay about £10 a pop every time you buy a share. Which makes no sense for smaller investments – you’re under water by a significant  % before you have started.

I also think investing is one of those things where a little knowledge is a dangerous thing. I include myself in that. I don’t invest in any shares as I can’t keep up with them. I think it’s too risky. I’d rather pay a boffin who spends all day staring at screens!

You sound like you have a good balanced chunk of investments which have spread the risk around in shares. If I were you I would top up existing funds OR think about a low-cost passive ‘multi-asset fund’ such as the Vanguard LifeStrategy range. And then leave it alone. Buying a portfolio of 20 shares could be a nightmare. You’ll overlap with some you own already in your funds and you’ll lose a lot in trading fees.

Just an opinion….!

Good luck
Holly

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

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Holly Mackay

Founder and MD of Boring Money, Holly Mackay has been working in the investments space since 1998. She read Modern Languages at Oxford, with a special focus on Mediaeval French which was deeply interesting and arguably utterly useless.

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