Is using Trading 212 and building a pie with the 10 most popular stocks a reasonably safe option?

05 June 2023

Question by Sue

Is using Trading 212 and building a pie with the 10 most popular stocks a reasonably safe option? Looking at a 1k punt.


Answered by Holly Mackay

Hi.

At the risk of being boring, I wouldn’t suggest anyone invests to ‘have a punt’. I get it’s fun to try and back a winner and I’ve done this in the past – picked some speculative stocks and sat back for the ride. But I just think you can be a bit more sensible and keep hold of your £1,000!

If you want to pick 10 shares and can afford to take a risk with this money, then really with £1,000 the thing to watch out for is trading fees as these will eat away your money. With £1,000 - which sounds like your first investment amount - most of us should look to fill up our ISA allowance first as this is tax-free. But it’s not often free to trade listed securities inside an ISA. So 10 x the typical trading fee of £10 = £100 in cost. So you’ve reduced your £1,000 to £900 before even blinking!

Trading212 is the cheapest provider around for trading shares within an ISA. They charge no dealing fees or ISA fees. Picking stocks based on popularity is rarely a safe option and will probably require a lot of maintenance, as prices change frequently, and specific stocks can quickly fall out of favour. If you are intent on building a pie, selecting from a range of ETFs is probably more prudent and definitely allows for better diversification.

I know it’s deeply boring but in my opinion you really would be better off putting this £1,000 into a single multi-asset fund on a low-cost platform and then get your kicks on the ski slopes, cave diving or down the dogs. Sorry!

Holly

Answered by

Holly Mackay

Founder and CEO of Boring Money

I’ve worked in investment markets for over 20 years. I started out at Merrill Lynch Investment Management and worked at a few big names before setting up my first business in 2008.