The one thing we know about stock market investment is that it’s risky, right? That’s why so many people avoid it.
The view that you should never invest more in the stock market than you can afford to lose is persistent. And who can afford to lose money? But how much are you really likely to lose – 50%? 100%?
The way the graph-pointing men in grey suits talk about risk, it might as well be a meteorological chart or the flying velocity of an African swallow. What does it mean for a regular person? Are we jumping out of planes here, or just driving to the shops? Eating a chilli in a packet from Sainsburys or chancing some vegetal weapon from Brixton Market with a skull and crossbones on the label?
Things to consider
Worst case scenarios
Most people want to know the most they could lose. What has been the worst-case scenario with some of the DIY investing brands?
Say you had invested £5000 in a 'spicy' risk portfolio with any of the eight major online investment services called robo-advisers when the market was at its highest point over the 12 months to 31st March. Say you then sold out on the very worst day, the most you could have lost by month’s end would have been £283 of £5000. Admittedly, that’s quite hurty, but it is literally the worst case scenario. Over the entire 12 months all of these portfolios increased in value and the best-performing made £194 from a £5000 investment.
But, you may argue, the past few years have been good ones in the markets. And yes, there have been some disasters. Yet, it is worth remembering that since 1997, we’ve seen the technology bubble, the global financial crisis, wars, pestilence and Donald Trump. Yet someone who had invested £100 per month in the stock market would now be sitting on a pot of around £35,500. The cash investor would have just £25,500.
If you think it’s worth a try, visit our Best Buy tables to see what other new investors say about various popular providers. There’s even a Beginner Investor filter you can tick! No bubbles. No jargon. No fake guarantees. Just smart independent advice for people who don't own super yachts and haven’t got a degree in Economics.
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