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Diary of a Dumb Investor: ouch! Time I had a plan
I’ve started to think more seriously about my stock market strategy having watched my first investment lose money last week.
I’m slightly embarrassed to announce that my first investment has got off to a rather ignominious start: the £999 I put into Jupiter European Opportunities is now only worth £953.62.
I lost almost fifty quid in a week!
Okay, so that £45.60 loss – or 4.56% – on my investment comes after £19.85 in charges (£14.95 commission, £4.90 stamp duty). And the shares were hit during a pretty rough week for stock markets – what with Libya imploding and oil prices going absolutely mental. They went from £2.81 a share, when I bought them, to £2.74 at the close of trade on Friday.
Tough week for JEO: click to enlarge
And I don’t want to make a fortune this year (although it would be nice); I just want to make long-term investments in a manner that will prove to my great-uncle that I can put his £10,000 money to good work.
As Mike88 commented on my column last week, this really isn’t about trying to get rich quick or making a quick buck. And I’d like to assure La Mamma, another reader, that I do intend to buy funds on the online platform I’m using, Hargreaves Lansdown.
Although I realise now more than ever that I really need a solid plan for my portfolio, which needs to be diversified so that losses like this week’s will not cause me to dribble coffee onto my keyboard in disbelief. I’ve decided to hold off investing this week to allow me time to put such a plan in place.
So, as I said last week, I’ve bought and borrowed a whole load of literature to help demystify the whole investing thing for me. I’ve made pretty good progress in the Tim Hale book, Smarter Investing, but haven’t touched the others yet. I do feel slightly guilty about that, since my ignorance will probably cost me real money, but then again – I’m a busy guy!
Tim Hale's risk spectrum
Hale outlines a number of portfolio models for investors along a risk spectrum, where one is the least risky and six is the most. I’m going to pick the fifth level and use it as a rough guide for my portfolio. As I keep saying to myself this is a long-term investment and I’m trying not to worry too much about short-term ups and downs.
Sliding shares: click to enlarge
More about this:
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- Diary of a dumb investor: my first investment!
- Diary of a dumb investor: getting started
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