Investing Experiment Write Up
DISCLAIMER DISCLAIMER DISCLAIMER!!! This is NOT any recommendation of anything whatsoever (in how to invest or what funds or companies to invest in etc!!!) lol. This was just a one off experiment I ran applying what I’ve learned and to see how things went (I don’t think I’ll be doing anything like it again as 1 year is nothing in the investing time). I don’t mind a bit of risk and was interested to see how things went. 1 year is NOT something I would traditionally do- my strategy is the long term- 10/20/30 years+. You all know me, I love to teach, share and try to be as open book because I can only teach what I know to work for me. Again, do your own due diligence and seek professional help if so needed. Thank you all for being part of my teaching and learning experience. Lots of love, Nick Xxx
SUMMARY: I had £6,000 from my family member which I invested for 1 year (17th Aug 2016-1st Aug 2017). I split it in half into individual shares and funds. There wasn’t much movement over the year for most of them and when you take into account the transaction fees- that ate away a lot at the profit. However, thanks to two individual shares doing exceptionally well (90+% in one case!), my profit was around £1,200- something I could never have predicted.
BACKGROUND
One of my family members had £6,000 to redo her bathroom, but the money wouldn’t be needed for a year. So instead of having it lie around and do nothing, or put into a bank which would likely yield very little in interest (1-3% if that!), I thought it’d be interesting to take a risk and do something with it. The trust is implicit- any profits would be split in half and I would have to cover all losses- I would’ve felt too bad otherwise!
Using the knowledge that I teach in the classes, I thought it best to split the money up in terms of risk (what I personally deemed to be low/mid/high risk and not based on any analysis of the business or what someone else thought) and type (i.e. individual shares and funds- clumps of companies).
£3,000 would be in individual shares bought at the same time
£3,000 would be in a mix of funds which I would split over two months (September and October 2016), due to pound cost averaging (a concept which in essences states it can be better to divide your money up regularly investing than buying in one lump sum at one time)
SHARES BOUGHT (Wed 17th August 2016) AND MY REASONING BEHIND THEM
As I said previously, I divided it up into what I personally believed the risk of the shares to be and not what an official source said they are. NB: There may have been dividends issued for the shares but I didn’t have the time nor inclination to include them- though you definitely would factor these into your calculations.
£500 – Hargreaves and Lansdowne (LOW RISK) – This is the company I use to invest in monthly funds. I like them and they seem to be quite stable
£500 – United Utilities (LOW RISK) – Utility companies are considered to be low risk
£1,000 – Jetblue (MEDIUM RISK) – I love love this US airline- think Easyjet prices with Virgin style. They have been sort of disruptors since they introduced their Mint product – a private suite style for transcontinental US travel (which has traditionally been awful, I really didn’t like flying across the US or using any US airline really) and at a price from $549 one way I knew it was amazing and had to support it! If you ever get to try it, then do- luxury for cheap! Consequently, not only has it impacted airlines within the US, airlines across the world are going to be copying them and it has yielded a great profit, so much so they are expanding the routes due to popularity. Anyhoo, a number of investors say never invest in airlines as they’ll lose you money but hey, when I have ever listened to other people?! Do your thang!
£1,000 – Netflix (HIGH RISK) – A year ago, I didn’t really know much about Netflix and hadn’t even used it properly but I had heard good things about it and figured it was worth a punt. I didn’t know it at the time but this is part of what is known as FANG – the acronym for 4 high performing tech stocks- Facebook, Amazon, Netflix and Google (all of which I own funnily enough).
FUNDS – I don’t remember my exact reasoning for choosing these clumps of companies, but I know I would’ve wanted a mix of areas around the world (you just never know how things are going to turn out these days!). Each fund has a factsheet with a breakdown of fees, performances, regions and sectors it holds investments in etc. So I would’ve gone for those with low fees (a definite) with a good spread of regions and industries. NB: there were small annual fees, but I had neither the time nor inclination to calculate them and include them. But you would want to include this, especially if doing it for the shorter term as this has more of an impact on your bottom line
FUNDS (each amount paid for two months)
£400 – FTSE UK 250 (LOW RISK)
£400 – North America Tracker (MEDIUM RISK)
£250 – Pacific area Excluding Japan (HIGH RISK)
£250 – Vanguard 20% Equity (HIGH RISK) – although on hindsight looking at it now, this probably would be lower risk as it’s mainly bonds and in western countries
£200 – Fidelity Global Property (HIGH RISK)
EXPECTATIONS
Obviously, I wasn’t quite sure what to expect. As the amount in each of the funds was quite small and funds aren’t too volatile, I would’ve thought maybe 5-20% gain or loss would be reasonable in a year. With the individual companies perhaps 5-30% gain or loss would be possible, maybe a bit more. What I did know, for me it would be worth the risk compared to a piddly 2% in a bank account!
RESULTS (See photo with full breakdown of %)
INDIVIDUAL SHARES: Netflix (90%+ gain) and Jetblue (30%+ gain) turned out to be the saving graces of the portfolio- which incidentally I identified as higher risk. There wasn’t a huge amount of movement on the other shares.
FUNDS: There wasn’t huge movement on the funds overall either.
CONCLUSIONS: As expected, a year really isn’t long for anything to happen, other than the few major movers which I couldn’t have predicted nor anticipated how big it would be! While I was fortunate that just as they gained a huge amount, they could’ve also gone down by that amount. So taking into account the small amount of movement and when you factor in the fees to buy/sell shares (at least £12.50 each share and each transaction), it does really eat away at your profits. It’s these things which you need to take into account as the gains for the majority weren’t really that great. Even until the last days, there were quite a few fluctuations. Netflix announced their results and I think the shares jumped to as much as 98% or thereabouts but then they dipped slightly! Thankfully, overall things went in my favour but they could easily have gone down and I’d be making up the losses from my own money. I don’t think I would do it again, or at least for the short term, but as I’ve said for me, I like a bit of educated risk, it is a test of what my understanding of investing and when compared to the other options out there for using £6,000 in a year, this experiment has suited me just right! Thanks for reading, lots of love, Nick Xxx
SUMMARY: I had £6,000 from my family member which I invested for 1 year (17th Aug 2016-1st Aug 2017). I split it in half into individual shares and funds. There wasn’t much movement over the year for most of them and when you take into account the transaction fees- that ate away a lot at the profit. However, thanks to two individual shares doing exceptionally well (90+% in one case!), my profit was around £1,200- something I could never have predicted.
BACKGROUND
One of my family members had £6,000 to redo her bathroom, but the money wouldn’t be needed for a year. So instead of having it lie around and do nothing, or put into a bank which would likely yield very little in interest (1-3% if that!), I thought it’d be interesting to take a risk and do something with it. The trust is implicit- any profits would be split in half and I would have to cover all losses- I would’ve felt too bad otherwise!
Using the knowledge that I teach in the classes, I thought it best to split the money up in terms of risk (what I personally deemed to be low/mid/high risk and not based on any analysis of the business or what someone else thought) and type (i.e. individual shares and funds- clumps of companies).
£3,000 would be in individual shares bought at the same time
£3,000 would be in a mix of funds which I would split over two months (September and October 2016), due to pound cost averaging (a concept which in essences states it can be better to divide your money up regularly investing than buying in one lump sum at one time)
SHARES BOUGHT (Wed 17th August 2016) AND MY REASONING BEHIND THEM
As I said previously, I divided it up into what I personally believed the risk of the shares to be and not what an official source said they are. NB: There may have been dividends issued for the shares but I didn’t have the time nor inclination to include them- though you definitely would factor these into your calculations.
£500 – Hargreaves and Lansdowne (LOW RISK) – This is the company I use to invest in monthly funds. I like them and they seem to be quite stable
£500 – United Utilities (LOW RISK) – Utility companies are considered to be low risk
£1,000 – Jetblue (MEDIUM RISK) – I love love this US airline- think Easyjet prices with Virgin style. They have been sort of disruptors since they introduced their Mint product – a private suite style for transcontinental US travel (which has traditionally been awful, I really didn’t like flying across the US or using any US airline really) and at a price from $549 one way I knew it was amazing and had to support it! If you ever get to try it, then do- luxury for cheap! Consequently, not only has it impacted airlines within the US, airlines across the world are going to be copying them and it has yielded a great profit, so much so they are expanding the routes due to popularity. Anyhoo, a number of investors say never invest in airlines as they’ll lose you money but hey, when I have ever listened to other people?! Do your thang!
£1,000 – Netflix (HIGH RISK) – A year ago, I didn’t really know much about Netflix and hadn’t even used it properly but I had heard good things about it and figured it was worth a punt. I didn’t know it at the time but this is part of what is known as FANG – the acronym for 4 high performing tech stocks- Facebook, Amazon, Netflix and Google (all of which I own funnily enough).
FUNDS – I don’t remember my exact reasoning for choosing these clumps of companies, but I know I would’ve wanted a mix of areas around the world (you just never know how things are going to turn out these days!). Each fund has a factsheet with a breakdown of fees, performances, regions and sectors it holds investments in etc. So I would’ve gone for those with low fees (a definite) with a good spread of regions and industries. NB: there were small annual fees, but I had neither the time nor inclination to calculate them and include them. But you would want to include this, especially if doing it for the shorter term as this has more of an impact on your bottom line
FUNDS (each amount paid for two months)
£400 – FTSE UK 250 (LOW RISK)
£400 – North America Tracker (MEDIUM RISK)
£250 – Pacific area Excluding Japan (HIGH RISK)
£250 – Vanguard 20% Equity (HIGH RISK) – although on hindsight looking at it now, this probably would be lower risk as it’s mainly bonds and in western countries
£200 – Fidelity Global Property (HIGH RISK)
EXPECTATIONS
Obviously, I wasn’t quite sure what to expect. As the amount in each of the funds was quite small and funds aren’t too volatile, I would’ve thought maybe 5-20% gain or loss would be reasonable in a year. With the individual companies perhaps 5-30% gain or loss would be possible, maybe a bit more. What I did know, for me it would be worth the risk compared to a piddly 2% in a bank account!
RESULTS (See photo with full breakdown of %)
INDIVIDUAL SHARES: Netflix (90%+ gain) and Jetblue (30%+ gain) turned out to be the saving graces of the portfolio- which incidentally I identified as higher risk. There wasn’t a huge amount of movement on the other shares.
FUNDS: There wasn’t huge movement on the funds overall either.
CONCLUSIONS: As expected, a year really isn’t long for anything to happen, other than the few major movers which I couldn’t have predicted nor anticipated how big it would be! While I was fortunate that just as they gained a huge amount, they could’ve also gone down by that amount. So taking into account the small amount of movement and when you factor in the fees to buy/sell shares (at least £12.50 each share and each transaction), it does really eat away at your profits. It’s these things which you need to take into account as the gains for the majority weren’t really that great. Even until the last days, there were quite a few fluctuations. Netflix announced their results and I think the shares jumped to as much as 98% or thereabouts but then they dipped slightly! Thankfully, overall things went in my favour but they could easily have gone down and I’d be making up the losses from my own money. I don’t think I would do it again, or at least for the short term, but as I’ve said for me, I like a bit of educated risk, it is a test of what my understanding of investing and when compared to the other options out there for using £6,000 in a year, this experiment has suited me just right! Thanks for reading, lots of love, Nick Xxx