I’m not going to beat around the bush. Life as a single parent of a teenager on one income was a hard slog. Friends complimented me on my thriftiness. They were impressed by what I achieved with my money. Even so, I took on credit card debt, depleted my savings and had to do a lot of juggling to make ends meet. It was a situation that I was very uncomfortable with. I like to have a comfy financial cushion behind my back in case of emergencies and to help me realise future dreams. After all, saving isn’t just be those rainy days. It’s to fund the nice times too.
Since I’ve been in a relationship I’ve been fortunate enough to reduce my reliance on zero rate interest deals. Sharing household expenses has made such a difference too. And Monday was a milestone. We paid off the mortgage with some of the proceeds from Hot Stuff’s house. Whoopee! I should have no debt at all just after the start of the next tax year. The one more bit of jiggery pokery needed before I am beholden financially to no big corporation.
For a while now I’ve also resumed making regular monthly savings. Because interest rates for investors are pitifully low at the moment I just have a month’s wages in the form of cash and have returned to my ‘go to’ investment of stocks and shares
One of the reasons that I’m writing this post is that I truly believe that the stock market should not just be the preserve of fat cats. Those rich guys out there aren’t sitting back and accepting paltry interest rates. They’re making their money work more creatively. In the days before tech took over it was far more difficult for just anyone to get a foot in a door. Now, with online resources it’s a breeze. Small amounts can be invested easily by anyone, even leftish leaning. hippy types. You can even set up virtual portfolios to have a practice before dipping your toes into the water.
Maybe this isn’t the type of investment for someone who’d lose sleep every time the stock market fluctuates. However my own financial risk profile is medium-high (you can test yours here) It means that I’m pretty happy with taking chances in return for a long term gain. I’ll weather the storms. For others that are more cautious a professional broker can help make choices for a fee. There’s the middle ground too. Fund such as unit trusts and investment trusts are a pot of shares chosen by an expert. Risk is spread because they are actively managed and contain multiple shares. Someone else does the work for you but of course they take a cut.
I’ve chosen to save into a stocks and shares ISA, that allows me to put £20,000 yearly into a tax efficient pot. I’ll never pay capital gains tax on the profit when I sell shares or on dividends, my share of the profit of the companies. I now have a portfolio of ten holdings. That’s good enough to spread the risks but is a small enough number for me to keep an eye on. I mainly hold UK shares in single companies but sometimes branch out overseas. I’ll invest in a fund if they’re particularly well performing.
I try to choose from companies that match my values and ideals and will spread my investments across a number of sectors. Don’t put all the eggs in one basket is the mantra. I also do a bit of research before I on financial websites before I buy. Sometimes brokers make recommendations about what might be a good buy or I act on a bit of news in the regular press. I also perk up when a director of a company has recently bought a bunch of shares. Sometimes I’ll go on hunches on my own. I once invested in a high street store because it was always packed out. In the space of a few years I’d tripled my investment.
So when do you sell the blooming things? Do you hold onto shares as many financial advisors recommend? Five years seems to be the term that is banded about. Or do you flog them when they’re riding high and pocket the gains? Like many others, I didn’t take profits from my hi-tech shares at the end of the ’90s and watched substantial amounts of booty disappear forever away to nothing. I learnt my lesson by being burnt but it wasn’t a big deal. I’d only invested weeny amounts.
My selling policy is a bit mix and match. Often I’ll take a 10-20% gain and reinvest it in my existing portfolio or a new share. There’s some of my other investments where I may be in it for the long term. Very occasionally I’ll heed online advice and sell a duffer that’s making a loss. After all the standard warning is that shares can go up as well as down. The key is that I keep an eye on the market and make decisions on a regular basis.