Do I know anything about stocks and shares?
Is it something you need to fully research before investing your hard earned cash into?
Do I want to get into investing and earn some extra cash and save something for when I need it in the future?
Of course I do, who doesn’t….
Now, before we get into the nitty gritty of what I am effectively experimenting with I will give you a rundown of what’s what with my current financial situation. I have credit card debt & overdraft debt that was paid off with a personal loan which now has four and a half years left on it. The reason why I got into this situation was money mismanagement i.e. my outgoing’s where more than my income, I am a homeowner currently paying off a mortgage with my fiancé.
Saving, investing and trading are area’s that I have been curious about for some time, I have a pension through work, along with another pension from a previous job. These will give me a nice little nest egg when I retire but in the short and mid-term I kind of have nothing in terms of savings and saving in my day to day account can be quite tricky, especially with the personal loan I am paying off.
The reason for the loan was simple, I was at the end of my overdraft which I was paying interest on daily, and I had accumulated some credit card debt in which I was only able to the minimum each month. In the end it was easier to get a loan to pay off both as the rate on interest was less overall.
Anyways, I was looking to put some money into some sort of stocks/shares but didn’t know where to start, when one day I just dove in and did the following:
1. Googled for a platform of where to trade
2. Trading 212 was my choice, mainly due to the 0% commission on trades
3. Downloaded the app
4. Signed up and deposited £29 as that was the minimum and away I went
Now, when you sign up on the app it asks you all sorts of questions and gives you information and warnings about the risks of trading, as I was going at this like a bull in a china shop I just ticked what I felt was needed, obviously I know the risks involved with trading and in my mind I made took the necessary precaution which was only put in the smallest amount of funds I could which was the £29.
Within this trading platform there are 3 separate trading options: CFD Trading, Stock Trading & ISA Trading. You need to be aware of one issue I came across which was you choose where you want the money to go into, but after that you cannot move those funds around. So I put £29 into CFD Trading then realised I could not syphon off these funds and spread them out over the other formats.
CFD Trading Explained: The principal advantage of CFD trading is because there are typically lower requirements and markets are less, a person can trade with a much smaller account compared to trading the actual asset. Standard in the CFD market begins with as little as a 2% margin requirement, meaning a trader can trade larger.
Stock Trading Explained: Stock is an equity investment that represents part ownership in a corporation and entitles you to part of that corporation's earnings and assets. Common stock gives shareholders voting rights but no guarantee of dividend payments.
ISA Investment Explained: ISA stands for individual savings account, a form of UK investment that is exempt from tax on its returns. The amount of money you can invest in ISAs each year is limited, with the total permitted amount typically changing each tax year.
Again, as I had not done any real research into what I was doing I continued in an experiment. And I bought stocks in a company called Sirius Mineral and then Lloyds Bank & Ripple. The reason for which is that at the time I deposited my money these stock were on the rise. The way I had the stock value graph was set to the default 5m view which was my first error but I will go into that later.
After a couple of hours all the stocks I had invested in where going down, at this point I decided to sell what I had and see where that left me. I had made a loss of a couple of quid, frustrating but not the worse that could of happened due to the fact that I had done zero research.
After I had sold these I decided to have a play around with the UI on the desktop version of the site as up until now I was doing it all on the IPhone. Obviously this is a lot more in depth in terms of options, graphs and you get an overview of what’s going on with your investments. After playing around with this for a bit I started changing the time option on the graphs, you can adjust the time from one minute updates all the way through to one week, one month one year.
I did this and noticed a trend with a couple of familiar companies, these were Disney and GoPro. The reason for this were their long term trends were good climbing then being steady then climbing again. I invested 70% of my funds in Disney and 30% in GoPro, the main reason for this was that the Disney stock cost more per share bought. I left this ticking over for four days although two of those were the weekend so there was no change to them.
At the start of the following week GoPro had made me a good return on my investment, but Disney had lost me money. The next stage of my experiment was this, to sell all those shares and reinvest in something else. My choice was easy, I put it all into Uber, they had not gone public at the time I started my fore into stocks & shares as I started the day before. This was a good choice as the stock has been rising steadily and I have made 50% of what I initially invested. For now what I want to do is see how it may go before using some of that money to reinvest into something else.
A word of caution for anyone using the Trading212 platform, I have read mixed reviews on trust pilot about them, this was after I had already put money into them, but the experience has been really good. That said I have not tried with draw funds yet. And on top of that and as I said earlier in this piece the initial deposit can be £29, after this the next time you want to put money in the minimum changes to £100. If I had known this maybe my first deposit may have been higher, as I wanted to capitalise on the Uber stock rise but due to my financial situation was unable to do so.
I will keep updating the blog on the goings on with this, as I am really curious where it will take me. I am learning new things which is always a good thing and even it helps me be more money wise then that’s always a win win no matter what.
Again, I have done this with little thought but have kept my head on about the situation, I had funds to invest further but that would of meant going into an overdraft which is not a resort I want to take. No matter how frustrating it was see the Uber stock price rise so high. Investing money can bring in good income but can also lose you money if you are not careful. So before taking the plunge do your research, plan then work out what YOU CAN AFFORD. Yes big investments can bring big wins but can also bring big losses so tread carefully.