#273773
Postby Bouleversee » December 28th, 2019, 6:43 pm
We are all different and can only do what suits us best individually. I am of the Bubbles variety and prefer a hands off approach and wide diversification. I do actually spend time first thing in the morning listening to the news and reading the financial pages but then I get overtaken by events and more often than not miss the boat as regards taking action and I am useless at understanding balance sheets and am a bit of a ditherer; the question of whether to sell all my utilities in case the Marxists got elected remained tossing in the air and has now been superseded by whether to get out of tobacco shares and whether to reduce my holdings in building shares as they may not do so well in future; PSN has performed brilliantly despite its PR disaster.
Dod and others are experienced investors with a business background but it is easier to lose money than make it and I don't think anyone starting out can hope to pick all the right shares. FWIW my IWeb ISA , which contains 70 holdings (do stop rolling around on the floor) and most of my money, produced a total return since Jan. 1 this year to Friday's close (with no cash added or taken out but quite a bit of dividend cash uninvested for fear of a Labour win) of 31.85% which is good enough for me and far better than last year. My Interactive ISA, started more recently, contains 18 shares and only produced l6.56% total return because, whatever anyone says, timing is everything and it contains several mining shares bought at the wrong time (mitigated to some extent by buying more in the other ISA when the price had fallen) and also several dogs, two of which will disappear shortly after being taken over for peanuts to join the ones which ceased to bark and were put down in previous years.
I haven't yet worked out what percentage of the total return was due to dividends and what to value appreciation but I certainly had a huge amount paid in, including several large specials, which compensated for the zero payouts of the dogs. My guess is that dividends won't be so generous next year. It would be interesting to know how much better the total returns are of those who go in for trimming and trading and unitising etc., which Doris hasn't got time for, and whether it is worth the effort. I certainly wouldn't bank on any youngster wanting to spend much time on it either so I think a good level of diversification, with little or no emphasis on HYP, is best to start with. One can always add to existing holdings rather than add new ones as the years go buy if they appear to be doing well. I haven't checked yet but my guess is that I will have again beaten the performance of the 2 fund/IT ISAs I took out years ago (never added to), which have been disappointing.
Returning to the topic heading, I suppose in a way I have been doing a bit of top-slicing my own p/fs over the years by using my cgt allowance to hive off partial holdings of my most successful certificated holdings first to children then to grandchildren, in bare trusts, which lowers the weighting in those shares in my own portfolio and spreads the risk between 7 of us now so if one holding came a cropper it wouldn't make too serious a dent individually. That is a long way off as far as the OP's son is concerned, however, so in the meantime in his shoes I wouldn't topslice because at his age the main concern will be growth rather than dividends but if he is prepared to watch the investments closely, he might consider selling all or half if it looks as though things are deteriorating or likely to deteriorate in any of his holdings. If he has enough spare time, he might like to experiment with keeping a dummy portfolio with the same shares and doing a bit of top-slicing to see how that works out compared with letting the winners run in the real one. As others have said, luck plays a huge part in stock market investing and he is unlikely to be lucky all the time. Good luck to him anyway; it's great that you have managed to get him interested.