When we opened the account in February 2023, we did what a lot of beginners do. We opened a watchlist. We looked at companies we recognised. We read a few Reddit threads. We bought some individual stocks.
About six months later, we stopped doing that.
What we bought
Virgin Galactic, we thought space tourism was interesting and the price had fallen a long way from its peak. T2 Biosystems, a speculative biotech play someone in a forum mentioned. A few others we've mostly blocked out. We also bought into the Vanguard S&P 500 ETF from early on, which sat quietly alongside the individual stocks.
What happened
The individual stocks were disasters. Not every pick, one or two were fine. But the losers lost badly, and the time we spent reading about companies, watching charts, and second-guessing our decisions added up to a meaningful amount of stress for a very poor return.
The S&P 500 ETF did what it always does. It went up and down with the market and ended the period comfortably positive. We didn't need to do anything. We didn't need to understand individual company financials or predict management decisions or track news cycles. We just held it.
Why individual stock picking is hard
We weren't unusually bad at it. The data suggests that most people are bad at it, including professional fund managers with research teams and Bloomberg terminals. Markets price in publicly available information very quickly. By the time you read that a company looks interesting and decide to buy, that information is already reflected in the price.
To beat the market picking stocks, you need to consistently know something the market doesn't, or react faster than everyone else. For most people, most of the time, that's not realistic.
What we do now
One fund. Vanguard S&P 500 ETF, inside a Stocks and Shares ISA, on a direct debit monthly. That's it. We've looked at adding a global fund for broader diversification and we'll probably do that eventually. But the single fund has done more for our portfolio than all the individual stock picking combined.
Boring isn't a criticism of an investment strategy. For most people, it's the goal.
If you want to pick individual stocks too, for the interest, for the learning, because you find it engaging, there's nothing wrong with it. Just treat it as the speculative part of the portfolio, not the core. Keep the core boring.
Module 5 covers index funds, active funds, and ETFs in plain English, including the specific fund we use and why. Three modules free to start.
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