Taking SWP's advice is a good idea, investing in shares has to be for the long haul
In 1997 I invested just under £5000 in a self select PEP, the forerunner of ISAs
I hadn't really got a clue what I was doing but I read the Business Section of the Sunday Times regularly
Based on what I had read and my own opinions I bought stocks in about eight different companies. I'd read an article based on advice from Soros saying investing in the top companies might not be spectacular but at least you will make a profit. So that's what I did, I read about the top ten companies in the FTSE at the time and did a little research on each one and ended up buying shares in about six of them.
I then bought shares in companies that I liked at the time such Next and Boots, both which seemed to be very popular. Also, being of a science bent, I subsequently bought shares in NXT and Shire Pharmaceutical as I saw their potential.
All the dividends earned are put back into the PEP and nothing was ever taken out. When I have accumulated about £500 in dividends I then buy another group of shares.
Another thing that I read was that you should take about a quarter of your profit in a company and reinvest it into another.
The two best buys I ever made were Shire and Next. The Next shares were originally £5 in 97 so I bought 100, and I remember them crashing to below £4 so I bought another 114. They currently stand at about £61.50. As they have gone up in price I have sold them in batches and then reinvest in a different company. For example last week I sold 10 at £60.35 each and bought shares in Aberdeen Asset Management, in November I sold 10 at £50 each and bought shares in WPP.
The Shire shares are phenomenal, they have gone from about £2.50 to £29 since 99. When they hit £30 I'll sell another 10 and reinvest.
In 97 I had eight companies, I now have shares in 21 and next month it will be 22. From 1997 to 2010 it had gone from £5000 up to £11,000 approximately. Today it's worth £24,345!
But in that I've lost money. The lad who used to sit next to me at Maine Road was a financial advisor. In 98 I told him I was buying shares in United, he went apoplectic, saying his dad would turn in his grave (unfortunately his died had actually died at the match a couple of years earlier). He advised me to get shares in Newcastle United instead, so I bought £350 worth. In the next five years United went up and up in price and when the Glazers bought them out I would have got ten times my money back. Meanwhile Newcastle United shares folded and I got £38 back. Cheers Mike, the only financial advice I had ever taken!
As an aside I bought shares in NXT, a specialist speaker maker for £4.50 a share. Within two months I had made a profit of £4.5k. But I held onto them and now they are worth much less than I paid for them and I never get a dividend from them.
My only other regret was that I visited California before the iPod had hit these shores. I tried to buy one in the Apple stores in Vegas and LA and then eventually got two of the last five in the San Francisco store. When I got home I decided to buy shares in Apple as I thought these were genius. Unfortunately my PEP only allows British shares and so I left it. If I'd have invested about a grand then I'd be retired now!
I'm no expert but I did it for a bit of fun/interest fully accepting that it was a gamble and that I could lose the lot. But by cashing in my profits and diversifying things, fingers crossed, should be ok.
PS don't tell the wife, she'll go ballistic and then want half!
