Day Trade or Invest?
For nearly fifteen years, I have dabbled in the market via a number of instruments, namely spread betting and Futures trading. This is the ‘sharp end’ of the market, the dynamic self-empowered profitable trader view.
At least, that’s the perception. Reality is not always quite so rosy.
For many years, via the above instruments, I have made small profits here and there – pin money really, re-invested back into the market and, inevitably, lost through poor decisions. However, late last year I took the decision to invest more heavily in my financial future and look more closely at my pension and, perhaps alternative investments. A little late in life for me I suppose at the grand age of 44, but not too late. I already have a private pension which I’ve had since I was 18, although for several years in my twenties it went without investment. Finally I decided to get a grip on my finances and think about my future.
Investing on the High Street
In April of 2017, my 81-yr old mother asked me to invest some money for her in an ISA. She’d been looking at High Street offers and had found one that offered a whopping 1.5% return over three years, which she felt was a good shout. At least, she did until I pointed out to her the current inflation rate of nearly 3%, which means that in real terms, her money would be worth less in three years than it is now. Although my mother isn’t really financially well schooled, she understood the implications of this immediately, as would anyone.
High Street Options
Your bank can usually only provide limited financial advice. We can’t provide it here on the site because we’re not FCA registered and that’s not a path we intend to go down either. But there are plenty of tools that can point you in the right direction, and I used one such tool to learn about the advantages of a Stocks & Shares ISA with Hargreaves Lansdown, instead of a normal Cash ISA.
And so, in April of 2017 my mother invested some money she’d inherited into this Stocks & Shares ISA with HL. She invested the maximum amount she could, just before the tax year ended. I helped her diversify the money across five different funds with varied interests. These five funds are all well-known names except one, which was a bit of a higher risk and hence warranted a slightly smaller proportion of her equity.
Six Weeks Later…
How are we doing? Well, of the five funds invested, there’s not one that has so far yielded less than a 3.5% return – in six weeks. That’s over 30% per annum if this performance continues – and that’s the lowest performing of the five funds. The highest performing is currently over 8% return in six weeks, which collectively means that her £15,240 investment is currently worth over £16,000.
Now, of course, fund value can go down as well as up, but she is off to a jolly good start. £800 profit in less than six weeks is actually more than I would have made trading FX via a spreadbetting account in that same time, and this, like Spread Betting, is tax free because it’s in her ISA.
Bear in mind that this is only on a £15,000 investment. Double it, and you double your return. I’m not advocating or suggesting for a moment that £15,000 isn’t a lot of money, but the ‘average’ returns quoted by High Street institutions certainly don’t offer this kind of return over three years, let alone six weeks.
So, thinking about investments? You could do worse than a Stocks & Shares ISA. Hargreaves Lansdown are one of our partners here on the site, an FCA-registered and long-standing investment firm. Take a look at their offerings and make your own decisions.