A first -- and possibly last -- step into the scary world of spread betting, and more from the boards.
My first trade
Having only recently triumphed in his epic struggle against the 'Evil Debt Monster', Gostev1e has lost no time in trying to get his money to work for him, rather than for other people.
Back at the end of April, he made his first spread-betting trade...
"Today I bought the equivalent of 800 Aviva (LSE: AV) shares at 313.94p using a June futures spread bet. That's a total exposure of £2,511.52, although my initial deposit into my account was just £250. Theoretically I could lose the entire exposure.; in practice if the share price were to tank I would be closed-out as soon as my £250 evaporates."
Spread betting as a first foray into investing? Perhaps unsurprisingly, there was a little, well, surprise. As Swill453 commented:
"Kind of surprised your first foray is more akin to gambling rather than investing!"
(I said there was surprise.) And GoSeigen remarked:
"I too am amazed ... All that slog to clear the debt and you are now plunking your first real cash on a spread bet! Hey it's the first of May not the first of April today! ... Good luck GS, I hope you become a canny investor. Look forward to seeing how you get on"
So, how did Gostev1e's first spread bet go? We found out on Tuesday:
"Well, almost needless to say, I have lost almost all of my play/education money. My original £250 is now worth precisely £24.96.
"This little game has taught me that spread betting is a quick way to the poor house.
"Best £225.04 I've ever spent.
"The £2,000 that I've stuffed into my Cash ISA since being debt-free eases the pain. :-)"
Ouch! Losing £225 is an expensive lesson, so we're obviously pleased that Gostev1e considers it well spent, and that he also has money stashed away somewhere rather safer.
Not that spread betting has to be a fast track to poverty. As Tony Loton wrote in a recent Fool article:
"... it is perfectly plausible to label new spread bettors with the nickname "The Six-Monthers" on the basis of their typical non-longevity. But it doesn't have to be that way. I believe that spread bettors can live longer (in the financial sense) and more prosperous lives, or at least not die trying, by adopting a more Foolish approach."
So, however you invest, do it Foolishly.
How to spot a good advisor
Rather than trying to "do-it-themselves", many people use the services of an independent financial advisor (IFA) to help make their money grow. But how do you spot a good one?
This week, long-time Fool poster, and fee-based IFA, coleyfish provided his personal "summary of what a good IFA should offer clients and what potential clients should look for in a good IFA".
It included things like
"... for a start an IFA must be independent and should be able to offer a level of advice and guidance across the board on all matters that relate to a client's financial immediate and future well-being. This is pretty much a given."
"The adviser should ascertain what a client’s attitude to risk and capacity for loss is. This is a rather vague area, but very very important."
Later in the thread, Toandfro offered the comment:
"Financial advice, to me, is NOT about choosing the right investments and looking to 'outperform'."
This was seized on by Clitheroekid as being "the heart of the matter", and was followed by some "fighting talk":
"Unfortunately, however, IFA's somehow got the idea that they knew how to invest people's money to make it grow, and that's where it all started going wrong.
"... as all too many people have found out, the average IFA had - and continues to have - no more idea about what investments would perform well than the average taxi-driver. And this is why they have become a reviled species. They allowed people to believe in their Midas like powers, took their money off them and proved to be false prophets."
Understandably, that wasn't going to pass without comment by coleyfish -- but you'll have to read the rest of the thread for that!
Just sticking my head in
Earlier this week, upagainstthewall got in touch with us to "reactivate" his Fool account, having forgotten his password since he last posted in 2003.
"I think I last posted when i was about 1 year in bankruptcy, got married and was running a man with van service. The reason I stopped posting was that in the next year the business and the marriage both went down the toilet directly to do with my bankruptcy and not having money and credit."
So what happened next?
"I did what any self-respecting mid-life crisis man would do..... I learned to drive a coach and sodded off touring the UK and Europe living out of a suitcase :) ... Worlds away from what I did pre-bankruptcy (senior management) but I've never had so much enjoyment or got more satisfaction out of a career in my life."
We're so pleased that everything has worked out so well for him -- and that he came back to let everyone on the Dealing with Debt board know.
Drop the dead donkey
Finally, after all the discussion of the myths and stereotypes of unscrupulous IFAs in the thread mentioned above, here's battlebus with a not-uncommonly jaundiced view of investment bankers... Enjoy the bank holiday weekend, Fools!
Last week's roundup: The Death Of Shares