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Question 1

Lesson 48

Answer 1

Lesson 48 Planning a share portfolio

Question 2

There is no sho

Answer 2

There is no shortage of tipsters around offering ‘get-rich-quick’ opportunities.

Question 3

But if you are

Answer 3

But if you are a serious private investor, leave the Las Vegas mentality to those with money to fritter.

Question 4

The serious inv

Answer 4

The serious investor needs a proper ‘portfolio’ – a well-planned selection of investments, with a definite structure and a clear aim.

Question 5

But exactly how

Answer 5

But exactly how does a newcomer to the stock market go about achieving that?

Question 6

Well, if you go

Answer 6

Well, if you go to five reputable stock brokers and ask them what you should do with your money, you’re likely to get five different answers, – even if you give all the relevant information about your age age, family, finances and what you want from your investments.

Question 7

Moral? There is

Answer 7

Moral? There is no one ‘right’ way to structure a portfolio.

Question 8

However, there

Answer 8

However, there are undoubtedly some wrong ways, and you can be sure that none of our five advisers would have suggested sinking all (or perhaps any) of your money into Periwigs*.

Question 9

So what should

Answer 9

So what should you do? We’ll assume that you have sorted out the basics – like mortgages, pensions, insurance and access to sufficient cash reserves.

Question 10

You should then

Answer 10

You should then establish your own individual aims.

Question 11

These are partl

Answer 11

These are partly a matter of personal circumstances, partly a matter of psychology.

Question 12

For instance, i

Answer 12

For instance, if you are older you have less time to recover from any major losses, and you may well wish to boost your pension income.

Question 13

So preserving y

Answer 13

So preserving your capital and generating extra income are your main priorities.

Question 14

In this case, y

Answer 14

In this case, you’d probably construct a portfolio with some shares (but not high risk ones), along with gilts, cash deposits, and perhaps convertibles or the income shares of split capital investment trusts.

Question 15

If you are youn

Answer 15

If you are younger, and in a solid financial position, you may decide to take an aggressive approach – but only if you’re blessed with a sanguine disposition and won’t suffer sleepless nights over share prices.

Question 16

If portfolio, a

Answer 16

If portfolio, alongside your more pedestrian investments.

Question 17

Once you have d

Answer 17

Once you have decided on your investment aims, you can then decide where to put your money.

Question 18

The golden rule

Answer 18

The golden rule here is spread your risk – if you put all of your money into Periwigs International, you’re setting yourself up as a hostage to fortune.