Investing in the stock market for the first time: a retrospective (Part 2)

This is the second part of my experience of my first year investing in the stock market.  Please read Part One first.

Being a foreign investor

I had no clue how things worked being a foreign investor, could it be done?  The answer is yes. The great thing about the Internet is that it has opened everything up so that even someone as clueless as myself can own a share in companies all over the world.

I can’t comment on companies beyond the UK and US, but for my US shares, I just had to sign some additional forms declaring my legitimacy for receipt of dividends.

Another tip to consider is to always take into consideration the current exchange rate, I have overestimated how many shares I can buy due to miscalculations.

Investing where your passion is

It’s tempting to look at brand names, companies you have loyalty or an affinity to.  As you can tell I have taken a logical approach, what looks to be performing well, who pays good dividends and who is going to grow sustainably into the long-term future so my investment pays off.

My personal approach is to focus on sectors – I am interested in financial institutions and technology firms because, in my opinion, I think those are the best investments.

I have looked at a number of retail outlets and high street brands but decided against it because of the volatility of the market – in the UK a few of the old school stores brands have gone into administration.  What you invest in it’s up to you, I just stick with what I think I know.

Long-term strategy

As mentioned my motivation for buying shares is a long-term investment.  As a risk-averse person, it was tempting to sell my Netflix shares and essentially double my money – time will tell if I am correct, but I am not a day trader looking to make a quick profit to then pour into something else.

I am also not investing for quick benefits in my life – I would like to take my wife on a big holiday to celebrate our 40th birthdays (still six years in the future) and thought that potentially I could sell some of my shares to pay this.

I decided that this would be a bad idea – I shouldn’t use my shares to buy luxuries or household improvements.  I have other funding avenues to cover these costs – if I can’t afford I don’t buy.

My shares are not being sold unless the time is right.  I will continue investing in growth to increase my portfolio for the dividends, and watch my investment increase.

First-year performance

So how did I do?

I own shares in three companies and so far my experience has been positive – my shares haven’t collapsed which has increased my confidence and I have received dividends that are more than if I had left my money lying dormant in a savings account.

I think there has been a bit of beginners luck in my investments and I would never say what I have written is good advice – just my experience.  The market is a long-term game and next year I could be discussing my shares decline – who knows?

Whatever happens, I am sure I will learn a lot more.

The future

My strategy in the future is to keeping reading, keep informed, assess the wider environment (What are trends?  What technology is emerging?  What are the risks?).  And I will keep up the approach of only investing what I can afford to lose – I won’t be remortgaging the house at any point!

I am happy to keep investing as I have been – I wouldn’t revert to letting an investing company do the work for me because I enjoy doing the research and making my own picks.

I thoroughly recommend investing in stocks and shares if you don’t want to start your own business – its a way of investing your money into something without having to do any work (well except for having to keep up with your reading); in return, you own a share of someone else’s company.

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Good luck!

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Please note that this post is my thoughts on my first year investing on the stock market – I have not written this post endorsing any specific recommendations but to share my thoughts as someone who has no prior experience investing in the world of stocks and shares.