‘I’ve got £600k invested in stocks for fun – am I crackers?’

Most investors have had a stressful start to the year as market falls erode the value of their money. But for many, building and monitoring a portfolio can be fun – even a hobby. This is the case for Pauline Craggs, a 75-year- old pensioner from Wimbledon, who has invested more than £ 600,000 across almost 30 different stocks and investment trusts.

“I know it’s an unusual portfolio,” she said. “But for this pot I don’t want to be boring and invest in funds that will compound over time. I trade quite frequently and I like keeping up to date with the news.”

Mrs Craggs plans to withdraw £ 150,000 from the portfolio soon in order to help her daughter with a home renovation. “I’d like a view as to which holdings I should trim,” she said. “And I’d like to know if the professionals think I’m totally crackers. Should I grow up and be more sensible with this money?”

Rob Burgeman

Investment manager at Brewin Dolphin Portfolios invested in shares can be like gardens. They need regular pruning, and highly successful plants can quickly dominate their overall appearance.

Mrs Craggs’ portfolio is dominated by Empyrean Energy, which accounts for around 13pc of its value. That looks risky to me.

This stock has a market value of just £71m, is focused on energy resource exploration and has a share price of around 11p. It has no major institutional shareholders, which is another sign of a speculative investment. That is not to dismiss what has been a highly successful buy: Mrs Craggs has more than doubled her money in this holding. But, as the adage goes, “it’s not a profit until it’s in your pocket”.

In terms of withdrawing £150,000 from the portfolio, I would look to reduce some of these more adventurous holdings. If Mrs Craggs wants to continue investing in smaller companies, there are many investment trusts that specialise in this area. She already owns BlackRock Throgmorton, but we would also suggest the Odyssean investment trust, which invests in some private companies.

I think the portfolio would benefit from international diversification.

Many consumer products that we see are from international companies with good growth prospects. Such stocks can offer exposure to sectors that we struggle to access via the London market.

This can range from luxury goods from the likes of LVMH Moët Hennessy Louis Vuitton to sportswear from Nike, soft drinks from PepsiCo and online shopping from Amazon. Mrs Craggs mentioned an interest in biotechnology, where we favour the International Biotechnology and Biotech Growth investment trusts.

Rachel Winter Investment director at Killik

Mrs Craggs’ portfolio is very heavily weighted towards commodities, with more than a third invested in oil and mining stocks. While commodities have historically provided good protection against inflation, they can be very volatile. I think she should reduce her stake in Empyrean Energy, especially given that it is by far her largest holding.

The energy spike that we are currently experiencing has made it clear that the West should not be so dependent on Russia for its energy supplies. Achieving a greater degree of energy independence is likely to require significant investment into alternative energy sources, particularly renewables.

Mrs Craggs might want to consider investing in wind power companies such as SSE and Denmark’s Orsted. The US-listed hydrogen leader Linde will be well-placed to benefit from the energy transition, too. Mrs Craggs knows her portfolio is heavily focused on Britain. But many of the stocks have more attractive overseas alternatives.

The London- listed gold miner Fresnillo is a good example; its shares have lost more than half their value over the past decade. Conversely, shares in American rival Newmont have risen by 56pc in the same period.

Finally, Mrs Craggs is considering selling her holding in Lloyds Banking Group. I am not so sure this is the right time to do this. While British banks have performed poorly in the years following the financial crisis, they should benefit from higher interest rates. With more rate rises expected this year, it may be worth hanging on to these shares for a while longer.