First-time investors share their secrets

Traders who first bought shares last year are more sophisticated than veterans might expect, writes Sam Benstead

‘I want to achieve financial independence by 40’ ANDREEA ION Top pick: Square

One of the unlikely consequences of the pandemic has been a boom in people investing for the first time. More disposable income for many, combined with the rise of “free” stock- trading services and a sharp drop in share prices when the pandemic struck, has led to a 20pc jump in the number of DIY investors over the past 12 months, according to Boring Money, a research company. But rather than simply chasing hot stocks, novice investors are taking a longerterm approach.

Freetrade, a stockbroker, found that 80pc of first-timers traded every couple of months, and the same proportion said they were approaching investing as a long-term habit. So how is the army of newbie investors putting its money to work? Telegraph Money found out.

With an economics degree and a job in accounting, investment was a natural fit for Andreea Ion.

Ms Ion, 25, from London, is taking a long-term view and investing in growing trends such as clean energy, biotechnology and financial technology.

“I am investing in the industries of the future. I do lots of research on companies before buying shares, examining the strength of their finances, management teams and brands,” she said.

“My goal is to find great companies and hold them for a long time. DIY investors are not constrained by the short-term outlook of many fund groups as they only have themselves to answer to.”

One key lesson Ms Ion said she had learnt was not to sell stocks too soon.

“There were times that I rushed to sell a company as soon as it started falling. I got too emotional and didn’t have enough conviction in my ideas. Some companies I sold have gone up a lot since,” she said.

For example, she said companies such as Amazon and Apple had made astonishing profits this year but their share prices had still fallen. “This should not worry investors if they truly believe in why they own the stocks,” she said.

Another important thing was to recognise when she did not know much about an industry and to hand over investment decisions to a fund group.

“I wanted to invest in biotechnology and gene editing but have not got a background in science. Instead I bought the Ark Invest Genomic Revolution ETF, which owns companies in the sector,” she said.

Overall, Ms Ion has made about 20pc over the past year. It was 50pc until recently, before tech firms fell.

“A fall does not worry me. That’s the nature of investing.” Ms Ion is blogging about her investment journey on her Instagram account, @intothestock.