Currently, my investing strategy is long-term buy and hold with property, index investing and crypto. If my current plan works out, I’ll be financially independent within 6 years. That means that my income will come from my assets.

Basically, I want to become a full-time investor who lives life on his own terms. Like spending less time at the office, and more time with the people I love. To get to this financially independent, full-time investor level I have a few things to work on. One of those things is earning my right to risk.

To earn my right to risk, I need to remove my emotions and be more neutral around money and investing. I’ve been aware of this over the last few years but haven’t done too much to improve it. The way I’ve invested in my index fund (stocks and shares) is a step in the right direction.

In terms of index investing, I’ve done it by the book. First, I read the books and done some research. This was at the start of 2019. Picked my Vanguard fund and have been dollar cost averaging since. And have been neutral as I’ve only checked my fund maybe once or twice a year.

A little test with single shares

I have laboured on my history with single shares a lot over the last few years. To summarise, I lost my life savings as a 28-year-old by being too emotional and not doing any research. This time, things are going to be different.

So far in 2022, I’ve been working on being more neutral around my investments. Like not checking too much on coinmakretcap to see how my crypto investments are doing.

To take it a step further, I’m going to invest into one or two companies and I’m going to treat them like my index fund. This will be long-term buy and hold and I will just set and forget.

I’m working on my right to risk because I want to try trading (Forex trading). I’ve been tempted now for well over a year but as the saying goes, fools rush in! Anyway, more on why I want to trade later.

The plan with single shares is to do a lot of research and pick low-cost undervalued shares just like Warren Buffet. I will also be looking at companies that have an emphasis on technology. Things are moving fast and there is a lot going on with the current digital age we are in. I think it’s important to look at companies that are relevant now and in the future. Companies involved in AI (Artificial Intelligence), 3-D printing and cyber-security for example.

The test for me with single shares is treating them in a similar way to my index fund. Like doing the research and then just set and forget. I have to remind myself of how I invested in single shares back in 2010 and 2011. Checking on them all the time just brought stress and anxiety. This is the opposite of being neutral with money and investing.

My intention is to pick one or two companies and forget all about them for a few months. Then check on them in 6 months towards the end of 2022. I’ll treat my single shares and my crypto investments like my index fund and earn my right to risk. 

How to invest in single shares

As I’ve touched on, I know exactly how not to invest in single shares. Like steaming in without doing research. Or investing in a company because the lads down the pub gave me some advice on the latest company that would make me a fortune.

Losing my life savings as a 28-year-old didn’t feel good at all. And this meant I didn’t even consider investing in the stock market until 2019 as a 36-year-old. I didn’t even consider my financial future. When you learn about how to invest in the stock market, you learn things like the power of compound interest (interest on top of interest). Looking back, I missed out on 8-years of compound interest.

Fortunately, I now know how to invest in single shares. This is because I’ve taken my time to learn from my mistakes and to read the books. This is what I want for any novice investors. Learn from my mistakes and go away and read the books on how to invest. Work on your money mindset, and work on being neutral with money. To learn from my mistakes, you can read my 1st book, FI Money: Learn the hard way, teach the easy way.

Here is a quick summary of how to invest in single shares:

  • Work on your personal finances
  • Get a cash buffer
  • Invest with money you are willing to lose
  • DYOR (Do Your Own Research)
  • Work on your long-term plan and stick to it
  • Learn how to pick single shares
  • Choose a platform to buy single shares like Hargreaves and Lansdown
  • Check on the price maybe once or twice a year

How to pick single shares

The way I’m going to approach it is trying to pick a bargain with a particular company. I’m going to try and pick a company that is currently undervalued and has a good long-term future.

Here are some of the things I’m going to be focusing on:

  • The balance sheet – how much cashflow the company has and how much debt if any
  • The people in charge – who is the CEO and are they pushing the company forward for example
  • Comparing the company to similar companies in that particular industry
  • Does the company pay out dividends to the shareholders?
  • Price-earnings to give an indication of valuation
  • Future prospects of the company

Let’s have a little look at the P/E (Price-earnings) of a stock (or company). To find the P/E you divide the current market price by the earnings per share. Earnings per share (E) is a company’s earnings over the last twelve months, divided by the average number of shares outstanding.

A low P/E means a stock is selling at a relatively low price compared to its earnings. A high P/E means the stock’s price is high and may not be much of a bargain.

Worked example…

A share costing £5 isn’t always cheaper than a share that costs £10. Company A you pay £10 to earn £1 of profit. Quick easy maths that is 10/1 which means a P/E of 10. Company B shares are at £6 each but you only get 50p of profit. Quick maths that is 6/0.5 which means a P/E ratio of 12. Although company A is more expensive (£10) it has a more attractive P/E ratio (lower) and you might feel it’s the more attractive option.

My target ROI of 15% or above

Currently, official inflation figures in the UK are around 7%. With the cost of everything going up by much more than 7%, the actual inflation is more likely to be at 15% or even more.

I’ve been reading a lot about inflation over the last few months and it has pushed me further towards BTC and other crypto’s. It’s also made me reconsider my ROI (Return On Investment) target of 10% with my investments. This was mainly with property and I used to compare this target ROI of 10% with savings accounts in the UK.

My new target of 15% is to try and at least match inflation. To do this intend to keep investing with property, index investing and crypto. I’m also throwing single shares into the mix as I earn my right to risk.

If I can become more neutral with investing, I’m also going to try Forex trading. Over the next few months, I’m going to do some digging and find a company to train with and learn how to trade. This is because I feel that Forex trading will help me achieve 15% ROI and even higher. I also feel that it will help me accelerate my journey towards Financial Independence.

Buy and hold with single shares is going to be part of my long-term investing plan. That will be long term buy and hold with property, stock market (index investing and single shares) and crypto. And if I manage to become more neutral with money and investing, I will add Forex trading into the mix to push me closer to becoming a full-time investor. A full-time investor who lives life on his own terms.

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