Investing club launches

At St James we have just started an investing club. The aim is for students explore other ways to increase their money, outside that of a tradition savings account.

Savings accounts:

According to Which? Magazine the best 11-18 year old interest rate is 4.5% with the Halifax. You have to deposit £10-£100 each month and you are not allowed to withdraw your cash.  Barclays gives 3.5% interest, which drops to 1.51% if you make a withdrawal.  Is there a better way to make your money grow?

What is investing?

Investing is buying a unit of ownership in things like companies, property, commodities (eg. gold), classic cars or art. With investing, the price may go down as well as up.

During session 1 of the investing club, we looked at the top 250 companies in the UK and chose 5 to invest in.

Warren Buffet, one of the best investors in the world has some basic principles when it comes to investing. A few that we looked at when choosing our stocks were:

  1. Stay within your area of competence – invest in something that you know a bit about
  2. Choose a company that will be around in 10 years’ time. Don’t go after a trend
  3. Buy quality rather than quantity. ““It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett

With this in mind, here are our portfolios:

Aoifa Mally Justin Rodger
Diagio Merlin Domino’s Pizza Sirius Minerals
Ted Baker Asda Shell Lloyds
BP Easyjet Fever Tree Merlin
Lloyds Pets at home WH Smiths JD Sports
Easyjet National Express Rightmove Game

Some thoughts on why students chose their stocks:

invest club

Diagio: Students knew a lot of the brands from this company, and parents had personal favourites.  “Dad is not going to stop drinking Guinness” was one students take on this company.  Whilst students felt that the stock was quite highly priced, they felt that this was a quality company and had longevity.

Merlin: As the second biggest entertainment company in the world, students felt that this company will still be around in 10 years’ time too. Students discussed how the stock was undervalued as both poor weather and the accident at Alton Towers last year have affected the share price. The UK would not be the same without its theme parks, plus if you buy shares in Merlin, you get discounted annual passes: Win, Win!

Easyjet: All students liked this company and preferred flying with Easyjet to other low cost airlines.  Some research suggested that Easyjet were fully prepared for Brexit and were quite a forward thinking company. The only issue some thought was that profits can be linked to the cost of oil, and the company has no control over this variable.

Sirius Minerals: This was a stock that students knew very little about.  After researching the company and the use of Potash, opinions changed.  As the population was growing, students felt that potash would be a commodity that would be highly sort after.  Whilst the mine was still 2 years away from production, students felt that this was a risky but good as a long term investment.

WH Smiths: Students could see growth of this company through the travel outlets.  At stations and airports, WH Smiths seems to be very popular. One students didn’t like the high street side of the business. This could be an interesting pick to follow.

What next?

Next week we are going to look at US companies and the concept of diversification. We will also keep you updated with our virtual portfolios.

If you would like to come along, please join us in RE1 at 2:45pm on Wednesdays.

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