Do you play poker? Sorry – did I type that? What I meant to ask was ‘Are you a shareholder?’

Because in my book, it’s kind of the same thing – more on that later.

However, if you do trade shares, here’s a platform you should know about: it’s called DeGiro. It’s an online-only stock brokerage giving retail clients (in other words individuals like you and me) access to stock exchanges in Europe, the US, Australia, Japan and Hong Kong.

Like N26, which I wrote about last week, DeGiro is an example of a European fintech start-up that is doing things differently, and it’s doing well. It has just under 250,000 users, up 67% on 2016, and has carried out over 14 million transactions since it opened in 2013.

The platform works on a highly competitive commission structure, which it claims, makes it up to 80% cheaper than any of the Dublin 2 stockbrokers.  If you’re interested in that kind of service, check it out here.

When to hold, and when to fold

But let me come back to my opening question: do you play poker? I’m not casting any judgement here. I have been known to sit down at a poker table myself from time to time.

But if you play Holdem, you can handle high risk around the poker table. You understand that you could lose everything you started out with (you could also win big) and you’re OK with that.

That’s what it means to play poker after all.

With your investments, however, that’s not what you’re signing up to, is it?

You’re investing surplus cash to make sure that you have enough money to do whatever you and your family want to do or need to for the rest of your lives.

When you think about it like that, the notion of investing the way most Irish people invest in stocks and shares just doesn’t make sense. We traditionally go for single security stocks – Facebook, AIB, CRH, Anglo … It’s an all-in kind of strategy, just like Texas holdem.

Last April I wrote a blog on what it means for you to have shares in one particular entity, like a bank, or a smattering of shares with no rhyme or reason to them.  At best, it’s a hassle. At worst, you lose big, just like those people who had a substantial proportion of their wealth invested in Anglo/BOI/AIB etc.

Some of those people were relying on cashing in those shares for their retirements.

They might just as well have sat down at a poker table with that same amount of money.

Even if you hold shares in more than one entity, it’s still a gamble. To mitigate the risks of business failure (Lehman Brothers) or sectoral failure (construction/property) or national failure (Ireland, Greece, the US arguably) you need to have a massively diversified portfolio. I’m talking about hundreds of different shares in many different countries (this is possible through a provider like Dimensional).

Make no mistake about it, when you invest in single-security stocks or a random collection of stocks, you are gambling whatever future you had dreamed of.

Poker is always risky. Investing doesn’t have to be.

Give me a call or drop me an email if you have any concerns about your current investment strategy.

Best regards,

 

 

 

Bob

+353 87 952 7060 – bob@themoneyadvisers.ie