Case Study: How I invest

A recent investment for Richard was copper, zinc and lead producer Central Asia Metals (CAML:AIM) which cost him 220p per share. This is another stock with a reputation for paying generous dividends.

Richard sees the role of the individual share portfolio as complementary to his fund and investment trust holdings. He prefers smaller and mid-cap shares as they are less likely to feature in the funds he owns, so there is minimal danger of duplication in his portfolio.

Richard owns Whitbread (WTB) shares exclusively for their shareholder benefits which include a free breakfast at Premier Inn, saving him around £10 each time he stays at the hotel chain.

Finding Ideas

To find investment ideas Richard reads Shares magazine, Yahoo Finance and applies screening tools he has developed using Stockopedia’s website.

Although he is satisfied with the performance of his share picks it does not always go to plan. One failure is global cinema operator Cineworld (CINE) which Richard purchased at 22p per share but now sit at 4p per share. What looked attractive turned out to be a value trap, explains the investor.

Richard says owning this stock has taught him to pay closer attention to the amount of debt a company has on its balance sheet.

One aspect of investing Richard would like to improve is knowing when to sell. He said he feels he is better at buying and seeing opportunities rather than spotting the risks.

While saving up for a house deposit was his original goal for squirreling money away, circumstances changed. Having broken up with his partner, Richard has subsequently moved back to his childhood home.

He is now giving more help to his father around the house and hopes he will inherit this property later in life. That has enabled him to follow his interests and spend more quality time with his family and not have to stress about liquidating his investments to fund a property deposit.

DISCLAIMER: Please note, we do not provide financial advice in case study articles, and we are unable to comment on the suitability of the subject’s investments. Individuals who are unsure about the suitability of investments should consult a suitably qualified financial adviser. Past performance is not a guide to future performance and some investments need to be held for the long term. Tax treatment depends on your individual circumstances and rules may change. ISA and pension rules apply.

By Martin Gamble Education Editor