Opinion on investing in few stocks for medium term as opposed to depositing into a saving account

[pastorjustin]

Hello everyone,

Suppose, someone is maxed out their pension. And save up to about 500 Euros a month in a savings account. The irony is savings accounts don’t yield much return. Therefore, would it be reasonable to invest about 100 Euros/ month in few stocks (E.G. a pie like option in Trading212), and do continuous investment for about 10-20 years and let it grow. The idea here is to grow your money outside savings account.

I reckon here one of the trick is to select the stocks that gonna be bullet proof for the next 1-2 decades. Nevertheless, based on the history, stocks such as Amazon, Berkshire B, Markel, Toyota, Sony, Novo Nordisk, etc. could be considered long-term.

I’d also like to know potential hidden costs, tax implications during disposal in this kind of an approach. Also, due to ETF’s deemed disposal, I was thinking about having a few stocks. Alternately, having an extra ETF outside pension (once you maxed your pension), for about 8 years also, could consider a medium term saving account. However, I’m thinking a potential option that could grow beyond 15 years.

Kindly share your balanced review.

Many thanks!

 

[kinzie]

@pastorjustin I think this is what you're asking... but it seems too obvious, so just double checking.

Are you asking if you invest monthly into the stock market, would it beat a savings account?

Yes.

I think, somehow, you may have stumbled upon dollar cost averaging. Google it.

As for picking stocks that will be "bullet proof for the next 1-2 decades".. That's the challenge!

A fund is a better option (Google diversification). You can also invest in ETFs for more than 8 years fyi.

Sounds like you are just starting down this path. Take your time, have a plan, and enjoy it

 

[pastorjustin]

@kinzie Thanks for the reply. Yes, I’m new to investing. I just googled and got the fundamental idea around Dollar-Cost Averaging (DCA). I have a reasonable understanding of ETFs. I’d like to invest in an ETFs as a medium term savings account only due to the deemed disposal (i.e. for up to about 8-9 years only). And alternately, invest in few stocks regularly for 15-20 years, treating them as a longer term savings accounts.

 

[doglovr74]

@pastorjustin Don’t be afraid to pick stocks. Bit of craic and funds tend to have costs that can be avoided by building your own fund gradually

 

[pastorjustin]

@doglovr74 Could you please elaborate on “building own fund”

 

[doglovr74]

@pastorjustin A fund is just a collection of holdings(mostly individual company shares). A fund will do the picking and charge 1% per annum for it. You can just do that yourself and avoid that cost/drag on return. Or just buy Berkshire Hathaway to mimic a fund without the costs of one