“The first investments I made were to my work pension scheme in mixed funds. These are something like the balanced funds we have today,” he said.Wise admits this wasn’t a preferred strategy, but it was his first foray into the investment world.
However, looking back, he thinks something that’s very important is for investors to have a wide enough range of investments to choose from in order to reach their savings goals – something he didn’t have in his initial pension scheme.
“Try and make sure you’ve got as wide an investment choice as possible,” he said. “You can have quite significant constraints in investment choice. You can get from A to B if you’ve got sufficient scope in the investment.”
Wise says every investor has a different goal, whether they are saving over the long-term towards retirement as he was in his first investments, or putting capital away for a shorter term goal such as a house deposit.
The amount of risk an investor is able to take varies widely as well, which is another reason why Wise wishes he had had more than just mixed funds to choose from early on in his investment career.
“I left [a work scheme] to start my own SIPP arrangement so I could buy what I wanted to buy,” he said.
Wise hasn’t just dabbled in funds over the years, he has also picked up a few equities, which he says have taught him some valuable lessons about market timing.
One of his better investments has been British American Tobacco.
Investors who have held shares in BAT over the last 20 years would have seen a lag in performance relative to the FTSE 100 early on; however, over the last two decades the stock is up 1,332.76 per cent – well ahead of the 259.88 per cent gain from the index.
Performance of stock vs index since 1995
Source: FE Analytics
Wise also picked up a couple of tech stocks just before the bubble burst and held on for too long when the party ended.
“I didn’t lose significant money, but it’s a good learning curve to have a sell discipline,” he said.
“It’s good both on the upside and downside so you don’t get too emotionally attached to the investment. If you do, history proves you’re going to lose a lot of money.”
“Don’t get carried away. If it’s doing well, take some profit because it can turn away from you quickly.”
Gavin Haynes, managing director at Whitechurch Securities, got his first taste of investing back in school when his economics class entered a stockmarket challenge against other schools in the area.
“My first notional investment experience came where I headed up a syndicate within our economics class that came second nationally in an inter-school stock market challenge, our strategy being to speculate on penny shares during a buoyant phase for stock markets,” he said.“This undoubtedly whetted my appetite to pursue a career in investment management.”
Haynes went on to study financial services at university, but he didn’t sink his first real cash into an investment until he decided to pick up shares in BT.
“My first real investment was to use money from a holiday job to 'stag' (where you invest in a new issue and sell immediately) shares in BT, which the Government was privatising cheaply to encourage widespread share ownership,” he said.
“My short-term gains paid for a flight to Australia for a working holiday.”
FE Alpha Manager Jason Pidcock also bought shares in BT when they floated in 1984.
BT has continued to perform well in recent market conditions, outpacing the FTSE 100 by nearly 45 percentage points over the past 12 months, according to FE Analytics.
Performance of stock vs index over 1yr
Source: FE Analytics
However, Haynes says his timescale has become longer than when he picked up BT shares in his youth.
“My investment strategies are now much more long-term and balanced,” he said.
“Having invested professionally for nearly 20 years and seen the damage that heavy market falls from the dotcom crash and global financial crisis can have, I am focused on minimising losses during the market falls as much as benefiting from the good times for stockmarkets.”
