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Investor Views: "I Lost Money on Blue Chip Shares"

Business owner Tyrone Zafir initially lost money with his direct shareholdings, but he is using ETFs to build a more diversified portfolio

Emma Simon 9 August, 2017 | 12:32AM

Tyrone Zafir, a London-based business owner, says his original foray into investing was not entirely successful. 

I try to diversify across multiple industries, markets and businesses

He explains: “Back in 2010 a friend suggested I should invest in shares. He said shares were easy to buy and manage and that I needed to diversify my investments, which until then had been largely in cash and property.”

Zafir initially bought stocks in companies he was familiar with, such as HSBC (HSBA), Tesco (TSCO) and BP (BP.)

However throughout 2010 these did not prove to be particularly successful investments: BP shares plummeted after the Deepwater Horizon oil spill; HSBC shares dropped as the banking sector was mired in the fall out of the financial crisis, and profits at Tesco were squeezed by competition from low-cost discount supermarkets.

Zafir, who is a business consultant and life coach, said: “I knew nothing about shares, trends in the stock market or how to diversify effectively. I was entering areas I had no knowledge of and had done little research in. The result was I lost most of my money and stopped investing.”

All three companies though are currently trading above their fair value according to Morningstar equity analysts.

Stephen Ellis, director of financial services at Morningstar says: “HSBC’s strengths are its positions in the UK and Hong Kong banking systems, as well as its overall leadership role in trade finance. With China, Hong Kong, Malaysia, and Singapore being important pools of wealth and growing trade corridors, the bank’s pivot toward Asia makes sense.”

Switching to ETF Investments

Luckily, Zafir’s initial experience did not put him off investing for good. Over the next few years he decided to do more research, reading books and articles about the subject.

“This gave me insight into the challenges I’d encounter, possible strategies to implement; and directions to consider providing me with the confidence to invest again,” he says.

In February last year Zafir started investing again, but rather than buying individual shares he focused on Exchange Traded Funds that track different global indices. 

He invests in a tax-free ISA, spreading his transactions across 12 months. This has two advantages: it keeps the brokerage transaction costs low and ensures a regular investment each month, averaging the ups and downs of the market.

Zafir says this regular investment approach helps him to remove the emotion from of investment decisions.

He holds a range of ETFs, including Vanguard FTSE 250 (VMID); Vanguard FTSE Developed World (VEVE); Vanguard FTSE Emerging Markets (VFEM) and ETF Securities Long Dated All Commodities.

Zafir runs his own company called Top Hat Consultancy, and is investing to provide long-term financial stability. So far, he has been very happy with his returns.

“They have seen continual growth on their purchase price, coupled with dividend payments to provide a steady return,” he said.

“I try to diversify by spreading my regular investments across multiple industries, markets and businesses in as economical way as possible. This is the main reason I’ve opted for Exchange Traded Funds, I think they provide wide investment exposure at low cost.” 

Zafir was born in Australia, but has lived in London since 2008.

He added: “I’m not looking to buy and sell investments. Instead I want to buy and hold for the long term. Entering and exiting the markets are the most expensive transaction costs, so it makes sense to minimise this where possible.

"Wealth is generated through accumulation; you need to begin investing and grow it over time.”

Alongside his equity holdings he invests in property, explaining: “As my grandfather always said there will be more people but less available land.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
BP PLC440.00 GBX-0.72
HSBC Holdings PLC736.20 GBX-0.24
Tesco PLC176.55 GBX-1.29
Vanguard FTSE 250 ETF31.48 GBP-0.71-
Vanguard FTSE Developed World ETF GBP44.52 GBP-0.39-
Vanguard FTSE Emerging Markets ETF GBP45.12 GBP0.09
About Author Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk