Now is the time to be merry and start a profitable hobby

Why not make a New Year resolution to start an investment club with colleagues or friends?

The onset of the festive season signals a change of routine and diet for those of us who spend most of our working week in the City of London. For 11 months of the year we act much like any other office workers, starting around 9am, snacking sandwiches at our desks for lunch, then toddling off home around 5-6pm for dinner and a glass or two of chilled Chablis.

The onset of the festive season signals a change of routine and diet for those of us who spend most of our working week in the City of London. For 11 months of the year we act much like any other office workers, starting around 9am, snacking sandwiches at our desks for lunch, then toddling off home around 5-6pm for dinner and a glass or two of chilled Chablis.

But as Christmas approaches there is a subtle change at the end of the day. Dinner is replaced by tiny orange balls on a small square of toast or a minute puff pastry parcel that tastes distinctly fishy. And that lovely Chablis becomes an insipid wine of unknown origin.

It's party time and the pubs and clubs of the Square Mile are packed with people wearing name badges and talking in loud voices about shares and money. Invariably these incestuous rituals are excruciatingly boring, but they do have the merit of herding us City types into the same corral. That way we do not inflict our obsessions on those for whom talk of the stock market falls into the same category as trainspotting or paint drying.

While most people admit finance is a fact of everyday life, I believe the majority are not prepared to adopt it as a hobby - my opinion is reinforced by a reader's letter I received this week.

"Dear Terry, I have been reading your column for over a year now, after I decided we needed to make more of our savings in preparation for two sons hopefully going to university in five and 10 years respectively.

"Instead of just putting cash in a building society, I thought we might venture into stocks and shares. Your column has been very informative and as a result of reading it I have realised that even though I now know what an index tracker ISA is, I am not the stuff of which successful stock market investors are made.

"With a full-time job, two sets of homework to supervise and the odd interest of my own, I am never going to have time for the daily checking and comparing that seems to be needed. If you add the fact that company reports render me comatose in minutes then it is clear I am never going to be able to put in the sort of research you recommend.

"So, a big thank you, since you have probably saved me from some very expensive mistakes. I did wonder whether you would answer a question for me? We have a Lloyds TSB PEP and a Framlington Net ISA (the limit of my daring and the latter isn't doing very well is it?) We want to save fairly regular amounts each month and, having abandoned the idea of saving it up and buying shares every so often, should we just stick it in the building society or add it to the ISA?

"Alternatively, would you recommend one of the personal investment plans that are being marketed? (The flexible ones sound attractive since you can vary your savings but the rates don't look very good to me - but what do I know?)

"If you don't answer questions then thanks anyway for the column. I'm still reading, so eventually maybe I'll be able to use the knowledge!

Yours gratefully, Lisa Maughan"

"Dear Lisa, Thank you for your lovely e-mail. I have a strong suspicion you epitomise the majority of wannabe investors in Britain - you are keen for your savings to work for you in the best possible way and you have read about the super returns everyone else seems to be making from the stock market. The problem is because of your busy lifestyle you have not got the opportunity to study the market and research shares.

"So let me give you a couple of facts: fishermen, golfers, and private investors have one thing in common - they are economical with the truth. The good news is always exaggerated, the bad news is conveniently ignored. Over the long-term, there is no surer place for your spare cash than the stock market. I hate to quote statistics but almost every reliable survey will bear this statement out.

"You have obviously tried and failed to join the ranks of us investment anoraks, sad souls who get our kicks from playing the market, and you have opted for the more spiritually rewarding life of going to work and bringing up a young family.

"So let's try to make it financially rewarding too. Find a good independent financial adviser, preferably one who is personally recommended to you (but if you fail to locate one that way ring 0117 971 1177 to get a list of those in your area). Visit the IFA in his or her den - that way you'll get a true picture of who they are and how they operate - and reveal all to them. Tell them your exact financial situation, what investments you have now and how much you will be able to save on a regular basis, then ask them to submit a no-obligation report to you. Emphasise that you want to experience the rewards that the stock market can offer but without the problems of research and daily monitoring.

"A good IFA will tailor his or her recommendations to suit your situation and your preferences. An alternative source for this information is one of the major stockbrokers because they usually have enough specialist advisers to bake a financial cake using your ingredients that will rise satisfactorily. If you need a list of stockbrokers ring 020 7247 7080 or look on the website www.apcims.co.uk.

"I hope this helps and I'm sorry that I have not commented specifically on the investments you have made so far. It would be wrong for me to do so without knowing exactly what your overall aims are, when you will need large sums of money (to subsidise the offspring when they go to university because mom got all the homework questions right?) and so on.

"But when the kids are off your hands, Lisa, and you have time for relaxation and perhaps a new hobby, revisit the world of the active investor. Start an investment club amongst your friends, spread the work of researching and monitoring shares. It will give you a reason for getting up in the morning to open the paper and see how your portfolio is getting on.

Best regards, Terry Bond".

terry.bond@hemscott.net