Right shares, wrong price: 'like racing a Ferrari filled with sandbags'

When seeking out new additions to your investment portfolio, choosing the right companies is half the battle. It is just as important to make sure you pay the right price for your stocks and shares, according to Morgan Housel writing for the Motley Fool.

There are subsequently two options open to independent investors: Either look for runaway investments before they attract the attention of the investment community, or alternatively bide your time until established winners begin trading at bargain prices.

For instance, those who invested in Microsoft from 1992 to 2002 would have seen 24-fold increase in their money. However, in the proceeding years, shares slid by almost 50 per cent, despite earnings per share increasing by 60 per cent.

Mr Housel comments: "Successful investing requires the right company purchased at the right price. The former without the latter is like trying to race a Ferrari filled with sandbags."

Get some invaluable tips on independent investment from at a Knowledge to Action trading seminar.