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Our
Clients

Financial
Planning

Investment
Philosophy

About
WealthFlow

Latest
Comment

Contact

Our
Clients

Financial
Planning

Investment
Philosophy

About
WealthFlow

Latest
Comment

Contact

24th
Feb
2021

If Only I’d Picked That Apple

Pick the right apple

Over the last few years you may have seen headlines telling you how much you would have made if you’d invested in Amazon, Apple, Microsoft etc. Companies like these have been coined ‘unicorns’; the term first used in 2013 by Aileen Lee (New York Times). A unicorn is a privately held start-up company valued at over $1 Billion.

Taking Amazon as an example, if you had decided to place $100 into Amazon in 1997 it would now be worth approximately $120k (Investopedia). Such gains can make it seem as though investing in start-ups or young, exciting companies may be worth it, after all the potential gains are so large.

So how likely is it that you will be able to pick the next Apple?

Let’s assume you are making your investment in a U.K. company and that the company you decide upon is delighted to accept your capital (many young companies would be unwilling to accept smaller investors).

Over the period 2000-2020, the chance of picking one of the U.K. unicorns was approximately 1 in 450,000 or 0.00022% (Companies house and CB insights).  You’d have similar odds of:

  • Being struck by lightning in the next 20 years
  • Flipping a coin and guessing the result 19 times in a row
  • Being killed in a ski accident during a 2 day trip to a ski resort
  • Winning an Olympic Gold medal
  • Buying 30 lottery tickets and one of them being the jackpot ticket

(Berkeley Stats)

The idea of making millions from investing in a new company is appealing, but when the chances of success are expressed by comparison to winning the lottery or being struck by lightning it should probably not form part of your investment strategy.

Patrick Christie
Graduate Intern – WealthFlow
[email protected]

 

This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.

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© 2021 WealthFlow Group Limited
All Rights Reserved | Privacy | Cookies Policy

Head Office & Consulting Rooms: 10 Charlotte Square, Edinburgh EH2 4DR.

Mail correspondence to our Central Scotland Admin Hub: WealthFlow Group Limited, PO Box 14947, Grangemouth FK3 3AU.

Authorised and regulated by the Financial Conduct Authority

For your protection, unresolved complaints can be referred to the Financial Ombudsman Service.

Registered in Scotland No SC635011. Registered Office: 10 Charlotte Square, Edinburgh EH2 4DR.