Stock Market: First-time Investors

Lord Davies of Brixton Excerpts

Monday 3rd February 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I very much thank the noble Lord, Lord Lee of Trafford, for introducing this short debate and I look forward to hearing other speakers.

I have been reading the Financial Times for nigh on 60 years and, for many years, one of the highlights was the columns written by the noble Lord about investing on the stock market. The headline on his last column—which, unfortunately, has now ceased—was:

“The first ISA millionaire says there are only two essentials in investing: common sense and patience”.


Clearly, he knows what he is talking about, but there is a problem: an inherent conflict is involved.

I am going to put words into the mouth of the noble Lord now but, as I understand it, what the noble Lord, Lord Lee, advocates for investing is patience, resilience during market downturns and an unwavering commitment to high-quality companies, reinforcing the belief that wealth is built over time rather than through frequent trading.

That is clearly right, but it is not easily transferable. Investing is a skill that, I suspect, is not readily available to large numbers of people in our country. I am not against people investing in the stock market; if people choose to do so with the necessary knowledge and information, that is good. However, the Government should not put themselves in the position of, in effect, proffering financial advice. That is not the Government’s job because, while the potential gains are real, so are the risks of the downside.

Everyone needs to start from somewhere, and training and education are clearly important, but the key is that we need people to understand that, while investing in the stock market offers opportunities to grow your money and build financial security, the risks are just as real. There are so many stumbling points at which people will lose out. The previous debate was about risk; another key to successful investment is understanding the risks.

I return to the point that I made initially, which is exemplified by the noble Lord’s own career: the need to understand that investing takes time. There is no quick fix to successful investment on the stock market. It is not a shortcut to wealth; it requires patience, learning and discipline.