Shares

Discussion in 'Finance, Property, Law' started by terroratthepicnic, Apr 16, 2010.

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  1. terroratthepicnic

    terroratthepicnic LE Reviewer Book Reviewer
    1. ARRSE Runners

    I'm looking at buying shares. Not in any particular company but in general.

    How do I go about doing this?
    Is there a minimum amount I need to buy?
    How do I choose what shares to buy?
    What are the costs involved?

    I'm sure there are plenty of you on here that have done this before and can provide details. I have absolutly no idea about how to buy or manage shares. But I do know how to make an omelette.

    So if any of you can point me in the right direction I will be greatfull.

    TATP
     
  2. Depends on a few things, but the first thing you will need to sort out is a dealer.

    Have a look at your bank. They will almost certainly have a share dealing service.

    Personally, I went with Halifax. It's online, real time and it has some advantages. The main one being a very low dealing fee if you are prepared to take a punt and deal a few days in advance.

    No minimum amount of shares, but you will be charged a dealing fee for each transaction so you will have to factor that into the equation. Also you will be charged stamp duty on each deal. Halifax fees are £15 fee for a normal deal, £1.99 for an advance purchase. Stamp duty, if I remember correctly is 1%

    As for the strategy.....Buy Low, Sell High. If only I knew how to do that!
     
  3. To follow on, and answer another question, how to choose shares....

    Well, it's pretty subjective and always a risk. The first thing you should do is start looking at the finance pages in the papers, and also I quite like the BBC finance pages here

    http://news.bbc.co.uk/news/business/market_data/overview/default.stm

    Choose a couple of companies that you like the look of (think about what they do, how the market is and how you feel that they might do in the future) and then start following their prices. Do pretend deals and then see if you would have made or lost money.

    I've made and I've lost money on the market (Northern Rock....Hurumph! - Lloyds....yay!), but the important thing to remember is that you have made nothing until you have sold the shares! Your dealer may tell you that your shares are worth double what you bought them for, but if you don't sell them, then that money isn't yours, it's essentially notional.

    Finally, don't forget tax. You will be liable for capital gains tax, but only on anything over 10k profit.
     
  4. Totally agree with Infiltrator .

    If your intention is to buy some shares just for the enjoyment of being able to say you have an investment in a company of your choice all good and well . Buying / trading to make money is a totally different kettle of fish and a one abundant in pitfalls . Remember share prices especially in the past few years have been extremely volatile . I have investments in a variety of sectors … Power , Oil , Engineering, Retail , Banking and a few more thus giving an element of protection of the total investment …. as some go up some may come down . These investments acquired over a period of time have always been for long term investment but also an element of enjoyment and horror in tracking their performance . This has required some nerve over the past few years to hold and view the long term picture but the trend has been generally upward . If the ability to pick a winner every time was easy there would be a lot more millionaires in the UK . Research is critical .When you find a company of interest use the Internet to find out as much info about them as possible before you commit . Remember as has already been pointed out the instant you make a purchase you have made a loss because of commission charges etc .
     
  5. How do I go about doing this?

    You need to use a licensed, regulated broker. These can come in many guises. As has already been mentioned you bank may well offer a share dealing service and the costs are often fairly reasonable.

    Secondly you can choose an online broker - again there are several of these and can be much of a muchness. Googling for 'UK online brokers' will I am sure yield results.

    Thirdly you can go through a traditional stockbroking firm. The costs here are likely to be higher however you get the advantage of receiving one on one advice which, as a novice, you may find useful. Again Google for 'UK stockbrokers' and you will find plenty. Make sure that anyone you speak to is FSA regulated

    Is there a minimum amount I need to buy?

    No - you can buy one share for one penny if that is all you want. UK shares do not trade in specific lot sizes (unlike some other global markets). If you are investing in only one company then owning 10,000 shares at 1p is no more or less risky than owning 1 share at 100 pounds. Your measure of gain (or loss) should always be looked at in % terms not price movement. Do not invest more than you can afford to lose - and always put a stop loss in place (a figure at which the loss is no longer acceptable and you close the position) either in your head or physically with your broker / online trading system.

    How do I choose what shares to buy?

    The $64,000 question. What do you want to achieve? What is your risk profile? Are you looking for a relatively quick gain or appreciation over time? Do you want an income through dividends or capital appreciation?

    A decent stockbroker will offer an 'advisory' service, whereby he will sit with you and asses what you are aiming to achieve and what your risk profile is. He will then advise you on what he thinks is right for your circumstances and you can decide what course of action to take and which shares to buy.Many will also offer 'discretionary' service whereby you leave the stock picking to him (again based upon your risk profile). Both of these will usually cost you more in fees than an 'execution only' service and are more useful for larger portfolios.

    Remember that investments do not necessarily have to be in shares. You can invest in futures and/or options if you have a very high capacity for risk or else gilts if you are looking for very low risk. Investigate also Funds that will diversify your risk - there are many different types available that would suit most risk profiles and can be exchange traded such as investment trusts or simply priced relative to underlying investments such as Unit Trusts. Again both have advantages and disadvantages. If you want to, for example, just follow the general movement of an index (i.e. you believe that the FTSE 100 will rise in the future) then buy an exchange tracker fund. You will find a fund covering pretty much any investment class that you are interested in.

    What are the costs involved?

    As mentioned above it depends on the level of advice that you want to receive. Online trading platforms can be very cheap (I have been out for the country for 3 years but when I was still working in London you could certainly get 10 pounds a trade). Full service discretionary brokers will take a lot more, usually based on the size of the trade/portfolio. Remember that fees will be levied on both the purchase and the sale. In addition you will pay 0.5% stamp duty on every purchase. DO calculate this into your profit/loss account - if you are making very regular trades it can add up quickly.

    I have done this professionally both as a retail stockbroker and an equities trader with major banks. I will be very happy to pass on any general pointers if you need any information, feel free to PM me. I will not however pass on any specific recommendations
     
  6. There's not much to add to the above, but here are a few practical ideas to get started:

    1. Have a look at the Motley Fool website for all sorts of articles on investing. Some of it will be too detailed as a first read but there should be some useful articles on getting started, too.

    2. The Daily Telegraph has a column called "Questor" which recommends shares. I wouldn't say "rush out any buy whatever they tip", but they sometimes have good ideas and reading it will give a useful flavour as to the way to approach it. This column appears online too.

    3. A good way of getting started is Halifax's "Sharebuilder" service. This enables you to put a small amount of money away each month into a slecrtion of shares of your choice; you might prefer this rather than taking the plunge and sinking a big lump sum of your cash in, and then worrying if you made the right choice or whether the timing was right. I put £25 a month away in into each of a selection of shares. With the Sharebuilder they don't charge you the typical £10 or £20 for each deal, so you can invest quite modest sums and gradually build up your investment. The traditional way it's not really worth putting less than about £500 on each share in my opinion due to the £10-£20 dealing cost.
     
  7. All good advice. Just one thing. Personally I wouldn't look at a "traditional" broker unless you are looking to invest seriously.

    Early on, go for an online service and dabble. Don't invest your life savings straight away and never, ever invest money that you cannot afford to lose. Even big companies go bust overnight....Enron, Northern Rock to name but two. Firms CEO's will often lie through their teeth to keep their company going through a bad patch and if they get it wrong you get left with nothing.

    I know I'm painting a bleak picture, but don't be put off. Personally I've made over 300% on my investments with Lloyds, but I got in at the right time, where as some of my building society accounts have made .5% over the same period. Play it safe to start. At one point I thought Lloyds was going the same way as Northen Rock. I simply had to hold on and hope.

    Remember the stockbrokers maxim, A long term deal is just a short term deal that's gone wrong.

    I still say, that for small amounts, Halifax has yet to be beaten, as long as you are prepared to take a chance on the price in a couple of days. It's certainly done me no harm.

    Most of all. Enjoy. It can be quite good fun, as long as your mortgage doesn't rely on your results!
     
  8. terroratthepicnic

    terroratthepicnic LE Reviewer Book Reviewer
    1. ARRSE Runners

    Great advice guy's, I think I need to sit down and look at all the options.

    I think what I am looking for is a long term investment. Something that may add a few pounds to the pension in about 30 odd years time. But at the same time, allowing me to dip in, should the need arise.
    I have no desire in getting rich quick and besides I probably couldn't afford a broker who could help that to happen.
     
  9. Firstly I'm not a financial advisor so this post comes with the expected warning - don't gamble with money you can't afford to lose!

    Now that's over, I got interested in shares and finance from this website, a couple of guys on here "Banker" and "Silver Bull" I think suggested looking into it a while ago. After leaving The RN I fell into a good job and have a significant excess of income so wanted to do something worthwhile with it, what I've ended up with is an addictive obsession but one which I enjoy immensely, it's like a hobby but I get to play with my own money without throwing it all down a hole (hopefully). Having hung around websites like Motley Fool (I'm not a fan and much prefer This is Money for my share tips) I picked up a bit of knowledge, did a lot of research and then joined an online share buying service called The Share Centre where I set up a "pretend" practice account, learn about dealing and get tips on companies and their performance. Once I'd played with my £15k pretend money and learnt the language, how to trade, set limits etc I started to develop an investment strategy and then started playing for real.

    It really is very simple and if you do start small, set limits and research well you should be ok, until I started this I wasn't aware that you can simply set loss and profit limits on your investments. To begin with I only invested money I could afford to loose completely like my annual bonus because I was still learning but now I invest monthly having spent about 2-3 weeks researching the companies I intend to invest in. It's also about balance; save some cash I opt for 20% of my investments, use your ISA allowance to its maximum, look for income and growth with smaller risk (FTSE 100 Giants like TESCO, Vodaphone, BP maybe even a large bank or two) and then take some small risks - I've recently opted for a potential copper mine as a pure punt which may pay off in a year or two or I may lose half of my investment....... we'll see, whatever happens I now know more about copper mining than I ever thought I would!

    After much advice to do the following I'm now doing ok and I'm confident that I'll see a better return than my old savings account (I am so far by a lot): Pay off debts except the mortgage but bring it down to a level you could still pay if the worse happens, save 3 months salary in easy access savings (probably low return but almost without risk) use your ISA allowance against a managed fund, then and only then start to gamble with your money - even if you think those bets are safe.

    I'm still no millionaire though and with my approach to risk I doubt I ever will be but I've never been so financially stable and well off.
     
  10. I use iii.co.uk

    They have a regular investor service that lets you buy and sell for free. Basically, you choose a day of the month for the money to be transferred into your dealing account and a day for the shares to be bought. Because they execute all the deals at the same time you pay no commission or fees. It's a great way to get a portfolio started as it gives you time to think about what you want to buy - I buy a new share every month and spend a while researching each purchase rather than just buying on a whim.

    I'm not buying at the moment because I think the FTSE is overvalued and will correct quite heavily after the election - but I could be completely wrong!
     
  11. terroratthepicnic

    terroratthepicnic LE Reviewer Book Reviewer
    1. ARRSE Runners

    Someone has asked me to do a 6 month review of my findings, so here it is.

    After being given some sound advice back in April I went away and thought about what I wanted then set up a Practice Account at the share centre.
    I was given 15K to put into companies that I felt would do well. Most didn’t.
    I originally spent about 8k on 5 companies, leaving 7k should it go pair shaped. After a couple of months, I binned the 2 worst performing companies.

    I’m now left with 3. One is a large Security firm, which is down by 7%.
    Another is a sports fashion chain, which is up by 3%.
    The last one is a company in the oil and gas trade that is up by a Wapping 35%.

    After 6 months and a couple of bad choices I have a total value of £14,902.51, which leaves me £97.49 down from my starting sum.

    The oil company is probably due a drop in prices any time soon, and when it does, I will be throwing money its way. It would be rude not to.

    Here is the forecast for the oil Company.


    Year Ending ▪ Profit (£m) ▪ EPS ▪P/E ▪ PEG ▪ EPS Grth. ▪ Div ▪ Yield

    31-Dec-10 ▪ 58.42 ▪ 6.10p ▪ 20.7 ▪ n/a ▪ n/a ▪ n/a ▪ 0.0%
    31-Dec-11 ▪ 187.73 ▪ 19.42p ▪ 6.5 0.0 ▪ +218% ▪ n/a ▪ 0.0%
     
  12. Only £98 down in 6 months? Give the man a job in LloydsTSB, quick!!!

    The market has been difficult in the last 6 months which is an understatement, so you were sensible to run a virtual portfolio.

    The best way to learn about investing in the markets is to open your ISA with one of the big companies and drip-feed your money every month into a good quality unit or investment trust. Then, if the market crashes, you won't lose too much - and can buy more with next month's money! (Caveat: and there are lots of other ways to invest...).

    Just remember that we are now have RPI inflation of 4.5% so very few savings accounts will be making money for you.

    Litotes
     
  13. I started trading a few years ago at the start of the crash, I've had a blast. I aimed to pop £100 - £200 a month into different companies depending on what was happening around pay day (and if I could afford it).
    I got****ed over by RBS, made some of it back when I bought at 13p and sold at 40p. But by far the best investments I have made where Norseman Gold, Mwana Africa, Greatland Gold and Highland Gold.
    I cashed in a lot last year to put money towards our first house. Over all I got a better return than a bank.
    share centre was good as it only charged a few quid for a batch trade (no longer available), I'm look to move the halifax this month.

    I used to bet on horses but have found shares more fun an profitable.
     
  14. I think Primary shares are better for you. Coz Im also a new investor in share. But later day by day you can invest your money in Secondary share.
     
  15. Get someone registered to deal for you, a bank/BS/ or stockbroker.

    There is no mimimum amount needed but you pay commision on dealing so it may pay to buy a minimum amount.
    e.g £1,200 minimum per transaction.

    Choose the ones you think will give the most return.

    Depends I get charged £9.50 per transaction, irrespective of amount, this I think is reasonable.
    Banks normally charge a %age.

    I also have shares in an ISA so any gains are free of income tax, I pay £12.50 per 1/4 plus VAT on my whole ISA, and do not pay dealing transaction fee's.

    Be aware you can be liable for Stamps duty,Captial gains tax & M&MC fee's depending on the amount of the deal.
    If you sell the same shares in dribs & drabs you pay each time you deal.