Hello all ,
Looking to buy and sell some shares in my Boredom.....Does anyone have any suggestions on the best (cheapest) brokerage platforms? Have Looked at Degiro, looks ok , any experiences? Im looking to do 50/50 medium term /short term trades but want to keep fees as low as possible.
I am new to this but not a complete idiot so please be gentle with me. I have about 5k to play with.
I am not qualified to give financial advice, but I can point you in a few directions. The first is not to put all your eggs in one basket and the second is to have a strategy to exit. Might sound daft, but you do make neither a profit nor a loss until you sell.
You are starting at a very good time insofar as the markets are priced in for a long and sustained recovery but am not convinced that your choice of an individual equity (share in a quoted comnpany) is going to be the correct approach just yet. Take into account dealing costs - typically these will be somewhere between £10 and £15 for each transaction (buy and sell) and for many companies there is stamp duty to pay too.
I'll try and give the same advice as I give to my children as they are beginning to build their portfolios put the money into a Stocks and Shares ISA (brokers such as Hargreaves Lansdown, Charles Stanley Direct etc) because although you are unlikely to exceed either the £2,000 threshold for dividends or the CGT allowance unless you are extremely fortunate, there is no point in being taxed on your investments and good sense to plan for your future.
Next, split the sum into 5 amounts, each of £1,000 so that you can drip these into 5 different holdings. Understand where the market is going and use momentum to your advantage. (I believe that the political will of the world is for a greener society). Consider at this stage too where growth will occur once the pandemic is fully over.
Markets are forward looking so are about 6 months ahead of where we are today, if that helps. The last 20 years have grown as a consumer led market and todays 20 year old cannot (in the west) has huge debts from education to pay off. Developing (sometimes called emerging or frontier) economies want a piece of the action too, so consider a tiny investment trust called Aubrey as that is exactly where they focus. IT is going to be terribly important too as the West realise that it is possible to work from home, and this throws new challenges - Allianz Technology Trust or Polar Technology Trust might be worth thinking about.
You might also want exposure to infrastructure that is desperately needed for the green revolution - The Renewables Infrastructure Group for instance is a solid player with a good track record of preserving capital and with the intention of delivering a growing dividend policy every quarter.
Of course, you might also want to look at Utilities but not necessarily water, gas and electricity in the domestic markets - Utilico might be a good'un for you. Templeton, Scottish Mortgage and Montanaro have fantastic track records.
I hope this gives you a few pointers. Only you can make the decision to place a bargain. Run your profits but cut your losses early. Good luck - I am sure the next 6 months will be a very exciting and rewarding time for all investors.
Sound advice from Alas_Smith there. The only thing I can add is to recommend IG as a trading platform but only if you intend to trade 3 times a month or more in which case the charges are only £3 per trade. The platform is a bit of a learning curve to get used to but I find it excellent. Also with parcels of shares circa £1000, you rather need to minimise costs. For this reason I would advocate looking at shares where no stampduty is paid, many shares on AIM are like this but also IAG and PLUS500 for example.
Run your profits but cut your losses earler...wise words and has been the most difficult advice for me to follow even after 40 years experience. I am a day trader and I am watching the market and my investments all day long. I use automatic alerts to tell me about significant changes in a share price...this enables me to a have a real life as well! By such monitoring it is possible to trade the changes that happen through the day, for me, this is where I find the most profit.
Jolly good luck with your trading.
SadAct, I suspect is of a similar vintage to myself. I am still building my portfolio having started in 1979!
Your first few investments to "cut your teeth" are potentially likely to be shares in a "fund" of some sort. In simple terms these are either open-ended or closed ended. What is the difference? Closed ended fund begin with the injection of capital by the managers. A prospectus is issued to set out how the investments are going to be managed and SHARES are sold to investors so that the managers simply manage the capital. This type of fund is an INVESTMENT TRUST. The managers make investments with the capital and the market capital (share price) of the fund rises and falls so that there is always a Nett Asset Value (NAV) to underpin the Trust. Shares in the trust might be at a premium or discount to the NAV. If investors wish to sell their shares, MM will give them a price for the shares. Investors might not like the price offered, but thay can sell and realise their assets.
A fund, on the other hand, seeks to attract investors through the reputation of the managers. If the fund does well, it will attract money (which can be used to buy new holdings). It will also need to have a constant flow of cash from dividends and new investors so that those wishing to realise their holding can do so at specified valuation dates. Usually once per week.
A fund that is failing (Woodford was a good example) will have more sellers than buyers and may have to sell assets to meet liquidity. If it is unable to meet its liabilities or the assets are too illiquid to sell, the fund might be "gated". No new investors permitted and no investors able to realise their holding.
Although fund supermarkets (and Hargreaves Lansdown is a big player) are frequently described in the press as suitable investments, I would urge caution and ALWAYS choose an investment trust in preference.
Sorry if this all seems rather overwhelming. There is a lot to take in and it can be very confusing at first. Do yourself a favour and get an old book published by the Motley Fool (before they went downhill) called "How To Make Your Child A Millionaire". I know it is written for an American audience, but it is an excellent starting point and makes its points very well.
If you do not understand what the company does or how it makes its money, then walk away. The person that has your best financial interest at heart is you. You know what sort of company you want to be associated with so do not be afraid to ask the managers of the company for information. Investment Trusts will, for instance, let you have a monthly list of all their assets in a portfolio. You just need to ask. If the company is unwilling to be open honest and truthful about what it does and how it generates revenue, walk away. Some managers are utter charlatans, others ruthless and some are exceptional. Most, though are at best average.
Can I ask what your reasoning is for going with IT's as opposed to funds? I'm not a complete novice but by no means a veteran.
Can IT's be 'gated' as you refer below? Or is it just because of what happened with Woodford (and perhaps others)?
I have about 25% of my portfolio in funds and they've served me well to-date. Although I do have some cash in one IT - Scottish Mortgage Investment Trust.
hi philipjm, investment trusts generally have out performed funds and are deliberately kept under the radar by the main supermarket fund brokers of which Hargreaves Lansdown is the largest player. There were plenty of other funds that were gated in 2019 and 2020 which were property based. Again, it is the liquidity in the fund that is the problem not necessarily the fund manager.
For the last few years, we have seen commercial property (with the exception of warehousing) crash. It will (IMO) continue to crash in metropolitan areas once the furlough scheme ends and businesses have to resume rents. We have just started (again, my opinion) to see the effect that closure of economy does in terms of business failures; these I believe will accellerate this year.
So, as funds require liquidity, either as new money is introduced or generated both to acquire assets and to discharge those wishing to redeem their stake, the level of cash held might not be enough. Investment trusts do not have that problem as the shares in the trust are separate from the assets of the trust.
Investment trusts also have a long term record of payment of dividends (City of London is a good example) and can also add leverage to their assets. There is an excellent book by John Baron which explains the advantages and disadvantages of IT's over funds.
Where I hope that RoseMax will benefit is to use the theme of pooled resource to grow her wealth and spread this over 5 sectors. The sectors, I suggest are China, Emerging Markets, Renewables, Healthcare and Information Technology.
Anyway,returning to funds..... as so often happens, the fund manager with the loudest drum has prominence. Most of the commentators in the press when providing opinion on portfolio structure funnily enough seldom mention Investment Trusts or individual shares but they always seem to promote funds..... and that is how they get paid!
hi philipjm. I had replied earlier but no sign that the message was published. I'll try again!
The underlying structure of IT's is different from the open ended funds. Plenty were gated last year as a result of liquidity (investors wishing to cash out), mainly property based funds. That is, if you like the fundamental difference - liquidity had to be created by the fund managers selling assets and property deals (and unquoted assets) take far longer than those involving quoted equities.
So, although you might not like the price offered by Market Makers at least you can place a bargain for settlement under Stock Exchange rules. Dividends (if the Trust pays them out) are more stable because the Trust usually has provision for retained earnings - this is useful in a down year so that dividends are unbroken. City of London is a good example.
Hope that helps
Hello Again all
Thank you all so much for your responses, all of which make perfect sense and seem like great advice.........However, just for clarity of thought i would like to expand a little on my earlier post
Firstly how did I get to this point well about 2 years ago i started trading on both the Betdaq and Betfair exchanges. I started with £150 in each account and traded my way , with lots of ups (profits) and downs (losses). I have, since Christmas, liquidated those accounts hence the 5K to play with. so what am i looking for? Well i have set myself 2 Targets for year 1. Beat the FTSE % gain for the year and 2, Have a bit of fun. As i'm new to shares I have set at least 1 goal that i probably won't achieve (i'll let you guess which one) but would like to use the first year to Learn, and yes i know i will make mistakes but for me thats the best way to learn. I have spent the last 2 months doing a bit of research and am surprised how similar the sort term strategies are between stock markets and betting exchanges so thats why i say i'm not a complete idiot just a partial one.
As SadAct alluded to my biggest concern is fees hence the question about Digero's trading platform which if anyone uses I would be grateful for any feedback. I may ask the same question of the Red Braces brigade who seem to be mainly day traders and may incur lots of fees or commission.
couple of other things before I enjoy this evenings libation.
User names can be misleading Sorry (Alas-Smith), Rosie and Max were my first 2 Jack Russell Terriers, sadly passed away, and i find it easy to remember and fairly anonymous. I am actually male, mid 1960s vintage with a bald patch, drive trains for a living, and enjoy the odd Ale when I can.
I hope to hear from you all again soon and when i get going may post updates if thats ok with everyone.
For 19 years I contributed to ADVFN as Erogenous Jones. Following my complaint to that company on cyber bullying which was ignored, I issued the company with a Data Subject Access report. The company refused to delete my data, issued a permanent ban on me and I have raised further complaint with the Data Commissioners Office which is under investigation at the moment.
The pun with names was quite deliberate and might bring a smile.
Delighted that you have done so well thus far. However, I know nothing of Degiro, and as the capital that you are starting with has been hard won, I would stick with more mainstream companies such as those mentioned on the various strands to your thread.
Alas_Smith Hows this for irony, my surname is Jones. :-)
How's this... My surname is Smith!
If you do stocks safely , its " boring" sitting there watching you capital grow slowly.
Since you want some fun and to learn
If I was in your position I would split your capital 4.5k/5k in funds/IT's in HL (for example) within an ISA ( taxman can't get you then ;)
and put the other £500 in 212 trading ( for example) this will give you access to partial stocks instead of whole ones. THis means you can leave the bulk of your capital to mature and grow in relative safety ( sorry I have to put that because we all know nothing on the markets is 100% safe). And the £500 is your "play" money to learn and earn coin :)
I would be inclined to look at World growth funds, green energy, EdTech, FinTech, Pharma ( massive business) I would stay away from normal automotive ( I work in an automotive Tier 1) everything is cost reduction, screwed right down to max 5% profit.
PLCs for your £500
Tesla? - the only one I know that bucks the automotive trend
RDS - stupidly low, not sure if its a good idea, but they pay divs( not the full amount, long play out if it does come back IMHO)
STAF- recruitment, temp workers etc - on its arse but there is good growth potential again IMHO
These are suggestions unless you have an idea already. as always DO YOUR OWN RESEAARCH.
P.S. well done on the betfair!
Yo-homes makes very viable observation first in sheltering investment in ISA wrapper for gains (and dividends) and that some fun needs to be had while investing. Challenge yourself just to beat the market each year but go where the market is growing.
If growth is in Japan or Chile or mining or renewables or stem cell research or anything else, and you haven’t the least knowledge about either the geography, the subject or sectors, then that is where Investment Trusts are used. They give exposure to the most beneficial or likely holdings that will achieve gains.
Remember also that you do not need to knit muesli, support Greenpeace, play a tambourine or vote Corbyn/Biden/Macron, listen to Attenborough or even want to have anything to do with renewables to make money from the sector. The same applies to bombs, fags, chemicals, nuclear processing etc.
Getting rich slowly has worked for me. I’d have preferred it to be fast, but in hindsight slow was good. With flooded homes, the downsideis insurers but the upside means new carpets. Good fortune to all.