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  • FIRST POST
    • novice_investor
    • By novice_investor 5th Dec 17, 4:13 PM
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    novice_investor
    Buying shares question from novice investor
    • #1
    • 5th Dec 17, 4:13 PM
    Buying shares question from novice investor 5th Dec 17 at 4:13 PM
    I am a new investor who has never bought shares before so apologies in advance if these questions sound very basic.

    I did a little bit of research into the whole process but am confused by the fees/taxes etc and want to make sure my understanding is correct before I dive in.

    I understand that there is a choice of different platforms and they all have different charges depending on how many deals are made each month. If I was to open, for example, a Hargreaves Lansdown share dealing account, it says on their website that they charge £11.95 for 0-9 deals per months which is about my expected level. What I don't understand is whether this is a one off charge, for example, if I open an account in December and make 3 deals, am I charged a one off charge of £11.95 or is it £11.95 per deal? Also, if I don't make any new deals the following month, do I still have to pay £11.95 (since it says 0-9 deals) or am I only charged for months where I make deals? It says on their website that there is no annual charge for management of a sharedealing account but do I have to pay a monthly or yearly fee to hold my shares on their platform?

    I also understand I have to pay Stamp Duty which is paid automatically when I buy shares at 0.5%.

    Are there any other fees, charges or taxes that I would pay for buying and holding shares (for example if I buy 3 lots of different shares and hold them for 18 months, what costs would I incur ?).

    I have used Hargreaves Lansdown as an example, I know they are not the cheapest but what do people recommend? I understand they are often recommended because there is a lot of information on their platform for investors.

    Thanks in advance for all responses.
Page 1
    • ColdIron
    • By ColdIron 5th Dec 17, 4:40 PM
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    ColdIron
    • #2
    • 5th Dec 17, 4:40 PM
    • #2
    • 5th Dec 17, 4:40 PM
    If you are a novice investor I'd suggest you avoid individual company shares as this is a very high risk strategy for you. I would imagine that most long term investors manage without buying any individual shares at all. You will be better served with unit trusts and similar collective investments
    • Eco Miser
    • By Eco Miser 5th Dec 17, 4:45 PM
    • 3,230 Posts
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    Eco Miser
    • #3
    • 5th Dec 17, 4:45 PM
    • #3
    • 5th Dec 17, 4:45 PM
    The £11.95 is for each transaction (buy/sell).
    There is also a £1 levy if you buy £10,000 or more of shares in one transaction.

    There is usually a platform fee, either a percentage or fixed number of pounds per month/quarter/year.
    See SnowMan's spreadsheet for personalisable information. Also Monevator and other sites.

    Unless held in an ISA, dividends are taxable in the year they are paid, even if automatically invested in an accumulation fund. First £2000 (£5000 this year) at zero%.
    Unless held in an ISA, capital gains are taxed when you sell the asset. First £11300 each year at zero %. This does not carry forward.
    Eco Miser
    Saving money for well over half a century
    • Linton
    • By Linton 5th Dec 17, 4:46 PM
    • 8,650 Posts
    • 8,626 Thanks
    Linton
    • #4
    • 5th Dec 17, 4:46 PM
    • #4
    • 5th Dec 17, 4:46 PM
    The £11.95 will be per deal. If you are a heavy user and have more than 9 deals/month they will lower the charge.

    There is just stamp duty when you buy shares, no other buy/sell charges.

    The charge for holding shares will vary depending on the platform. It will generally be calculated as a % of total value of shares. I believe H_L charge share holdings at 0.45%/year capped at £45. Other people may simply charge on the total portfolio with no cap.

    Buying/selling and holding shares may be charged differently to buying/selling and holding funds. Different platforms do things differently.
    • cloud_dog
    • By cloud_dog 5th Dec 17, 4:57 PM
    • 3,311 Posts
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    cloud_dog
    • #5
    • 5th Dec 17, 4:57 PM
    • #5
    • 5th Dec 17, 4:57 PM
    I am a new investor who has never bought shares before so apologies in advance if these questions sound very basic.

    I did a little bit of research into the whole process but am confused by the fees/taxes etc and want to make sure my understanding is correct before I dive in.
    Originally posted by novice_investor
    Can I ask why you have decided to dive in to buying shares?

    Do you already hold any investments in funds?
    I assume because you are not confident in platform/charges that you probably do not have an investment (S&S) ISA?
    What sort of money are you talking about ?
    Re above, this may indicate whether an ISA platform is really necessary (certainly as you start out).
    Last edited by cloud_dog; 05-12-2017 at 5:05 PM.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • novice_investor
    • By novice_investor 5th Dec 17, 5:02 PM
    • 6 Posts
    • 1 Thanks
    novice_investor
    • #6
    • 5th Dec 17, 5:02 PM
    • #6
    • 5th Dec 17, 5:02 PM
    Can I ask why you have decided to dive in to buying shares?

    Do you already hold any investments in funds?
    I assume because you are not confident in platform charges that you probably do not have an investment (S&S) ISA?
    What sort of money are you talking about ?
    Re above, this may indicate whether an ISA platform is really necessary (certainly as you start out).
    Originally posted by cloud_dog
    I probably shouldn't have worded it that way. I already use a Financial Advisor and have a stocks and shares ISA which I invest in every year, however, I want to buy some individual shares in a few different companies, less than £1k altogether and just thought it might be cheaper and quicker to do it myself rather than pay my FA to do it.
    • cloud_dog
    • By cloud_dog 5th Dec 17, 5:13 PM
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    cloud_dog
    • #7
    • 5th Dec 17, 5:13 PM
    • #7
    • 5th Dec 17, 5:13 PM
    I probably shouldn't have worded it that way. I already use a Financial Advisor and have a stocks and shares ISA which I invest in every year, however, I want to buy some individual shares in a few different companies, less than £1k altogether and just thought it might be cheaper and quicker to do it myself rather than pay my FA to do it.
    Originally posted by novice_investor
    Ok.

    A large number of posters will, rightly, advise you to be very careful regarding individual company shares as the risks of a failure are so much higher.

    Having said that if you are comfortable to progress then that is your choice (one I don't have an issue with).

    Firstly, a single investment of £1k is going to make the proportion of charges relatively high; also considering there will be a bid/offer spread, and stamp duty (not all shares have stamp duty associate with them but, that is another story).

    A low cost dealer, such as iWeb (£5 per transaction) might fit the bill. iWeb do have an account opening fee £25. There are other low cost brokers.

    Depending on your financial set up, currently, and how much you may end up investing stocks directly you may want to consider opening an ISA account rather than a general investment account (GIA) / dealing account.

    I would echo the positive sentiment towards Snowman's spreadsheet, it is excellent for understanding the impact of charges against your own profile, i.e. number of transactions / holdings etc. Download it and have a play.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • novice_investor
    • By novice_investor 5th Dec 17, 5:17 PM
    • 6 Posts
    • 1 Thanks
    novice_investor
    • #8
    • 5th Dec 17, 5:17 PM
    • #8
    • 5th Dec 17, 5:17 PM
    Ok.

    A large number of posters will, rightly, advise you to be very careful regarding individual company shares as the risks of a failure are so much higher.

    Having said that if you are comfortable to progress then that is your choice (one I don't have an issue with).

    Firstly, a single investment of £1k is going to make the proportion of charges relatively high; also considering there will be a bid/offer spread, and stamp duty (not all shares have stamp duty associate with them but, that is another story).

    A low cost dealer, such as iWeb (£5 per transaction) might fit the bill. iWeb do have an account opening fee £25. There are other low cost brokers.

    Depending on your financial set up, currently, and how much you may end up investing stocks directly you may want to consider opening an ISA account rather than a general investment account (GIA) / dealing account.

    I would echo the positive sentiment towards Snowman's spreadsheet, it is excellent for understanding the impact of charges against your own profile, i.e. number of transactions / holdings etc. Download it and have a play.
    Originally posted by cloud_dog
    Thanks for your reply. My ISA is maxed out at the moment as I put the maximum in every year, so I will have to use a GIA for these. I would gladly invest in a Fund if there was one that covered the disparate individual shares that I am interested in but they are across different sectors so not easy to find. Will take a look at Snowman's spreadsheet.
    • MallyGirl
    • By MallyGirl 5th Dec 17, 5:34 PM
    • 2,102 Posts
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    MallyGirl
    • #9
    • 5th Dec 17, 5:34 PM
    • #9
    • 5th Dec 17, 5:34 PM
    if you just want to have a 'play' with a small amount of money then x-o is £5.95 per trade with no platform fee.
    • cloud_dog
    • By cloud_dog 5th Dec 17, 5:36 PM
    • 3,311 Posts
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    cloud_dog
    Thanks for your reply. My ISA is maxed out at the moment as I put the maximum in every year, so I will have to use a GIA for these. I would gladly invest in a Fund if there was one that covered the disparate individual shares that I am interested in but they are across different sectors so not easy to find. Will take a look at Snowman's spreadsheet.
    Originally posted by novice_investor
    What type of stocks are you interested in? Perhaps we may be able to help. There are also ITs and ETFs to consider (although there can be different risk scales associated with these).
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • novice_investor
    • By novice_investor 5th Dec 17, 5:50 PM
    • 6 Posts
    • 1 Thanks
    novice_investor
    What type of stocks are you interested in? Perhaps we may be able to help. There are also ITs and ETFs to consider (although there can be different risk scales associated with these).
    Originally posted by cloud_dog
    That would be helpful as I'd actually prefer to invest in a fund if possible. I will compile a list of companies and get back to you.
    • EJS_Superted
    • By EJS_Superted 5th Dec 17, 5:58 PM
    • 41 Posts
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    EJS_Superted
    As the cost of placing trades is quite high it is usually not considered efficient to buy less than at least about £500 worth of shares at once.

    If you pay £11.95 per trade as per your HL example and are investing £300 each time as it sounds like you plan to then the cost is about 4% of the value of the shares you buy. The share price then has to rise/pay dividends of 4% before you break even. You then have to pay again to sell the shares so actually you need an 8% rise to break even at this point. This doesn't include stamp duty or capital gains tax you may have to pay. Compare those percentages to a fund.

    Personally I would not buy less than about £1000 of shares in one trade and then only with the intention of holding them for many years and with money I wasn't bothered about losing. Hence I don't have any individual shares!
    • Audaxer
    • By Audaxer 5th Dec 17, 8:04 PM
    • 669 Posts
    • 305 Thanks
    Audaxer
    I probably shouldn't have worded it that way. I already use a Financial Advisor and have a stocks and shares ISA which I invest in every year, however, I want to buy some individual shares in a few different companies, less than £1k altogether and just thought it might be cheaper and quicker to do it myself rather than pay my FA to do it.
    Originally posted by novice_investor
    You're not that much of a novice investor then if you already max out an S&S ISA every year, even although you use an FA. It does seem costly to invest in a number of individual shares for less than £1k in total value. How many different shares are you thinking of? Are you planning to hold them for the long term?
    • brasso
    • By brasso 5th Dec 17, 10:33 PM
    • 722 Posts
    • 854 Thanks
    brasso
    You're not that much of a novice investor then if you already max out an S&S ISA every year, even although you use an FA. It does seem costly to invest in a number of individual shares for less than £1k in total value. How many different shares are you thinking of? Are you planning to hold them for the long term?
    Originally posted by Audaxer
    I like it when people admit being novices, and request help. Maybe the tone wasn't intentional, but your questions come across as a bit hostile, or at least terse. Questions like "How many different shares are you thinking of? Are you planning to hold them for the long term?" are not easy to answer, even by seasoned investors. I change my mind all the time, and I've been investing for years!
    ----------------------------------------

    I am not an IFA!
    • Tom99
    • By Tom99 5th Dec 17, 11:58 PM
    • 697 Posts
    • 418 Thanks
    Tom99
    One of the cheapest ways would be to use Halifax as the platform then use a one off regular investment which is £2 a deal. The downside is its not a live deal you place the order at least one day in advance.
    They also have once a month 2 hour buy/sell dealing widow at £3.95 a deal which is live.
    • ColdIron
    • By ColdIron 6th Dec 17, 8:16 AM
    • 3,682 Posts
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    ColdIron
    HL is cheaper at £1.50
    • Audaxer
    • By Audaxer 6th Dec 17, 10:02 AM
    • 669 Posts
    • 305 Thanks
    Audaxer
    I like it when people admit being novices, and request help. Maybe the tone wasn't intentional, but your questions come across as a bit hostile, or at least terse. Questions like "How many different shares are you thinking of? Are you planning to hold them for the long term?" are not easy to answer, even by seasoned investors. I change my mind all the time, and I've been investing for years!
    Originally posted by brasso
    It's not hostile at all - just questions out of interest as he advised he already invests full ISA allowances each year in an ISA through a FA, which is presumably invested in diversified funds rather than individual shares.
    • novice_investor
    • By novice_investor 6th Dec 17, 10:18 AM
    • 6 Posts
    • 1 Thanks
    novice_investor
    You're not that much of a novice investor then if you already max out an S&S ISA every year, even although you use an FA. It does seem costly to invest in a number of individual shares for less than £1k in total value. How many different shares are you thinking of? Are you planning to hold them for the long term?
    Originally posted by Audaxer
    Possibly 5-10 different shares. I would hold them longterm 10-20 years if possible. Most of them are precious metal miners and industrial/technology/energy companies. I'm in the process of compiling a list.

    I am already invested in a Gold ETF and a Palladium one via my ISA but am interested in specific mining companies and I'm not sure if there is an ETF that covers different metals (they all seem to cover one type of metal) or perhaps I am just reading the information incorrectly?
    • Malthusian
    • By Malthusian 6th Dec 17, 11:06 AM
    • 3,466 Posts
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    Malthusian
    Possibly 5-10 different shares. I would hold them longterm 10-20 years if possible. Most of them are precious metal miners and industrial/technology/energy companies. I'm in the process of compiling a list.
    Originally posted by novice_investor
    Seems like a lot of effort to go to just to invest £1,000, but it's your money.

    am already invested in a Gold ETF and a Palladium one via my ISA but am interested in specific mining companies and I'm not sure if there is an ETF that covers different metals (they all seem to cover one type of metal) or perhaps I am just reading the information incorrectly?
    ETFS Physical PM Basket?
    • novice_investor
    • By novice_investor 6th Dec 17, 2:17 PM
    • 6 Posts
    • 1 Thanks
    novice_investor
    Seems like a lot of effort to go to just to invest £1,000, but it's your money.

    ETFS Physical PM Basket?
    Originally posted by Malthusian
    Yes, I think I might need to rethink the £1000 thanks to the advice on here and up it to perhaps £1k per investment. Thanks for the Fund recommendation, will look into it.
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