Shares Advice

rizla01

Hi all.

To start, I know nothing about buying or selling shares.

I have acquired nearly 300 shares from the demutualisation of Standard Life and have just received a letter telling me that they are about to pay out £7.70 each (Approx £2k).

I am not in need of this money particularly, so the option of re-investing through their 'Scrip' scheme is something that I am considering.

I think the question is, would it be a wise move to invest in Standard Life or ANY financial institution at present?

They reckon that they have assets of approx £3.3 Billion even AFTER share withdrawals.

One problem that I have is that I trusted them with my Endowment and where it was supposed to pay out £45k odd it only paid approx £28k when I finished making all of my payment, so I am a little wary of trusting them again.

Would I be better advised to take the funds and re-invest in another company?

Or better to stay out of a market that I know absolutely nothing about and do not intend spending hours on, scouring the markets for better deals Etc

dunstonh

I think the question is, would it be a wise move to invest in Standard Life or ANY financial institution at present?

Crystal ball job. It could be very wise for the long term but you also run the risk of a Northern Rock or Bradford and Bingley and suffer a complete loss.

Single share investing is very high risk. You have all the eggs in one basket.

One problem that I have is that I trusted them with my Endowment and where it was supposed to pay out £45k odd it only paid approx £28k when I finished making all of my payment, so I am a little wary of trusting them again.

The issues regarding endowment payouts were not totally their fault. Endowments worked for decades. However, they best suited and priced to a boom/bust economy with higher inflation (ironically we were are and could be heading in future). When the country moved to a sustained period of low inflation with lower returns and a period of poor stockmarket performance and a regulatory system that drains 3 times more in charges than the distribution channel and a regulator that insisted on increased solvency at the cost of returns (which actually was a good thing and is why we havent seen an insurance company follow the banks.... yet), it really hit the returns on with profits funds really hard and made it much much harder, near impossible, to hit target.

If you are going to invest, you have to have a level head and be objective. Dont let emotion get into the equation. Especially if its emption on issues that were wider than any one provider.

Would I be better advised to take the funds and re-invest in another company?

If you are not knowledgeable on shares and cant diversify with shares then you are probably better going with funds as that spread the risk.

Or better to stay out of a market that I know absolutely nothing about and do not intend spending hours on, scouring the markets for better deals Etc

There is no such thing as "better deals" when investing. Its about potential, risk and reward. If you dont know what you are doing then its often better to stay away from shares and look at funds instead. However, funds need research too. So, if you are going to DIY, then any option is going to require you to do some research.

rizla01

Thanks for the advice Dunstonh.

Are they JUST as likely to fail nowadays? I thought those fears were more likely behind us.

Are they as vulnerable as those that went down?

Also, if I save with a bank then up to £50k (I believe) is protected. With shares, do you lose the lot?

dunstonh

Are they JUST as likely to fail nowadays? I thought those fears were more likely behind us.

No insurance company has failed so far and Standard Life are not considered amongst the weakest.

Looking at the future though I dont rate them. I havent recommended a Standard life product in over 5 years. I dont know many IFAs that still use them (at least not the good ones as their products are not very good. Whenever I hear someone has a Std Life SIPP I automatically think mis-sale as a first impression for example). They are not popular with IFAs which is never very good when IFAs are the biggest distribution channel. SL do still have a small tied sales arm and have focused more on corporate pensions in recent years but I dont see that they have much of a future.

To put all that another way, would I buy SL shares? No.

The share price may bounce when confidence returns or if a merger or acquisition occurs but its not one for an inexperienced investor with their only share holding who is unlikely to keep on top of the financial news.

rizla01

Right. That's decided then.


I shall await my windfall.

Perhaps have a holiday somewhere nice.:)

Thanks for that advice D.

Bertie-H

rizla01 wrote: »

Hi all.
I have acquired nearly 300 shares from the demutualisation of Standard Life and have just received a letter telling me that they are about to pay out £7.70 each (Approx £2k).

They are proposing a dividend (still to be voted) of 7.70 pence per share not £7.70. You would expect to receive just over 20 Pounds not 2000 Pounds!