Wanna start buying shares with £1000 we have saved. Where do I start?

Aegis

GH wrote: »

Not necessarily. Open a Spreadbetting or CFD account with £1000 and through leveraging you can get exposure to £20000 worth of shares and IF you make a profit the profit is the same as if you'd bought £20k worth. Losses? Sure you can make losses but you can set a stop loss of (typically) 10% below the share price. So if you buy a share a £1 and the price drops to 90p the trade is automatically closed and you lose no more money.

True enough, but that level of gearing and the stop loss mean that a downwards fluctuation of just 0.5% loses you £100. For most people without a system of picking a decent stock, I imagine that's going to be the result almost every time.

So with your £1000 you can do 10 spreadbets (or CFD trades) setting your stop loss at £100 per trade. 10 bets , provided you do your research properly , should yield you more winners than losers. Your profits , if any , will be extremely modest but you'll get a lot more fun out of it than investing £1000 in shares directly.

For a beginner to the world of shares, I'd be surprised if there weren't more losers than winners.

benood

£1000 is enough to make a start I think, I've got a selftrade account and I also use Hargreaves Lansdowne, both are fine but I've recently been charged £35 annual fee by Selftrade so beware.

You have to be prepared to take profits and losses - I've had some really good runs and doubled my money a several times but I've lost on Northern Rock betting Gordon wouldn't nationalise and again on a small cap IPO (subsequently doubling up after it fell 90% and made it back and more)

It is gambling I suppose but you get a better mix of profit/excitement for your pound IMO.

Don't ignore large caps - less risk of you being completely turned over by insider dealing - Oil Exploration is a classic for getting stitched up but any smallish quoted stock is more risky on the downside I think.

Once QE ends we may be in for an almighty correction.

sabretoothtigger

Some spreadbet firms will let you buy 0.1 of a unit in a company which I think is just 10 shares. Your'll still lose money most likely but you might also learn something without losing your head first

They charge you via the spread, 9 to sell 10 to buy so that'd be 10% loss right away. With stocks this can also happen especially with penny stocks, on top there is half a percent tax in duty and you must pay the broker to sell or buy usually about ten pounds.
I suggested sharebuilder as its 1.50 instead.

Using that I bought a bit of stock with a 10% spread and its risen 50% since then and the spread has decreased also, so lucky me but in theory its expensive to buy small companies, make sure you really like it

If you had bought even a small amount last feb or march you would have made money and learnt something. Now Im not so sure, if a stock has risen 300% since then and 50% since just july can it really be a good time to buy. Im certain there is always opportunity available, it just gets harder to see.

Spreadbet lets you shortsell, this is even more risky but it could be said now is the time

jinkster

Before you start buying any shares at all read 'the naked trader' by robbie burns - cannot post link as i'm a new posted

It's a very simple read and certainly worth a small investment.

Spread betting is a bit iffy if your just starting out, so I'd pass on that for the time being.

Also after reading the book set up an account with iii.co.uk (interactive investor) they charge £10 to buy and £10 to sell for the UK listed (LSE) shares.

Good luck - it can be a mind field but can also be very 'fun' at times!

Blah99

Spread betting is a road to ruin unless you know exactly what you're doing, and have been trading "normally" for long enough to understand the markets.

Before you start spread betting buy a book called "The Spread Betting Handbook" by Malcolm Pryor.

Sceptic001

I agree that spread betting can be risky if you don't know what you are doingand is probably not suitable for the OP, but it is a useful tool if used with care.

Spreads on larger companies are much smaller than the ten percent quoted by sabretoothtiger and there is no 0.5% stamp duty on purchase. Nor is there any capital gains tax.

sabretoothtigger

Theres no personal tax at all on the profits because its classed as gambling not investment (unless you make a job out of it then taxman comes calling apparently).
I wouldnt expect 10% spread most of the time but it can happen in stocks and even a bet can become uneven, its a very rocky road to walk.
major companies have spread of less then the duty charge, moneyam shows the % spread in realtime for any stock you like

Jake'sGran

gary_oleary wrote: »

Just to add on to this discussion.

What stockbroker/website do you use buy your shares? Im looking into investing into penny shares.

Thanks

I use The Share Centre for shares (Share.com) and Hargreaves Lansdown for Funds - one of these I bought recently has gained 25% in 2-3 months. They are risky, it is true but just for buying shares I'd say my utility ones have all done well. I bought a single company PEP some years ago; £3000 in British Gas, and that PEP is now worth about £16,000 as, along the way I gained Centrica and National Grid and United Utilities.
I have never bought penny shares which, by the way, got slated recently in a Times article.

The Share centre send out their tips by email regularly but they can get it wrong too I expect. They promoted REXAM recently but some of the big companies downgraded it not long afterwards.

sabretoothtigger

Rexam was tipped by iii also just before a rights issue and they've obviously fallen in price because of that. The rights were to reduce debt which in theory improves their position
I think they are high yield and a reasonable hold but the change in price per shares is confusing to compare long term

I never heard any new negatives on them really


Basically tips are a bad idea to follow blindly but sometimes they tip a company I like anyway and then their research and point of view can be useful but do not buy tips otherwise

Broker upgrades and the like are released to big corporate buyers first so you are only told its 'good' after everyone else had the chance to buy.


Do share.com let you buy internationally
uu was recently discussed by questor as a hold which is the telegraph 'tips' column

http://www.telegraph.co.uk/finance/markets/questor/6223922/United-Utilities-tax-rebate-means-it-still-floats-our-boat.html

They also tip vodafone at 140p which is a bit late to the party, they were a buy at 110p and no one said anything which is typical of tips, often very poor timing

DebG

Spread betting is very risky. Do not try it before you have read a couple of books on the topic. I also recommend to paper trade before starting to trade with your own money. Most spread betting platforms offer demo accounts, where you can try your luck without risking your money.
Also note that when your money is at stake you make decisions in a different way than in case of paper trading!!!
Start with a small bet size and always use a stop loss not risking more than 5% of your total account value.