Newbie Investor

Zuma

Hi,

I am a total newbie when it comes to investing in shares. I work in the Tech industry and have a good knowledge of new technologies and trends in the industry.

I am not just going to dive in and will read and research all I need before. Where do I start? I know the basic concepts involved in online share dealing but could do with some kind tips and pointers for more information.

I will not be starting with much, maybe 100 per month to start but I am interested in investing in US Tech companies as well as UK.

Any help appreciated

Zuma

Please can any one respond, I just need pointing in the right direction

Lokolo

Theres not much we can guide you wish as we can't tell you individual stocks. You really need to ask more specific questions because at the moment its more of a "now what?" question.

However, you need to find a stockbroker. The most popular one at the moment is iii which costs £10 trading fee. You can sign up there and start having a go.

However, starting on £100 a month means 10% of your money is already gone. Which is lame. iii do do a regular investor: http://www.iii.co.uk/sharedealing/?type=portfolio which gives you free trades, but it means you cannot buy whenever you want, its done on specific dates, which may not work in your favour.

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Other than that you can go for funds, which means you don't directly invest in companies, but invest in a specific area. The fund manager then chooses the stocks.

pramsay13

Hi Zuma, if you go to share.com. They give you £15000 play money for you to practice with, so you can have a go and it doesn't matter if you lose as it's not your money.
They also have a range of how to's that are very helpful and advice sections as well.
Then if you're wanting to trade for real they can do that too although they are not the cheapest.
Hope that helps.

lr1277

Don't go for the companies promoting the newest or sexiest technologies. Go for the companies earning money.
I used to work for an IT consultancy that treated its staff well but its commercial decision making wasn't the best. The stock market didn't rate our shares.
However one of our rivals Logica didn't particularly treat its staff well and made sound commercial decisions so the market liked its share and hence the share price went up.
So much so that Logica took over the company I was working for.

So my advice is go for the companies making money and profit and don't be fooled by technology. Sure if you want to get into a new technology early, that will be fine, don't put all your eggs and all that.

HTH

DisgruntledGoat

I think there are two approaches to investing in tech, neither (IMHO) great.

- get in to unproven companies at the IPO stage (aka the search for the 'next Google' or 'next Microsoft'). The problem is that at this stage the companies are generally losing money, not making it, and a priori you have no idea if they're going to win big or go bust. The only approach here I think is to spread risk, accept some losses and hope for the big one.

- buy established companies that are making money. However, these tend to be quite expensive, tech companies tend to trade on quite high P/E rations (or low yields)

I think that probably the best bets are recovery plays, where the company is established, the shares are out of favour and cheap but you believe management can turn it around - IBM in the 90s is one example, Sun post dot-com bust is another. There's money to be made here, but you need to be quite familiar with the company. Quite often they're out of favour for a reason...

I will not be starting with much, maybe 100 per month to start but I am interested in investing in US Tech companies as well as UK.

The problem here is that dealing charges will eat up your £100/pm, so i'd look to save up for bigger purchases or use something like Halifax sharebuilder with very low charges for a once-a-month purchase.

DisgruntledGoat

The problem here is that dealing charges will eat up your £100/pm, so i'd look to save up for bigger purchases or use something like Halifax sharebuilder with very low charges for a once-a-month purchase.

To give you an example of the issue here, i'm currently looking at a share trading at 10p. But if you're investing £100, you don't get 1000 shares. At my broker you pay £11.95 commission, so you're only buying £88.05 worth of shares. Then the bid-offer spread is 10-11p, which means you buy shares at 11p, sell at 10p, so you get £88.05/0.11 = 800 shares, not 1000.

If you turn around and sell, you get 800 x 10p = £80, minus £11.95 commission, or £68.09 - so the bid-offer spread and commission has eaten a third of your money. Or, to get your money back, your 800 shares need to become worth £111.95, i.e. a sale price of 14p. So you need a 40% rise to just break even.

The spread's a headache regardless of how much you invest, but on small purchases the commission cripples you.

SailorSam

Stock Research
Pick up a few tips here.

The share.com that gives you £15k (only in monopoly type money) that pramsay13 talks about, i've opened an account there, but not used it yet.

Nosht

Treat this as a business & plan accordingly, develop a trading strategy & stick to it. Minimum £1000 deals are most cost effective.
Motley Fool do a share buying process that can be drip fed.
As always, Do Your Own Research.
Don't listen to the "experts", if they are that good then why are they still working?



Regards,


N.

Zuma

Wow thanks for the tips. I really am a newbie and this gives me some ideas of what I need to do. I have read that iii seems to be the cheapest and popular. I guess I will play around with the share.com option and get a feel for it.

Thanks again guys

Mr.Mulla

Don't invest in anything you don't understand. If you don't understand stocks, don't invest in them. If you don't understand options, don't invest in them. If you don't understand futures contracts, don't invest in them.