Investing £500 in Bank Stocks, Newbie

CashStrappedTeen89

Just had a family member round who knows a bit about stocks, does it quite a bit now with banks and a few other companies, so i explained my conundrum with my ISA being crap and he suggested investing in bank stocks such as barclays, RSB, Lloyds ect, he explained as long as i could monitor the stock situation and didnt mind investing long term that it didnt matter what amount you start on.

So i have £500 and another £500 coming next month, he suggested joining the barclays stockbroker site and using that to buy and sell, investing in possibly Lloyds or simular?.
I know its not a lot but i'd rather invest a little and lose than a lot plus it'll be a good learning curve.

I havent done a great deal of research yet but i thought i'd tap into the wealth of knowledge on here.

So my questions are -

Would this method be ok?.
Are stocks/shares taxe'd when bought and sold ect?
What would be the best account to open?, stocks and shares?.
is it better to open a normal account with the banks im investing in just encase of charges ect?.

:beer:

jimbobboi

If you wrap the investment through a Stocks and Shares ISA then there's no tax.

Hargreaves Lansdown let you do this, I'm not sure who else does though.

cashbackproblems

You are allowed to earn approx 9k before paying any CGT on any profits and you can also use your ISA allowance for a Stocks and Share ISA.

The cheapest and most efficient broker is www.iii.co.uk where you can buy/sell in advance for free and £10 for live purchases.

I have small holding in RBS and Barclays and both are great long term investments, you will get short term fluctuations (like the whole of last week they were down then on Monday were up 10-20%). RBS arent currently paying dividends but then for £500 you wont get much.

Linton

CashStrappedTeen89 wrote: »

So my questions are -

Would this method be ok?.
Are stocks/shares taxe'd when bought and sold ect?
What would be the best account to open?, stocks and shares?.
is it better to open a normal account with the banks im investing in just encase of charges ect?.

:beer:

To answer the specific questions and not comment on the investment itself...

The method is OK but may not be the most efficient - many online share accounts have a minimum transaction charge, so I would say invest in lumps of £1K at least. Though I believe Halifax have a scheme whereby you can invest small amounts cheaply.

Stocks & shares are taxed when bought - its called stamp duty - this normally amounts to around 1%. You cant avoid paying this. There is no stamp duty when selling but you are potentially taxed on any profits when you sell - Capital Gains Tax. However the annual allowance is reasonably high, currently £10100, so you are unlikely to exceed this! A S&S ISA will protect you against CGT, but as I say it's not really an issue for you.

Any dividends are tax free for basic rate tax payers, but I dont believe the banks will be paying dividends for a few years.

You open a share dealing acount with an online stockbroker. There are many of these. I use iii (linked to Halifax) and Stocktrade (Brewin Dolphin). Online stockbrokers have a range of facilities - for example Stocktrade cant handle unit trusts whereas iii can.

Your share dealing account has nothing to do with any bank account. The way it works is that the online stockbroker provides you with a cash account as part of your share dealing account. Any buys and sells are done from your cash account. You use electronic transfer to move money between your share dealing cash account and your bank account which could be anywhere.

Biggles

CashStrappedTeen89 wrote: »

Just had a family member round who knows a bit about stocks, does it quite a bit now with banks and a few other companies, so i explained my conundrum with my ISA being crap and he suggested investing in bank stocks such as barclays, RSB, Lloyds ect, he explained as long as i could monitor the stock situation and didnt mind investing long term that it didnt matter what amount you start on.

He 'does it a bit' and he 'knows a bit'? Perhaps you should look into this a bit further before spending money. What exactly is your conundrum with your 'ISA being crap??

So i have £500 and another £500 coming next month, he suggested joining the barclays stockbroker site and using that to buy and sell, investing in possibly Lloyds or simular?

Not a good suggestion for the amount you are talking of investing and your style of investing. Barclays have an inactivity fee of £12+VAT for each quarter in which you didn't trade.

Linton wrote: »

Stocks & shares are taxed when bought - its called stamp duty - this normally amounts to around 1%. You cant avoid paying this.

Stamp duty is 0.5%

Any dividends are tax free for basic rate tax payers, but I dont believe the banks will be paying dividends for a few years.

Dividends are taxed at source, this is 10% for a standard rate taxpayer (which can't be reclaimed if you are not a taxpayer).

opinions4u

I used to have a few thousand bank shares worth tens of thousands of pounds.

I now have tens of thousands of banks shares worth a few thousand pounds.



Buying more bank shares just as several Eurozone economies go bump may not be the most secure investment.

It's a high risk strategy that may not pay off.

MarkFromCornwall

CashStrappedTeen89 wrote: »

So i have £500 and another £500 coming next month, he suggested joining the barclays stockbroker site and using that to buy and sell, investing in possibly Lloyds or simular?.
I know its not a lot but i'd rather invest a little and lose than a lot plus it'll be
:beer:

I bought shares in Lloyds a while ago. They are now worth less than half of what I paid for them. They have not paid me any dividends. If I'd put my money in a savings account it would be worth more. Worth thinking about!

Mark

Xbigman

Buying bank shares is a big gamble. Just because they are massively down does not make them cheap. If you want to risk money on a gamble try housebuilders barratt or taylor wimpey. They at least have hard assetts backing their shares.
Regards



X

sabretoothtigger

Do they? I thought they had massive debts hence the fall to near zero at one point.
They might have assets but against debts, the banks potentially have them on a leash at best or own them outright at worst

A bit like the old euro tunnel shares, not worth much but in theory a priceless asset


Santander is the most beat up bank share at the moment and they give a reasonable yield. BNC for shares, SAN for pref shares

turbobob

I think there's talk of the current government moving towards breaking up the banks (i.e. separating the retail and investment banking sides) which could weigh on share prices.

CashStrappedTeen89

jimbobboi wrote: »

If you wrap the investment through a Stocks and Shares ISA then there's no tax.

Hargreaves Lansdown let you do this, I'm not sure who else does though.

I asked about this as i had heard good things about it before, i cant remember what his advice was on the matter, i did ask a lot of questions and got a mini crash course from him, i know it was a negative comment though, iirc something about the possibilites companies going under ect, i am probably wrong, with give him a ring later tonight anyway.

cashbackproblems wrote: »

You are allowed to earn approx 9k before paying any CGT on any profits and you can also use your ISA allowance for a Stocks and Share ISA.

The cheapest and most efficient broker is www.iii.co.uk where you can buy/sell in advance for free and £10 for live purchases.

I have small holding in RBS and Barclays and both are great long term investments, you will get short term fluctuations (like the whole of last week they were down then on Monday were up 10-20%). RBS arent currently paying dividends but then for £500 you wont get much.

So iii works in the same way as barclays do just cheaper to use?.
Im not worried about dividends im not expecting much for £500 just want to get to gripds with stocks and shares may as well start out cheap.

nowretiredandlazingaround wrote: »

First question, is the family member well off with a big house and fancy car or does he live in a pocky flat?

Second question, what does he do for a living.

Third question, etc.

Jim

Im not sure if your being sarcastic or not but yes he does ok, has a nice house just bought a new car, anything else?.