Investing £500 in Bank Stocks, Newbie

CashStrappedTeen89

Biggles wrote: »

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??


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.


Stamp duty is 0.5%

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

Thats why i've posted here, im "Looking into it" a bit more, also looking at online experiences, guides ect, im not going to just jump in this as such without knowing something.
My conundrum being the interest is rubbish and its doing nothing there, i have no real outgoings at the minute and while i have that and while im young and can afford to lose a bit i may as well get my feet wet.

So would ou say save a bit more invest say 1 or 2k to start?.

CashStrappedTeen89

MarkFromMullion wrote: »

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

I know there's a risk, my understanding is though banks will always be needed, as the government showed banks cant "Just go under", bailsouts ect, and even if they do, i'd rather invest small and start to understand stocks than jump in with a massive amount.

Xbigman wrote: »

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

I also asked about this and he said that building industry is just to volatile at the minute.

sabretoothtigger wrote: »

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

Thanks for the info folks, Priceless to me :j

Linton

Biggles wrote: »

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

Not actually true, although the effect is not very different.

Dividends are paid from company funds with no tax deducted directly. However, because Corporation Tax has been paid from company profits the assumption is that dividend payments have already been taxed (although the company may not really have made any profits to be taxed). So HMRC invent an artificial basic rate tax of 10% and a tax credit of 10% to completely undo it. But the 10% tax take never actually existed.

Why HMRC bother to do this, perhaps someone can explain.

It does explain however that talk of government not refunding 10% dividend tax for allegedly tax free savings methods (ISAs, pensions) is not true.

CashStrappedTeen89

Linton wrote: »

Not actually true, although the effect is not very different.

Dividends are paid from company funds with no tax deducted directly. However, because Corporation Tax has been paid from company profits the assumption is that dividend payments have already been taxed (although the company may not really have made any profits to be taxed). So HMRC invent an artificial basic rate tax of 10% and a tax credit of 10% to completely undo it. But the 10% tax take never actually existed.

Why HMRC bother to do this, perhaps someone can explain.

It does explain however that talk of government not refunding 10% dividend tax for allegedly tax free savings methods (ISAs, pensions) is not true.

Thanks for clarifying, anyone have any other good tips or suggestions?. also any have any good resources regarding stocks and shares?.
Im considering opening an account with iii soon as i know a bit more. :beer:

Biggles

CashStrappedTeen89 wrote: »

So would ou say save a bit more invest say 1 or 2k to start?

That's the tough call. If you were going to be able to build those amounts of £500 for a few months, I'd say buy carefully chosen shares at £1k a time. The 'tough call' is because though, ideally, you'd invest a bit more than that each time, it's not a good idea to put all your eggs in one basket. You would do best to try and build up to, say, half a dozen shares as your first target, then maybe slowly increase the number of shares and amount invested in each one.

The last thing you want is to gather together £2-3k, invest it all in one share, and have it go belly-up on you. Believe me, it happens. If you already held 5 or 6 shares it would be less of a disaster, as many of the others would hiopefully be in profit.

And, as already advised by several people, I would particularly avoid bank shares for the time being.

CashStrappedTeen89

Biggles wrote: »

That's the tough call. If you were going to be able to build those amounts of £500 for a few months, I'd say buy carefully chosen shares at £1k a time. The 'tough call' is because though, ideally, you'd invest a bit more than that each time, it's not a good idea to put all your eggs in one basket. You would do best to try and build up to, say, half a dozen shares as your first target, then maybe slowly increase the number of shares and amount invested in each one.

The last thing you want is to gather together £2-3k, invest it all in one share, and have it go belly-up on you. Believe me, it happens. If you already held 5 or 6 shares it would be less of a disaster, as many of the others would hiopefully be in profit.

And, as already advised by several people, I would particularly avoid bank shares for the time being.

Sound advice bar one thing that may not be bad advice, why are banks so bad to invest in the major ones anyway?, i cant see the government letting lloyds go under the same for RBS.
Thanks for the advice its better asking and learning that not doing either

Aegis

Linton wrote: »

Why HMRC bother to do this, perhaps someone can explain.

The 10% used to be reclaimable within ISAs and pensions, and non-taxpayers could also do so (I believe). It's possible this may happen again at some point in the future, so perhaps HMRC are simply keeping the notional tax on the books in case the ability to reclaim it comes back.

CashStrappedTeen89

well got a III up and running just encase

Biggles

CashStrappedTeen89 wrote: »

Sound advice bar one thing that may not be bad advice, why are banks so bad to invest in the major ones anyway?, i cant see the government letting lloyds go under the same for RBS.

No, they probably won't go under. But, more than any other sector, banks are presently more susceptible to future government decisions, which is why I said 'for the time being'.

They are likely to be hammered with new taxes and new rules, eg on bonuses. And it looks likely they're going to be broken up. But they may get off lightly. There is always a possibility of some upside but one thing is pretty certain, and that is that they will be volatile. It could be worth holding a bank as part of a portfolio of several shares. But if you hold banks only, you're there for the very long haul.

CashStrappedTeen89

Biggles wrote: »

No, they probably won't go under. But, more than any other sector, banks are presently more susceptible to future government decisions, which is why I said 'for the time being'.

They are likely to be hammered with new taxes and new rules, eg on bonuses. And it looks likely they're going to be broken up. But they may get off lightly. There is always a possibility of some upside but one thing is pretty certain, and that is that they will be volatile. It could be worth holding a bank as part of a portfolio of several shares. But if you hold banks only, you're there for the very long haul.

Explains it a bit better. thanks.
I think i might just keep some low amounts invested and look at other area's, i've noticed mining industry taking off.