Wrong place

j2011 · 16 February 2011 at 4:52PM

Wrong placeWrong placeWrong placeWrong placeWrong placeWrong place

B_Blank · 16 February 2011 at 5:06PM

j2011 wrote: »

A few years ago I had some RBS shares which I sold at the beginning of 2007 as I needed the money.

I did actually make a small profit. 4 months later they were worth less than I had paid for them.

Now, given that they are about 46/47p per share I could afford to buy 1000 shares, more than I held before.

Should I, or wait until they escape from government control?

You have to be pretty confident that you can "outplay" the market if you are going to buy shares in an individual company. Espicially when you are only spending £500 on these shares and the commision and stamp duty will drive up your price that you paid for each share by a decent amount.

All in all it is probably a negative investment to make. But it could work, so its simply a gamble that is probably skewed towards a return which isnt as good as you could get by saving that £500 into a regular savings account £50 a month and getting 2.5%.

Obviously I am no expert though! But lets say you spent £500 at a share price of 47p. Usually £15 of this will go to commision and tax, meaning you only spend £485 at 47p. Then when you sell them you lose another £15-20 on tax and commision and you are basically down to buying £465 worth of shares for £500.

Thus, you can only make a profit on these shares if they rise 7% or more when you hold them. In fact you need them to rise alot more than that because you could be getting some interest on your £500 and there is always the chance the share price will decline.

In short, I dont think it is worth investing such a small amount in an established company (with no real growth prospects) because commision and other charges will destory any profit youu make