Shares

jamiebarrington

Hi sorry for noob question but iv absolutely no knowledge on this at all, at the moment i have around £3000 spare cash (willing to save more if needed) and already have some money in premium bonds but i have always wanted to buy shares in something not sure what but just something, is this possible online? and does anyone have any tips at all as i know nothing about this


thanks in advance, Jamie.

sabretoothtigger

Unit trusts are best and cheapest way to buy shares I think.
That is an order to buy a range of shares across a broad spectrum. Buying one company can end badly like Thomas Cook fell 30% yesterday but they are still making a profit?

If you buy a fund in share form it would usually be called an etf. I think going with unit trusts is simplier, I used L&G lots of times. Even after Lehmans went broke and all the others, I still did very well on an asia pacific fund

Ark_Welder

jamiebarrington wrote: »

Hi sorry for noob question but iv absolutely no knowledge on this at all, at the moment i have around £3000 spare cash (willing to save more if needed) and already have some money in premium bonds but i have always wanted to buy shares in something not sure what but just something, is this possible online? and does anyone have any tips at all as i know nothing about this


thanks in advance, Jamie.

Best keep the cash as it is for now. Spend the time learning more about shares and funds, especially what can make them fall in price as well as rise. Once you have some understanding then perhaps look at investing in collective funds rather than individual shares because this will help to diversify your investment, i.e. if your one share goes down in price then that is fully reflected in the value of your holding, but if that one share is just an element of a fund then it will have less of an impact on your holding. Yes, the opposite is true too, but that would just be down to a matter of good luck.

blinko

sabretoothtigger wrote: »

Unit trusts are best and cheapest way to buy shares I think.
That is an order to buy a range of shares across a broad spectrum. Buying one company can end badly like Thomas Cook fell 30% yesterday but they are still making a profit?

If you buy a fund in share form it would usually be called an etf. I think going with unit trusts is simplier, I used L&G lots of times. Even after Lehmans went broke and all the others, I still did very well on an asia pacific fund

Shares rise and fall on a whim, eg today supergroup +20% but I have seen them -20% on a good interim. bit of a mystery how shares work.

If you are new I recommend unit trusts, leave teh managing of the shares to someone else

Loughton_Monkey

There are plenty of on-line resources you can use to set up a share trading account and buy some shares. But you must understand that share trading is a huge subject, and something that is full of risks and dangers - especially if you don't fully understand what you are doing.

I sense that you are not thinking of 'trading', but more thinking about longer term investment in shares [equities]? Trading is a whole different ballgame and (don't take this the wrong way) absolutely not appropriate for anyone who doesn't yet know how to buy shares, and has money in Premium Bonds.

So if you are thinking of longer term investing in shares, then you possibly have a dilemma. £3K is a respectable amount, but not a 'fortune'. Put it into a single share, and you have an "eggs in one basket" problem. This is not to be recommended unless you have a very specific knowledge/reason to invest in that company.

So then think of diversifying into, say, 5 or 6 shares, then your dilemma is doing enough 'fundamental research' as is usually required to select which 6 companies look 'good', and then your costs go up because charges tend to be based partly on 'per trade' so dealing costs have sextupled!

Hence, this is why a good place to start is to consider either a Unit Trust or Investment Trust [they are a bit different - but have similarities]. These automatically allow you to be exposed to equities, but at a reasonable cost and - importantly - a reasonable 'spread' of risk.

I would recommend, though, that you validate in your own mind what you are trying to achieve. If it is simply trying to 'optimise' your savings/investment strategy for your longer term retirement or building up cash in the medium term, then I think you should think in terms of using various tax wrappers (ISA and Pension).

It could be, though, that you are looking on this as more of a 'hobby' or 'interest'. Nothing wrong with that, but you should understand that it will require an exceptional amount of work, dedication, research etc. if you are to 'outperform' in the longer term what you will get simply by buying a good Stocks & Shares ISA facility. I think it would be true to say that the vast majority of 'fledgling share traders' will lose money - so don't risk more than you can afford to lose.

atush

I agree that you should put the mloney into a good cash isa. Then maybe drip feed new savings into a colloctive fund of shares be it Unit trusts/OEICs in a S&S isa or investment trust savings plans (there are large general ones that invest in shares all over the workd not just the UK).

But you must do some swatting up too, either online or in a book on basics.

dtsazza

jamiebarrington wrote: »

i have always wanted to buy shares in something not sure what but just something

Is this for the "fun" aspect (of getting involved in the stock market), for the returns that you think are(/might be) possible, or for some other reason?

Depending on your motivations, and especially given your self-confessed inexperience, it's possible that other financial instruments (such as funds or ETFs) might suit you better than simple equities. Additionally, what you want to do will inform where you should first look to get a tutorial of sorts.

One thing I can say for sure, is that you've done the right thing to ask about it first before investing. Shares aren't really all that complicated, but they can seem so at first, and getting your head around the basics helps immensely in understanding just what it is you're doing.