Buying shares advice

rickypatel89

Hi,

I currently have £1000 in Aviva, BHP, HSBC, National Grid & Rolls Royce & ARM. I also have £500 in BSkyB, Diageo & Tesco.

I've got £5000 to buy some shares, I'm looking to put in £1000 in the following BP, Vodafone, Unilever, Imperial Tobacco, GSK.

I was wondering do my prospective purchases look alright. I had a look at Royal - Dutch Shell, it's down about 46p today, but I'm very much attracted to BP, I think there's good value there and I can see the company growing over the long term.

Any advice?

Thanks

qpop

It's probably best to head to some more specialist investment communities.

https://www.fool.co.uk regularly discusses the pros and cons of blue chips, and the forums are quite good.
https://www.stockopedia.co.uk is good too (but small-cap biased)

Ifts

rickypatel89 - What are your dealing costs each time you buy?

rickypatel89

£10 using Interactive Investors

Voyager2002

Personally, I think that anyone (like me) who has less than a six-figure sum to invest should diversify by buying funds, investment trusts or ETFs. It is really not sensible to spread your pot in less than ten companies.

Again it is a personal thing, but I would not invest in a tobacco company: I may be poor, but I don't want any dividends made by pushing dangerous drugs on others. GSK and Vodaphone are good defensive plays for current market conditions (but of course other investors will have realised this and got in first), and while Unilever is not going anywhere there is no reason to expect any falls. If you want to be exposed to a bank, HSBC is probably the best choice.

Ifts

The reason I was asking was because dealing cost can have a big impact on any profits on small share purchases. By the time you factor in your dealing costs £10 + SD per stock, the stock will have to rise ~1.5% just for you to break even.

Of course you could argue spreading your money between different stocks can be a good way of diversification but with small value trades you should weigh up if its worth investing more into fewer stocks, also it takes less time to research fewer stocks.

I also hold BP, VOD, NG, TSCO, and back in August's fire sale I managed to top up some more of TSCO with money I had been waiting to put into shares. Unless there is something that really takes my fancy I like to wait on the sidelines for a better buying opportunity as most of my shares I buy to hold for the long term.
For example yesterday was a good day to dip into the markets (Greece bailout) and close your trades before the day ended to make a quick buck, HSBC and BARC done well for me yesterday (although they both done well in early trading today too but I didn't want to hold overnight, if I had done no doubt they would have tanked today, in which case they would have become my long term strategy!).

I cant advise you to buy any particular stock, but will say always do your own research before parting with any money.

I agree with qpop, there are often very good discussion on the pros and cons of individual shares over on the Motley Fool boards, if you have not already done so you should take a look there.

rickypatel89

My strategy for my investments is, I buys shares of FTSE 100 & 250 Companies only, if I want exposure to any other sectors or regions I go for funds, for example I have the Aberdeen Emerging Markets Fund, Blackrock Gold & General, M&G American Class X & Hendersons Global Technology.

I've just spent a thousand on the Blackrock Fund and another £1000 on VOD, so I've basically got just over £3000 to to purchase three of BP, GSK, IPT and ULVR. I'm looking to put a £1000 into each so now I have to decide which one I need to get rid of.

Any opinions of advice?

BLB53

Personally, I think you are on the right lines buying individual shares, assuming these are long term buy and hold. OK the purchase cost is 1% for each purchase but thats it - unlike the annual 1.5% charges on OEICs etc.
I also hold Aviva, Billiton, Sky and Vodafone. I prefer Shell to BP. NG, RR and Arm are very solid as are Imperial, Unilever and GSK (I have AZN).
What strategy or criteria do you use to buy shares? You may want to explore the HYP approach on the Fool boards.
From the four on your shortlist, I would leave BP for now - too many uncertainties over pending litigation in US over Deepwater Horizon and dividend not yet fully restored.

qpop

If you're just doing simple share purchases you could always your dealing costs by going with X-O brokers or SVS Securities - both charge around £6 commission per trade. It all adds up!

I think it wouldn't hurt to further diversify.

20 shares is apparently the optimum in any market, to iron out non-systematic risk.



Company Share price return Total return
BP -2% 9%
Vodafone 52% 81%
BHP Billiton 43% 55%
Diageo 72% 90%
Tesco 28% 44%
Rolls-Royce 147% 167%
Royal Dutch Shell 50% 74%
Smiths Industries 20% 30%
British American Tobacco 69% 90%
Reckitt Benckiser 35% 48%
Unilever 62% 83%
WPP 54% 68%
National Grid 26% 52%
FTSE 100 49% 65%

http://www.fool.co.uk/news/investing/2011/10/26/20-shares-set-to-soar.aspx?source=uhpsithla0000002

They're all pretty good tips for sensible, long-term investments.

The tipsters, on the other hand, if you fancied something a bit racier, are currently making noise about a few smaller caps. Of note, Eros International is worth investigating, off the top of my head.

rickypatel89

BLB53 wrote: »

I would leave BP for now - too many uncertainties over pending litigation in US over Deepwater Horizon and dividend not yet fully restored.

I think I may agree with you now, I think I'll go with a £1000 in Royal Dutch Shell. I'm now left with £2000, I was considering adding £500 each to my investments in Tesco & Diageo which is currently stands at £500 each to bring them unto £1000. And then put the remaining £1000 in Unilever.

Ark_Welder

If you are buying into Shell then make sure that you get the 'B' shares: ticker RDSB

http://www.shell.com/home/content/investor/share_price_information/difference_a_b/