Best execution only share dealing service, no inactivity/quarterly fees? (iweb / XO?)

bowlhead99

Onedrew wrote: »

If I start with £1,000 and buy-sell-buy-sell and end up with £850 and three shares, have those shares not cost me an average £50 each?

If you start with £150 cash and end up with three shares and no cash, yes it's probably reasonably fair to say that they cost £50 each, on average.

However, if you start with £1000 cash which is all invested into shares, and then you do a lot of trading, and at some point quite a long way down the line, you happen to have 3 shares plus £850...

It's not immediately clear whether you had a very profitable decade leading to you having 0 shares and £3850 yesterday (in which case these shares cost you £1000 each); or you lost some money over the years in your endeavours and yesterday had 0 shares and £853, in which case these shares cost £1 each.

It strikes me as extremely useful, from a taxation planning perspective as well as a performance evaluation perspective, to know whether the shares you are holding were bought for £1000 each yesterday or £1 each yesterday.

To claim that you can't see this, or that it is unimportant, is naive.

Onedrew

Hi Sandspider200
iWeb charges no platform fee, but you do have a £200 joining fee. Trades are £5 a throw.
Clubfinance charge £2.50 a throw but there is a .25% platform fee.
Charles Stanley have a similar platform fee but funds eg Fundsmith or Vanguard LifeStrategy trade free

TCA

I think your terms are muddled up. £7.50 is the profit made based on average cost prices. You're talking about the "cost to you" but that is in fact the profit or loss to you.

In your example, the 1 share you have left still has the same average cost as it had before you sold the other share. i.e. £12.50

If you sell that last share for £2.50 you lose £10 on that deal, which means in total you paid out £25 but receive back £22.50. So you lose £2.50 overall

If you sell that last share for £12.50 you break even on that deal, which means in total you paid out £25 but receive back £32.50. So you gain £7.50

If you sell that last share for £20 you gain £7.50 on that deal, which means in total you paid out £25 but receive back £40. So you gain £15

Onedrew

Thanks Bowlhead99. I have only been trading since November, so I am very green. I do compartmentalise each share, with a fixed sum available to trade in fractions of the highest price achieved, ranging from 97.5% to 60%. I learned quickly that indexes via ETFs were quite a useful route, having discovered to my cost that many of the companies that most pension funds invest in - like Shell - were not necessarily the best bet.
I have sometimes sold some shares to raise cash for what I thought might be a better bet, hence my interest in the overall cost of purchase per share against the selling price I might set.
Range trading with Shell, has to my mind been invaluable in bringing down my average cost per share, but I am of course concerned that my strange maths may be giving me an incorrect insight as to my true position.

Onedrew

TCA: No. In my example I have defrayed £7.50 and own one share. Cost per share £7.50. No? If not, how much has that share cost me in the real world?

TCA

Onedrew wrote: »

TCA: No. In my example I have defrayed £7.50 and own one share. Cost per share £7.50. No? If not, how much has that share cost me in the real world?

Forget averages for a moment.

You bought 1 share for £15, then another share for £10. If you sell 1 share for £20, then you've made either a profit of £5 or a profit of £10, depending on which share you sold. The remaining share still costs either £15 or £10, regardless of what you sold the other share for.

You keep saying "cost to me", which is really profit or loss. The cost is still the cost, whether you use averages or individual prices.

Going back to averages, the average cost price is £12.50. If you sell 1 share for £20, that's a £7.50 profit on that share you sold. The remaining share still has an average cost of £12.50 and you won't know the profit or loss on that until you sell it.

Onedrew

Hi TCA
I do see what you are driving at. But if I am down £7.50 and own one share, then the cost to me of that share is £7.50. If I get the opportunity to sell it for £7.51, I am up. if I sell for £7.49 then, overall, I am down. True or false?

Onedrew

Hi Thrugelmir
I am not an accountant, but I don't understand your jibe. I spend, in the end, £7.50 and own one share. But you find my contention that one share has cost me £7.50 risible. Yet it has. I really want to understand how it's an unreasonable position for me to adopt.
Best

TCA

Onedrew wrote: »

Hi TCA
I do see what you are driving at. But if I am down £7.50 and own one share, then the cost to me of that share is £7.50. If I get the opportunity to sell it for £7.51, I am up. if I sell for £7.49 then, overall, I am down. True or false?

False, you are up in either case because your shares costs you £25 in total and you're selling for £20 plus either £7.49 or £7.51

If using averages, after selling 1 share you are not £7.50 down, you are £7.50 up. Sales price of £20 minus average cost of £12.50 = £7.50 profit

If you sell the last share for £7.49 you lose £5.01 versus average cost of £12.50, so total gain is £7.50 (1st share) -£5.01 loss (2nd share) =£2.49 profit

All money out £25 (£15+£10)
All money in £27.49 (£20+£7.49)
Overall profit £2.49

If you sell the last share for £7.51 you lose £4.99 versus average cost of £12.50, so total gain is £7.50 (1st share) -£4.99 loss (2nd share) =£2.51 profit

All money out £25 (£15+£10)
All money in £27.51 (£20+£7.51)
Overall profit £2.51

If you don't get it now, I give in gracefully.

Onedrew

Sorry, I bolloxed the original sums:
1 share bought at £15 av cost £15
1 share bought at £10, av cost £12.50
1 share sold at £20, av cost £5 (not £7.50)
Mea culpa