Sharedealing where to begin with little amounts of money?

grandplonker

Hi,

Is there a sharedealing equivalent of Skype, Ebay, Paypal and Facebook that works by an Android app?

What I want is something straightforward, simple, and easy to access. Preferably with an Android app (if not mobile compatible site), which lets me invest little amounts of cash here and there. £100 to start with, £20 in a few weeks' time and so on.

I want to build up a portfolio over years. At the budget end it's best if fees are commission only per transaction - no silly £40 a year management fees or anything which would wipeout the little profits made. I've had a look, but a lot have high minimum investments, are only available during trading hours and so on.

On the other hand the opening paragraph is how us young folk often do things anyway.

Thanks in advance.

bowlhead99

grandplonker wrote: »

Is there a sharedealing equivalent of Skype, Ebay, Paypal and Facebook that works by an Android app?

You just mean "is there an investment account I can access through an app", right?

Skype is a method of communication using video or audio calling. Paypal is a virtual wallet which allows you to send and receive funds without a credit card and without sharing your personal bank account details. Facebook allows you to use your social network to give your friends updates on what you are doing, have some real-time chat, share photos and links you found on the internet. I'm not sure what the "sharedealing equivalent" of these are, unless you just mean you want to access your online sharedealing account through a phone. You're not looking for your portfolio to be somehow integrated with facebook or discussed with your account manager over realtime video?

What I want is something straightforward, simple, and easy to access. Preferably with an Android app (if not mobile compatible site), which lets me invest little amounts of cash here and there. £100 to start with, £20 in a few weeks' time and so on.

I want to build up a portfolio over years. At the budget end it's best if fees are commission only per transaction - no silly £40 a year management fees or anything which would wipeout the little profits made. I've had a look, but a lot have high minimum investments, are only available during trading hours and so on.
.

I use the apps from both TD Direct Investing and SIPPdeal to manage/monitor portfolios. Both allow you to buy and sell from the comfort of your armchair with Android and you can place orders out of hours.

But taking a step back, you will have a problem with investing small amounts. There is a cost of them placing trades for you and reporting back to you. So even if you avoid an annual account maintenance fee, if you want to spend £20 on shares you will get hit with a £10 fee leaving you with £10 of shares. Then when you sell the £10 of shares you will pay £10 selling fees and have zero net proceeds. TD will let you have no annual management fee if you are placing at least one trade a quarter, but the commissions will burn through your cash just the same. You might find cheaper providers in terms of dealing costs but the logic is the same and the bargain basement providers don't have fancy apps and rich dealing features.

Now clearly you can put in 100 now and 20 later and 50 later and 30 later and only actually do a trade when you have a decent amount of money in there, but if you're buying individual shares a £10 fee is still an average year's growth on a £200 investment. If you're buying funds, you can do this without transaction fees but they have minimum sizes for one off deals so you couldn't just invest 100 or 200.

Both the providers I mentioned have special lower deal sizes and commissions if you commit to a regular investing plan of some minimum amount monthly. You can still put ad-hoc money in whenever you have a bit extra spare, and if you want to sell something you can do that whenever you like by paying the standard deal commission for that trade.

Hope this helps

adewalton

Hi
Take a look at Hargreaves and Lansdown.
They have an app, well I know they do for the iPhone as I use it.
You want to be looking at funds rather than shares in individual companies in my view.
Funds are a product that are cheaper to buy into if you have small amounts to start with.
If you bought say a UK equity fund then that fund invests in various companies within the FTSE 100 / 250 / all share index's for you.
You can start a monthly drip feed option, the lowest I have seen is £50 per month, you can start it and stop it when you want but I think you need access to a PC to do that.
You can add lump sums when the time is right for you!
The app for H & L is very good, the customer service is great and the charges are not over the top, I would not use them for single equity trades, google SVS Securities, the charge £1 per trade for the first 30 days then only £5.75p per trade thereafter!!!!!
If you need to know more just ask?

grandplonker

Skype, Facebook, Ebay and Paypal can all be used for one minute at a time on a smartphone. They are very easy ways of doing what would previously would have needed a trip to the bank/pub and they let you spend small money if you wish. That's my point.

As big money sharedealers might be charged 1% on a trade of £100,000 (a thousand pounds commission), the same applied to a beginner means £0.10 on a £10.00 trade. That would be economically feasible for a ten year old with pocket money.

To take the H&L example however, £5.75/trade means I need to spend £575 to be charged the same fee.

So yes, little profits can be easily wiped out by minimum fees.

However thanks to something called 'the internet' the overheads these days should be pretty small. Surely someone has the Skype concept to online share dealing, whre they can make £0.50 from a client buying £20 in funds?

However, if I put £50/m into H&L funds and trade online only. These fees should apply. I can't see how they are going to make their money from me...?

Lokolo

They get rebates from the funds.

So if a fund has an annual cost of 1.5%. HL may get 0.25% of that. From you, they won't really make any money at all. But there are many people who have hundres of thousands of £s in funds, and these add up.

grandplonker

Lokolo, I'll pose a practical example. I tell H&L to spend £20 of my money on the Fictional Fund.

What is the rebate? Is it a small profit I make, say £0.50 just for owning the fund, of which something like £0.15 goes to H&L?

Lokolo

The fund costs money to hold and run. This is taken from the fund value. Approximately 1.5% for managed funds. From this the fund manager will pay some of it to HL for selling the fund as a "Thanks".

This currently how HL operates. It will be different in the next year as rules are coming into place to stop it.

If the fund value is £1 per unit. Your £20 will buy 20 units worth £20. If the fund's investments do not change over 1 year at all, the fund will reduce by 1.5% (not all at once, over a daily period), £0.985, so your value will be £19.70. Some of this 30p thats been taken in costs will have gone to HL and the rest will be kept by the fund manager as running costs.

grandplonker

OK. HL funds is starting to look a little bit silly, because £20 funds is £19.70 a year later. It's gone down, but had I put it into an ISA instead it would have went up.

However, funds (like currency and my commitment to the gym) can go up and down, so people still buy funds. That is my theory. Correct?

brasso

You want something like the Halifax Sharebuilder product which will cost you about 2 or 3 quid per trade. You pay in whatever you want, leave instructions about what to buy/sell. They consolidate all orders and buy/sell on set days. So it's less responsive to sudden urges to buy and sell, but you pay less in fees and commission. I don't think you'll get cheaper than that.

As for wanting an app, do you not have access to a conventional computer? Much better to use for this than a phone as you can research better and have more functionality than a mobile app.

Good luck!

Derivative

This all seems very odd.

Firstly, 20 quid 'every few weeks' is nowhere near enough to beat dealing charges on any platform that I know of.

It's also not enough to provide you with any material sum of money.
If you invested 20 quid a month or 240 a year, after 40 years if you earned 3% above inflation (not that easy) you'd have 25 grand assuming zero dealing charges or fees. Your lifetime savings would buy you a family car.

Why the fascination with Android? Most providers have web sites - you can use your browser. No need for a platform-specific app.

Money-Saving-King

grandplonker wrote: »

OK. HL funds is starting to look a little bit silly, because £20 funds is £19.70 a year later. It's gone down, but had I put it into an ISA instead it would have went up.

However, funds (like currency and my commitment to the gym) can go up and down, so people still buy funds. That is my theory. Correct?

It would only be £19.70 a year later if it didn't make anything, my funds in the last 12 months have averaged a 12% return.

The problem is for you to make any money you'd probably best choose 1 fund and leave it or the costs of moving things would wipe out anything you make with such a little starting amount.

With shares it will be even worse if you move anything after the initial investment. Someone posted it's £5.95 a trade, I think with HL this is only if you make 20 trades a month otherwise it's nearer £11.

Someone above said with HL the first trade is very cheap, might be best you choose 1 company keep you fingers crossed and leave it for a year. The same with funds, don't keep moving things around. I try to review my funds once a year only and then that's only if I think something needs to be moved. It's a concept from Tim Hales book smarter investing that suggests only look at your portfolio once a year. No one will probably ever do that but at least try not to move anything once a year.

Tim Hale also recommends index trackers if you just want to leave money for the long term. I myself use active funds. I think these can do well but if you use active funds then you need to actively manage your portfolio (but not too much as I said).

With your little starting amount you'd probably be best just using a 1 year fixed cash ISA until you have more money to invest, basically at least a 4 figure sum. Just my personal opinion.