Help with trying to be clever!!!

james316

Hello people, I'm after a little help or pointing in the right direction. My friend and I have been talking recently about investing in shares. Basically, we aren't after the 'Wolf of Wall street' scenario, more just to play a bit, investing a little at a time and seeing a bit of a return somewhere within a month.
I am sure that we are not the only ones to ever come up with the idea and also that there are people out there who have already done this.
As I said, not after millions and millions but enough to just keep us interested and making enough to keep putting it back in.
I know about researching companies and watching past history of stocks, but what I would like, is someone to either give it to me in layman terms instead of 'Dividend percentages' and 'long term investment'.
What do I need to do, where do I start and how do I spot stock/shares that could be on a potential rise?


Any help, including whether I am in way over my head before I start, advise would be appreciated!!

jimjames

If you have no other investment and are looking to make money long term then I'd give investing in individual shares that you select a complete miss. Far more likely to lose money either through wrong shares or trading costs eating profits or selling at wrong time.

In my view far more likely to make money using funds like trackers. Boring but long term far more likely to be lucrative.

Obviously if you have £50,000 in cash ready to start then this might not be correct but I've assumed that isn't the case.

james316

You are correct sir - £50,000 still eludes me after all these years!!!!

Do you mean Index Trackers?? How do they work and how do I get into them?

masonic

There's lots of information about trackers over at Monevator that's presented in a straightforward manner and covering pretty much anything you'd want to know. In terms of how to start investing, you'll need to decide on a platform/broker. If you are starting out with a small pot, then one that charges percentage fees will be cheapest - so it's worth taking a look at Hargreaves Lansdown, Fidelity and Charles Stanley Direct. Once you've made a choice, setting up and running an account is quite straightforward.

Thrugelmir

james316 wrote: »

What do I need to do, where do I start and how do I spot stock/shares that could be on a potential rise?

Research, research, research. Perhaps focus on an area where you have particular expertise and an understanding of the industry sector etc. Then track the shares wait for a weakness before buying. Such as a major disposal of shares which temporarily pushes down the market price. No guarantee of an immediate profit. However a solid company will bounce back in time.

Reinvest the income is key strategy as well.

Reactor_2

Invest a set amount of money each month into an index tracker for 10+ years. Forget researching, as even the smartest minds in the business fail to beat the index constantly. Institutions only have research departments to legitimise their business and to make a good impression and maybe drum-up some business.

Glen_Clark

james316 wrote: »

how do I spot stock/shares that could be on a potential rise?

If you ever find out could you let us know please?
Research is all very well if you are Warren Buffet employing thousands of analysts, who have enough shares to be able to ring up the man in charge and visit the company to maybe find out first hand what the prospects are. Its a different matter if you are relying on what has got into the newspapers and tip sheets...

lozzy1965

Do you want to invest in individual shares for the 'fun' aspect or are you looking for long term returns? Trackers may, or may not, give you a better return, they will certainly even out your returns, but you can pick the wrong or right fund or tracker just the same way you can pick the wrong or right share(s) with regard to beating 'average market performance' over a given time.
I agree with comments on here regarding research. Especially the Warren Buffett comment

SilveradoJosh

Hi James316, you're not the first person to ask this sort of question and you certainly won't be the last. All other posters on this subject were made aware of the riskiness of what they were proposing, and how niave they were etc, etc. I am assuming that you want to engage in DIY share trading rather than putting your money into funds, of whatever ilk. Well, I have been doing DIY share trading since 2007 and have found it to be very enjoyable and lucrative. I have improved my original investment every year. For you to engage in what I do there are many things you need to understand and embrace. Firstly,
spending small quantities of money ( less than £1000 ) you would be making it difficult for yourself because of the effect of the transaction costs and stamp duty on your investment. Secondly, you need a good understanding and knowledge of the workings of the stock market which you can get by reading and more reading as well as practicing share trading on one of the many available on many platforms. Thirdly, you need ro formulate a strategy for buying and selling and sticking to it, or if you need to, tweaking wherever necessary. Fourthly, you need to have lots of patience. Fifthly, you need to register with a company that provides the facility to buy and sell shares online. There are plenty to choose from with dealing costs ranging from £5.00 to £25.00 per trade. The cheapest is Iweb, an offshoot of Halifax. To give you an idea of the effect of transaction costs I'll do a calculation. Let's assume you have £1000 to purchase shares in company X and the price to buy those shares is 240.00p. The number of shares you will receive is as follows: ((1000.00-5.00) x 0.995)\(240.00\100.00)=412
So, your total cost of buying those shares is (412 x2.400) +9.975 =£998.775 with a surplus of £1.225. You now need to work out the minimum price the shares must reach without you incurring a loss, which is (998.775 +5.00)\412 = 243.6p or an
increase of 1.5% which is no problem. Obviously, the greater the money you have the effect of transaction costs become less and vice versa if youn have less.

mike88

Either set up or join an Investment Club. Read here:


http://en.wikipedia.org/wiki/Investment_club

http://www.proshareclubs.co.uk/

lozzy1965

SilveradoJosh wrote: »

Obviously, the greater the money you have the effect of transaction costs become less and vice versa if youn have less.

Bear in mind that you should be aiming to diversify in different companies and different market sectors to minimise the risk of dealing directly in shares. In my opinion, you should be looking at a minimum of 6 companies and ideally working toward 20 companies before you start to increase your stake in each individual company.