Newbie share questions

littly_kitty

I am new to investing in shares. I've read around quite a bit, including the MSE guide, but I still have some questions.



1) How do you prove you own the shares?
In the MSE guide, it says:

A platform will set up the nominee account and hold the shares on your behalf. You are still the legal owner of the shares, but your name will not appear on the company’s share register.

So what happens if the platform goes bust, or they make an error? How do you prove you purchased the share?

2) What's a "holding?"
For the best buys on MSE, it lists the cost per a deal. But then it lists (example) "Transfer out fee: £25 per holding". Does this mean that you will pay £25 to transfer out each share. Is it £25 for all your shares.

3) If a share issues a dividend, where does it go?
Does it go to the platform, or do they pay it directly to me?

4) If a platform does something is their any protection (similar to how banks have FSC)?


I am primarily interested in buying US & UK shares. Does anyone have any platform recommendations?

So far my research shows that AJBell is the best

Pros: No admin or inactivity charges.
Low cost - £9.95 a UK share/£10.05 US share
Good reviews on Feefo and Money.co.uk

All the other companies have either platform fees or inactivity fees.

Thanks!

bigadaj

If you're new to investing then best to start with funds, individual shares are quite risky.

littly_kitty

bigadaj wrote: »

If you're new to investing then best to start with funds, individual shares are quite risky.

I am only starting with a low budget of £200.

I am also investing in shares that have increased their dividend every year for the last 10 years and have a yield of 4% or more. I am also investing for the dividend over a long term play of 30 years (so I shouldn't be stung by rising/falling share values, because the dividend is my main focus).

Once I've got to grips with my budget of £200, I can increase.

SAHD_Jim

This is a useful guide for ownership, protection etc. Obviously platforms will vary, but the thrust will remain the same. Whoever you decide to go with you need to know all of this specifically about their service:

http://www.hl.co.uk/investment-services/vantage-service/how-safe-is-your-investment

In terms of what is a holding, that is basically how many of one particular share you own. You might build up a holding by placing one or many deals.

Eg, you place 3 deals over a few months. Each time you buy 1000 BP shares. So you now have a holding of 3000 BP shares. £25 transfer out fee per holding would be £25 for all 3000 shares. If you own, say, 1000 Unilever shares as well then that's another £25 - etc. Basically the £25 is the transaction cost of transferring ownership of your shares to the new platform.

You can avoid transfer out fees by cashing up and transferring the cash, but then you are incurring selling costs and are "out of the market" which is bad if the shares subsequently go up whle you are in cash (or good in reverse!).

Dividends will be paid to the platform which then distributes to you either into your "cash account" or with some you can reinvest dividends meaning they'll buy as many new shares with the divi as possible. Some people choose to withdraw their dividends as income. If you have an ISA wrapper, then the dividends will be included within the ISA until withdrawn.

HTH

bigfreddiel

littly_kitty wrote: »

I am only starting with a low budget of £200.

I am also investing in shares that have increased their dividend every year for the last 10 years and have a yield of 4% or more. I am also investing for the dividend over a long term play of 30 years (so I shouldn't be stung by rising/falling share values, because the dividend is my main focus).

Once I've got to grips with my budget of £200, I can increase.

Well, on the cheapest platform, each trade will cost you a min of £5 plus stamp duty, so with £200 your costs will be relatively high.

You could buy an ETF that reflects your strategy, IUKD is the one to look at, and no stamp duty.

Now I know you're a beginner, but just google the above and begin to do a bit of research. Get yourself a subscription to Investors Chronicle as well.

Cheers fj

colsten

bigadaj wrote: »

If you're new to investing then best to start with funds, individual shares are quite risky.

littly_kitty wrote: »

I am only starting with a low budget of £200.

If you are starting with just £200, that's even more reason to start with funds.

Individual shares is something people should consider when they have around £5K to £10K each for 10-15 shares.

The costs of buying shares with just £200 will be prohibitive, and your portfolio would probably be way above your real risk level.

Whether you choose to accept the recommendations people gave you in this thread or not, make your investment in an S&S ISA so your investment is protected from the taxman.

BLB53

I am only starting with a low budget of £200.

It will not make any sense to invest in shares with this amount - the costs will be prohibitive and you will not be able to hold a diverse portfolio.

So, start off with a low cost index fund like Vanguard Lifestrategy which you can purchase for free on a platform like Charles Stanley Direct.

If you want to do a bit more research, have a look at some of the sites like https://www.monevator.com and https://www.diyinvestoruk.blogspot.co.uk and also maybe get hold of a good book like 'Smarter Investing' which covers all the basics.

Good luck!

Thrugelmir

littly_kitty wrote: »

I am also investing in shares that have increased their dividend every year for the last 10 years and have a yield of 4% or more.

How many shares have you identified that meet this criteria?

bigfreddiel

Thrugelmir wrote: »

How many shares have you identified that meet this criteria?

Look at IUKD and ukdv

fj

Thrugelmir

bigfreddiel wrote: »

Look at IUKD and ukdv

fj

I'd be making a capital loss on shares bought 10 years ago (IUKD) and the other doesn't have a 10 year history.

Doesn't seem a particularly good approach to screening.

frenchplonka

Ill give you my advise but im as new as you are but I was given some great advice in a thread I started a week or so but what you really wanna do is get you £200 find a broker like Charles Stanley Direct, put the £200 into the Vangaurd Lifestyle fund 60 or 80 and then continue to do the same every month in around 10 years you will have built up a decent fund it will be a diverse portfolio and then you can worry about individual shares.

P.S the 60-80 means how much a % your portfolio is in shares and how much in bonds so the VLS60 would be 60% shares and 40% Bonds which helps keep the huge losses and swings down ( But trust me they will happen you just have to look at the big picture )