15 Year Old Looking To Start Trading

Flobberchops

Just out of interest, could a 15 year old even sign up for a trading account?

To echo others in this thread, fantastic you're taking an interest so young, and with time on your hands you'd be in a great position to think about investing - for now, maybe stick to cash or Junior S&S ISAs though? Also, do plenty of reading on the subject. Investopedia is great but in my opinion is very American-centric. In a few years when you're 17, 18, 19, probably still living with parents and making decent money working part-time or seasonal, that's when you can start having a proper gamble with meaningful sums of money.

richy999

Hi Tom,

Good on you for wanting to do something with your £500 other than blow it on a new iphone ;-)

There is some great advice and sage wisdom in the previous posts.

You could do a lot worse than read up about about Warren Buffett... reported to be the most successful investor in the world.

Would recommend you read 'The millionaire next door'. It's a little dry but may give you a new perspective on what wealth is.

While you are on your quest for knowledge, you might want to look into what it means and takes to achieve financial independence and early retirement. Even if you decide not to pursue either, you may learn skills to make your money go further.

Last but not least... compound interest is your friend.

Good luck and happy 2016!

Richard.

bowlhead99

Flobberchops wrote: »

Just out of interest, could a 15 year old even sign up for a trading account?

Nope. Under the age of 18 they are unable to sign a legally binding contract to buy shares, funds or derivatives etc. So they can't get a trading account. Someone else could get an account and operate it in trust for them.

It's true, a self-select junior ISA would be a sensible choice if they want individual shares (although it's very expensive buying small parcels of individual shares) but they would need to have their parent/guardian to open it for them and be the one controlling the account.

In practice, if the parent then shared the login details and account operating instructions with the OP, he could in practice run it himself, albeit in breach of terms and conditions.

TJux

Do any of you guys have any experience in investing in Exchange Traded Funds and would you recommend them?

bowlhead99

I invest in them, among other types of investment. The mechanics of buying or selling an exchange traded fund (ETF) on a stock exchange are exactly the same as buying individual shares in companies. They can be very cheap to hold, but buying or selling them always costs a fee. If you want to invest via funds, there are other types of funds which can be bought on some platforms for lowish ongoing costs and no specific buy/sell fees which would probably be better for your small pot.

ETFs are specialist funds, generally set up to track specific indexes. You asked earlier if there are any particular industries to stay away from for a small trade. But basically if you want the best chance of making money over the long term you should spread your investments about across industries and countries because you don't know which will go up and which will go down. That means using multiple ETFs within a portfolio. Unfortunately that means if you only have £500 total to play with, you will be spreading your money pretty thin.

So, I wouldn't recommend them to you because you need several for a proper portfolio which only gives you enough to put £100-200 into each ETF. For example if you wanted all your money to be invested in equities you could put £200 into a UK tracker ETF and £200 into a 'rest of developed world excluding UK' tracker and £100 into an emerging markets tracker ETF.

But the problem is as others mentioned above, by the time you have paid a £10 trading fee to buy some shares in a company or an ETF, your £100 of cash only gets you £90 of fund. The fund would have to increase in value with the market by 22% until that £90 of fund is worth £110, and then you would be able to sell it for £110, pay the £10 trading fee and get back your net £100. So for a 20%+ market return, you make 0% return.

Therefore, other than as a theoretical 'learning exercise' there is no real point putting small amounts of money into real ETF investments where you have to be fortunate enough to make massive profits, just to make zero profits as above. So you might as well just do it as a paper exercise playing with fun money.

Of course, it's not like you have to buy and sell every week. The average developed equity market index might deliver a total return of around 7% a year in the long term. So you can just buy an ETF now with your £500 and then after it goes up by 7% and then that increased value goes up by another 7% in the second year and then that increased value goes up by another 7% in the third year and so on... after 10 years you will have got a compound return of maybe 97% and pretty much doubled your money. Paying a £10 fee to sell is not too bad when you just made £500 profit.

But the problem is, you probably don't want to wait around 10 years for £500 profit because 10 years seems like a very long time to a 15-year-old.

Instead of a 10-year hold, I expect if you are talking about 'trading' you want to be actively doing something with your holdings ever few months or so. If you invest in small companies with volatile prices you will soon get a feel for the fun of buying and selling.

Unfortunately it is a pretty quick way to lose your cash. If you are buying small parcels of shares where:

- making a 20% profit on a trade is only a 'break-even', nil profit after fees, and
- breaking even on a trade is making you a 20% loss after fees, and
- losing 20% on a trade is losing 40% after fees

then there is no way to stay afloat other than by pure luck.

Malthusian

You said that you have had a "fantasy" of trading stocks. I have a feeling this is the fantasy of being the guy that buys a stock like Apple that turns out to be the next big thing and goes up by x000%. (Because investing in a diverse portfolio of shares or a FTSE ETF and doing better than cash over 5 years isn't really a fantasy, just boring reality.) This isn't really any different to the fantasy of being the guy that backed Mon Mome to win the Grand National at 100-1 or Wigan to win the FA Cup. In other words, it can happen, but it won't.

If your aim is to gamble, then I would suggest poker or the dogs, they're much more interesting than jagged lines on a stockmarket graph.

If your aim is to make money over the long term, then others in this thread have already given you some very good pointers. Personally if I was 15 and had £500 I would not be investing with a 5 year time horizon. Too many of those "best years of your life" in front of you.

unitedwestand

Hi Tom,

Honestly I think its amazing your showing an interest in investing at such a young age, I wish I had invested £500 into the stock market when I was 15.

The things that I've learned/ found really useful is:

Actually investing is the best way to learn.

Time spent in the market, is better than trying to time the market (i.e. dont worry about best time to invest, take a long time view and just do it)

Use ISA's

Initially diversify and spread risk by buying fund of funds etc

Used passive/ tracker funds and etf's to reduce running charges.

Be very skeptical of commercial media outlets tipping/ touting funds or fund managers.

Only buy stocks and shares that you are happy with, not that someone recommends. There's only one thing worse than losing money and thats losing money on someone else's recommendation in a forum post etc.

Choose your (FSA registered) broker carefully and check if there is any exit fees, penalties or restrictions for transferring shares to another broker in the future.

Educate yourself by watching lots of reputable Youtube channels
https://www.youtube.com/user/FinancialTimesVideos
https://www.youtube.com/user/BoomBustRT
https://www.youtube.com/user/Morningstar3TopTips
https://www.youtube.com/user/IGIndexSpreadBetting
https://www.youtube.com/user/Bloomberg
https://www.youtube.com/user/investopediacom
https://www.youtube.com/user/wallstsurvivor

TheTracker

The best way for a 15yo to trade is much closer to home with physical goods and services. Not the stock market. Think Sir Alan and his beetroots. Buy something that you can add value to and then sell it. Or find markets where you can buy goods cheaper then on-sell them (eg schoolmates then eBay, or buying in bulk, or importing). You'll learn an enormous amount and make more money (or lose less money) than you would with stoxx. Get some traction and then maybe wheel your mates in and make a profit off the work they do. Before long you have a business.

richy999

If you can get over the hurdle of not being old enough to open/operate this account yourself, you may look into the Halifax Share Builder account. It's not a real time trading account but the dealing commission is £2 per trade. There is (currently) no inactivity or annual administration fee with this account.

But as mentioned by other posters, frequent trading with your £500 stake will quickly eat into any profits you might make. Would advise that you find the cheapest eft/tracker with the widest diversification and let it do it's thing... not at all exciting but as hinted at by ChesterDog, said good investing isn't exciting.