Beginner share investor

thin_king

Morning all,

The new year is here and I'm wanting some advice on investments. I'm wanting to have a dabble in the stock market, I have 1k to start off with and after initial research it appears the best option is to locate a diverse EFT and invest via an online platform that has minimum fees. My first question is related to the fees and if I would be charged every month even if I didn't invest - a lot of sites have a sliding scale of, for example 0-9 deals £10, 10+ £8 and 20+ £5 so would I just be charged £10 for my EFT investment or would this be a monthly fee? I'm aware that there are other charges such as subscriptions but it's the deal fees I'm not sure about. Also is it best to set up a share ISA via the online platform or is there a better way? Apologies if these questions are very basic I'm new to this.

coastline

I'm guessing posters will suggest starting off with a multi asset fund such as the one below..

http://www.legalandgeneral.com/investments/products-and-funds/mixed-investments/

A useful tool for comparing brokers..

http://www.comparefundplatforms.com/

Links on ETF's..

http://www.morningstar.co.uk/uk/etfs/

http://monevator.com/avoid-income-tax-with-reporting-funds/

http://monevator.com/low-cost-index-trackers/

http://monevator.com/how-to-chooose-total-world-equity-trackers/

thin_king

Thanks for the info

Linton

Do you just want to dabble (play) with a small amount of dispensible spare money or do you want to start on a path of serious investing which could lead to life-changing extra wealth in the long term?

If the former you probably wont get much fun out of a single diverse ETF (not EFT!). If the latter you need to see your £1K as merely the first of a planned regular series of investments. Are you ready to do this?

If so have a study of coastlines reading list and any other information you can get - eg this forum. Read it with an open mind as there are many different strategies you can take, each of which may have evangelical supporters. A good book for the basics, but with with its own views on specific investment strategies, is Tim Hales "Smarter Investing".

With £1K what you choose wont matter very much as long as it is well diversified. It probably wont make sense to invest in more than one fund until you have say £10K. It certainly wont make sense to invest directly in shares until your investment pot is much larger.

To answer your questions -
You pay, usually but not always, each time you buy/sell funds or shares. That is what the £10 is. So dont buy/sell very small amounts. There will also be stamp duty of a few £ on top for buying shares.

In addition you will pay a regular fee to hold your investments. These fees vary a lot between brokers. Some are a fixed amount (eg £80/year), probably most are based on a % of your total pot size. The information is on monevator. Clearly for a small amount such as a few £K a % based charge is better.

Finally there may be specific charges for various one-off actions - eg closing an account.

With most, but not all, brokers you can buy and sell both funds and shares. So choose the one broker that supports what you want to do.