Buying Shares

Interest

Hi,

Some background:

Mid 20's
Basic rate taxpayer
Only source of income from salary.
Have a mortgage
No other form of savings/investments other than a few of thousand in a current account.

I would like some advice as I would like to purchase shares in the near future, for the first time.

I would like to simply buy and hold shares for around 5 years to hopefully see a profit. I am talking a few hundred pounds to start with.

I have read the 'how to buy shares' guide on here and I wanted to check my understanding. As I don't plan to regularly trade, I believe it's worth using Hargreaves Lansdown as there is no platform charge, would that be sensible? I do realize there is a larger transfer out fee. I assume this is payable when you sell your shares?

Thank for your any support you can offer.

Alexland

Just to help us understand are there any particular shares you are looking to buy or are you just seeking to benefit from the stock market generally?

With only a few hundred pounds the fees in trading individual shares would be a high proportion of your money so you might also consider funds in which you buy into a larger pool of stock market investments? Funds might be better suited to your needs as the costs can be incurred as low percentages so are likely to offer you a better return at lower risk.

How is this money going to be eventually used? If it is for retirement then there are ISA and pension accounts that offer government incentives to save and invest. Does your employer offer a pension and if so are you taking maximum advantage of matched contributions?

Alex

Interest

Hi Alex

Thank you for the response.

There were some companies shares that I had in mind, FTSE 100 companies.

Funds isn't something I'd considered but I'm going to read up on this now.

Alexland

Interest wrote: »

Hi Alex

Thank you for the response.

There were some companies shares that I had in mind, FTSE 100 companies.

Funds isn't something I'd considered but I'm going to read up on this now.

You can buy into a FTSE100 tracker fund very cheaply but the consensus on this forum is that limiting yourself to the UK market in not a good idea and a more global perspective is better. Try doing a spreadsheet and seeing how quickly share trading fees add up.

Alex

Interest

Alexland wrote: »

You can buy into a FTSE100 tracker fund very cheaply but the consensus on this forum is that limiting yourself to the UK market in not a good idea and a more global perspective is better. Try doing a spreadsheet and seeing how quickly share trading fees add up.

Alex

Will do, thank you.

Sorry Alex, I just saw the rest of your response form earlier. The money isn't for retirement, I want to do this instead of traditional savings with a view to (in the future) putting the money into other income producing assets. Possibly property.

Re my pension that you mentioned, I take full advantage at work. I pay 5% of my salary per month & my employer pays 13%. The total is just over £5k per year.

Alexland

18% is a good contribution level for mid 20s and if you have been doing that for a few years your pot(s) should be off to a good start. It's worth doing some maths on the amount of income you would like in retirement (above state pension) and working backwards (remember it's only growth above inflation that counts, and you may pay some income tax in retirement ) to see if you are contributing enough.

ValiantSon

Spam reported.

Alexland

ValiantSon wrote: »

Spam reported.

And quickly removed. I was going to comment that Sberbank within my son's fund had been doing well recently and their growth was mostly unaffected by the recent correction.

Thrugelmir

Interest wrote: »

I would like some advice as I would like to purchase shares in the near future, for the first time.

I would like to simply buy and hold shares for around 5 years to hopefully see a profit. I am talking a few hundred pounds to start with.

Until you've build a sizable portfolio in value. You'd do better investing in funds or investment trusts. In order to have a well diversified portfolio.

In the meantime keep reading and learning. There's plenty of good material available that will enable you to broaden your investment knowledge.

Interest

Thrugelmir wrote: »

Until you've build a sizable portfolio in value. You'd do better investing in funds or investment trusts. In order to have a well diversified portfolio.

In the meantime keep reading and learning. There's plenty of good material available that will enable you to broaden your investment knowledge.

Thank you, I appreciate the advice.

inflationbuster

Few hundred pounds? Don't bother instead read up on investing (Naked Trader), practice trading virtually and save up.