Standard Life vs National Grid Shares

bowlhead99

aj23 wrote: »

Not everyone has a million pound to invest. If you look on a share on HL, people are buying low quantities constantly.

There are all sorts of reasons why people buy shares and the feed from London stock exchange showing in HL's site is just a snapshot of the most recent transactions made by anyone around the world who was buying or selling in the last few minutes. Most of them are in the thousands of pounds range rather than hundreds so that a fiver or tenner of transaction fees is relatively inconsequential.

But when you see small trades going through:
Many of them will be buying somewhere cheaper than HL. Some will be using deals where they just pay by direct debit for a few hundred pounds each month at a discounted dealing fee so they only pay £1.50 for a £500 purchase. Some won't care about costs, don't really understand what they're doing etc. So just because someone else is buying or selling a small amount of shares for their own personal reasons, doesn't make it a good idea for you to do it, and pay those large costs. The best advice is not to worry about what mistakes other people are making and focus on getting a sensible result for yourself.

I don't know why people keep going on about selling. I haven't bought mine to sell. It's a long term thing. It takes time to get money back. You don't get it back after one divident payout.

I only mentioned selling because the buying costs *and* the selling costs are part of your total costs of ownership, and reduce your returns. If you pay a fiver to buy and a fiver to sell its a tenner of expense or 2.5% of a £400 purchase ; if you use HL and pay £11.95 to buy its almost 3% of a £400 purchase even if you completely ignore selling costs.

2.5 to 3% of your cost of your shares is a lot to pay to buy investments, and for many companies that would be as much as the dividend for half a year or even a whole year. Thrown into the bin as a transaction cost. Instead you could save up until you had £1000-2000 to invest and then the same £10 transaction fees would be a percent or less of your investment cost. Which is only a few months expected return. More reasonable than 2.5 to 3%.

Obviously, we don't all have millions so we're not all going to go out and put £thousands each into hundreds of companies, not that we would have the time to research all the companies to see which ones to buy. That's why people are recommending funds; you put your £400 or whatever into a fund and the manager does all the investing (with low transaction costs because they are doing it with large amounts of money) and you get diversified exposure to the growth and dividends of lots of companies at once.

jimjames

aj23 wrote: »

I guess my private pension is a fund right? It's invested in four four different funds and yielding 9%.

9% yield? Which pension fund yields 9%? Or do you mean it grew by 9% over the last year?

aj23_2

jimjames wrote: »

9% yield? Which pension fund yields 9%? Or do you mean it grew by 9% over the last year?

Yielded, grew by, increased by. All the same thing.

aj23_2

bowlhead99 wrote: »

There are all sorts of reasons why people buy shares and the feed from London stock exchange showing in HL's site is just a snapshot of the most recent transactions made by anyone around the world who was buying or selling in the last few minutes. Most of them are in the thousands of pounds range rather than hundreds so that a fiver or tenner of transaction fees is relatively inconsequential.

But when you see small trades going through:
Many of them will be buying somewhere cheaper than HL. Some will be using deals where they just pay by direct debit for a few hundred pounds each month at a discounted dealing fee so they only pay £1.50 for a £500 purchase. Some won't care about costs, don't really understand what they're doing etc. So just because someone else is buying or selling a small amount of shares for their own personal reasons, doesn't make it a good idea for you to do it, and pay those large costs. The best advice is not to worry about what mistakes other people are making and focus on getting a sensible result for yourself.

I only mentioned selling because the buying costs *and* the selling costs are part of your total costs of ownership, and reduce your returns. If you pay a fiver to buy and a fiver to sell its a tenner of expense or 2.5% of a £400 purchase ; if you use HL and pay £11.95 to buy its almost 3% of a £400 purchase even if you completely ignore selling costs.

2.5 to 3% of your cost of your shares is a lot to pay to buy investments, and for many companies that would be as much as the dividend for half a year or even a whole year. Thrown into the bin as a transaction cost. Instead you could save up until you had £1000-2000 to invest and then the same £10 transaction fees would be a percent or less of your investment cost. Which is only a few months expected return. More reasonable than 2.5 to 3%.

Obviously, we don't all have millions so we're not all going to go out and put £thousands each into hundreds of companies, not that we would have the time to research all the companies to see which ones to buy. That's why people are recommending funds; you put your £400 or whatever into a fund and the manager does all the investing (with low transaction costs because they are doing it with large amounts of money) and you get diversified exposure to the growth and dividends of lots of companies at once.

I know, I get all of that. That's why I withdrew the cash on my capital account and am not by shares in the said above and am going to spend some time looking into funds and I have thank peopled for that advice.

Last year I bought 500 shares in Lloyds Banking Group because the price was low and I believe that now that they are not in any form of public ownership and are now turning a profit, it may turn out to be a good punt. That's all it was. A punt. I'm willing to wait to get returns (I've had a few already) and have no intention of selling as they are now worth less than what I paid for them. But that's the name of the game.

bowlhead99

aj23 wrote: »

I know, I get all of that.

Ok great, it's just that it didn't seem that you got all that earlier.

When we talked about not being efficient to buy in small amounts (£400 level); you replied to say it depended how many shares you got.

When explaining that it didn't matter how many shares you got, I pointed out that it wasn't to do with whether the £400 was buying 1 share or 10000 shares, it was to do with the fact that the costs to buy and sell would be a large proportion of your purchase cost so it was very inefficient and the company would have to outperform just to let you break even. But then you said you didn't understand why people were talking about you selling because you weren't going to sell. And you pointed out that other people bought small quantities.

So I explained that sell or not, it wasn't very efficient as it's easy to do a calculation to see that buying small amounts or shares is less efficient than saving up to buy more sensible amounts, or buying funds instead, and actually most people didn't buy in small quantities ; most of the reported trades are for thousands of pounds worth and the people with small amounts are a minority and it doesn't mean you should copy them.

But now you reckon you know and get all that. Which implies that we were probably wasting our time in what we thought we were doing (guiding a newbie through some of the key points about investing, and continuing to explain the points that he was misunderstanding) when actually he fully understood the issues. Ah well - that's another half hour I won't get back

Good luck with your Lloyds shares. I have a few (more than 500), and also some of their Prefs which I've had for ages (and was reducing in recent years but then bought more as they went cheap on the recent Aviva Prefs debacle). I also have some Deutsche bought the last time they were cheap to which I added a bit when they went under ten euro each. It's fine to have punts here and there if it keeps you interested in how your investments are doing. The difference is probably that mine are part of a bigger portfolio - I'm just messing around the edges of a portfolio that has a solid core of funds - whereas yours are just a bit of a gamble and you haven't bought your solid core of funds yet.

As you say, with any investment you'll be in it for the long term. In the long term all kinds of businesses will do well, do badly, do in the middle. This is why there's no real need to pick stocks and ponder between NG and SL and Lloyds etc, you can just buy a collective investment fund where the manager buys all of those companies and more (if he thinks they're worth having) and then over the long term you'll get the average blended result of all of them without wasting your effort researching (or paying transaction fees) on them one at a time. I *think* you get that - but just reiterating it, as it does after all fit in with the original question on the thread.

aj23_2

bowlhead99 wrote: »

Ok great, it's just that it didn't seem that you got all that earlier.

When we talked about not being efficient to buy in small amounts (£400 level); you replied to say it depended how many shares you got.

When explaining that it didn't matter how many shares you got, I pointed out that it wasn't to do with whether the £400 was buying 1 share or 10000 shares, it was to do with the fact that the costs to buy and sell would be a large proportion of your purchase cost so it was very inefficient and the company would have to outperform just to let you break even. But then you said you didn't understand why people were talking about you selling because you weren't going to sell. And you pointed out that other people bought small quantities.

So I explained that sell or not, it wasn't very efficient as it's easy to do a calculation to see that buying small amounts or shares is less efficient than saving up to buy more sensible amounts, or buying funds instead, and actually most people didn't buy in small quantities ; most of the reported trades are for thousands of pounds worth and the people with small amounts are a minority and it doesn't mean you should copy them.

But now you reckon you know and get all that. Which implies that we were probably wasting our time in what we thought we were doing (guiding a newbie through some of the key points about investing, and continuing to explain the points that he was misunderstanding) when actually he fully understood the issues. Ah well - that's another half hour I won't get back

Good luck with your Lloyds shares. I have a few (more than 500), and also some of their Prefs which I've had for ages (and was reducing in recent years but then bought more as they went cheap on the recent Aviva Prefs debacle). I also have some Deutsche bought the last time they were cheap to which I added a bit when they went under ten euro each. It's fine to have punts here and there if it keeps you interested in how your investments are doing. The difference is probably that mine are part of a bigger portfolio - I'm just messing around the edges of a portfolio that has a solid core of funds - whereas yours are just a bit of a gamble and you haven't bought your solid core of funds yet.

As you say, with any investment you'll be in it for the long term. In the long term all kinds of businesses will do well, do badly, do in the middle. This is why there's no real need to pick stocks and ponder between NG and SL and Lloyds etc, you can just buy a collective investment fund where the manager buys all of those companies and more (if he thinks they're worth having) and then over the long term you'll get the average blended result of all of them without wasting your effort researching (or paying transaction fees) on them one at a time. I *think* you get that - but just reiterating it, as it does after all fit in with the original question on the thread.

I always got what people said, I'm not stupid, I have two degrees. My point kept going back to the fact that I didn't buy them to sell them straight away and I'm not planning on buying more soon (as it will cost me) which is what every one kept saying isn't a good way of getting returns, when everyone kept missing or ignoring the point that I bought for them the long term and it's not a serious time consuming thing I'm into like some of you clearly are into. It's not my job and I don't rely on it for income, hence the long term investment and why I'm not doing National Grid or Standard Life shares and looking into funds, like I keep saying! I get it!

Go and have a look on the top 10 shares on HL, people are buying them every minute, it tells you. I'm not making up what's on their own website for you all to see.

I haven't wasted anyone's time. Nobody must reply to me. If people choose to reply, that's up to them only. Like I choose to reply to people. That's the whole point of a forum. I said from the start that I'm no expert, hence why I made the thread.

bowlhead99

aj23 wrote: »

Go and have a look on the top 10 shares on HL, people are buying them every minute, it tells you. I'm not making up what's on their own website for you all to see.

Of course people are buying every minute; average volume in Lloyds shares on the London stock market is over 150 million shares changing hands every day. Today is a quiet day so far, only about 100 million.

Just for fun I did as you suggested and looked at the 10 'most viewed' shares today and the last 5 trades in each.

Lloyds one trade under £1k, others average £5k
BT no trades under £1k
Vodafone no trades under £1k
Standard Life one trade under £1k
Barclays no trades under £1k
Scottish Mortgage (collective investment vehicle) one trade under £1k
Shell no trades under £1k
BP no trades under £1k
Capita no trades under £1k
Sirius Minerals, 3 trades under £1k (small cap company a thirtieth the size of Lloyds)

Certainly seems most people don't buy in small quantities. Nobody's suggesting that you are making it up that sometimes people buy in small quantities and as I said, there are various reasons that someone might, it's just very inefficient.

aj23_2

bowlhead99 wrote: »

Of course people are buying every minute; average volume in Lloyds shares on the London stock market is over 150 million shares changing hands every day. Today is a quiet day so far, only about 100 million.

Just for fun I did as you suggested and looked at the 10 'most viewed' shares today and the last 5 trades in each.

Lloyds one trade under £1k, others average £5k
BT no trades under £1k
Vodafone no trades under £1k
Standard Life one trade under £1k
Barclays no trades under £1k
Scottish Mortgage (collective investment vehicle) one trade under £1k
Shell no trades under £1k
BP no trades under £1k
Capita no trades under £1k
Sirius Minerals, 3 trades under £1k (small cap company a thirtieth the size of Lloyds)

Certainly seems most people don't buy in small quantities. Nobody's suggesting that you are making it up that sometimes people buy in small quantities and as I said, there are various reasons that someone might, it's just very inefficient.

It depends when you look because it only shows the last few minutes. I saw someone yesterday buy 10 shares in Standard Life.