Buying Shares

bowlhead99

MaxiRobriguez wrote: »

There's nothing fun about spunking £500 up the wall.

Yes, for £500 there are probably much nicer places to do that.

DUTR

Thrugelmir wrote: »

X-O charge a flat fee of £5.95p.

£500 is a very small amount to invest in a share. You be better off buying a fund of some kind and not actively trading. Simply holding it for the long term.

Why so? £500 would get you 250 shares with a certain blue chip company and the dividends would have outweighed any savings accounts even after the buying fee.

MaxiRobriguez

DUTR wrote: »

Why so? £500 would get you 250 shares with a certain blue chip company and the dividends would have outweighed any savings accounts even after the buying fee.

Number of shares you get as part of a purchase is irrelevant.

£500 is a low amount because the transaction costs and stamp duty associated eat into any gains made.

The longer you hold the stock the less important that becomes, but the more you open yourself up to single stock risk.

Tom99

Stamp duty is the same percentage whether you buy £100 of £10,000.

MaxiRobriguez

Indeed but you have other options to generate returns with £100 that you don't with £10,000 - like a regular saver, so the transaction fee and stamp duty combination needs to be compared against such things rather than a bigger investment.

In order words, £500 investment means transaction fee and stamp duty are going to cost 2% at minimum, which means an 12month gain of 8% a is needed to A) make it financially worthwhile and make it worthwhile in terms of risk/reward skew.

Stamp duty on investments is less of a consideration with bigger sums, you just pay it, because saving it as an alternative isn't a long term option for those looking for growth.

Tom99

Transaction fee £2 plus stamp duty £2.50 = £4.50 or 0.9% of £500.

worried_jim

Could have bought 1000 Lloyds shares and made 12% yesterday.

NedS

worried_jim wrote: »

Could have bought 1000 Lloyds shares and made 12% yesterday.

If we all had hindsight we wouldn't be here

Thrugelmir

worried_jim wrote: »

Could have bought 1000 Lloyds shares and made 12% yesterday.

Or made a capital gain of 2% if they've been held for 10 years.

MaxiRobriguez

Tom99 wrote: »

Transaction fee £2 plus stamp duty £2.50 = £4.50 or 0.9% of £500.

Where can you get transaction fees of £2 for a single transaction?