Help understanding ( shares etc)

LightKnow

Hi everyone, Am a major newbie in terms of shares and investment. But I would like to take a go. Any help and advice or answers would be most appreciated

So to start I had some questions

1. Is best to use banks for shares or alternatively someone else ? And are most bank pretty much same when comes to buying shares or selling etc? If there is a recommended one please share 😁

2. If I bought 200 pounds worth of shares and share prices go down am guessing I lose some of my money or all of it? Shares don't start taking money that I not invested right ( this probably sounds silly but wanted clarify) e.g I invested 200 and my bank has 200 and if shares drop to much they take chunk out my card or bank ?

3. As a start what would be a decent amount to start towards shares as error and trial ?

4. Are there any other investment opportunities ?

Any other information or advice?

I appreciate it ☺️

eskbanker

If you are interested in finding out about investing, I'd usually recommend starting your research at sites suited to inexperienced investors, such as:

https://www.moneyadviceservice.org.uk/en/articles/investing-beginners-guide
https://www.hl.co.uk/beginners-guides/investing
http://www.monevator.com
http://kroijer.com/
http://diyinvestoruk.blogspot.com/
https://www.ifa.com/indexfundsthemovie/

as well as bearing in mind a number of key points of principle:

1. Only consider investing once you have adequate accessible cash reserves.
2. Only invest if you're happy to commit for at least 5-7 years and preferably 10-15 or more.
3. Diversify - ignore individual shares, etc, and concentrate on collective investments that spread your eggs over many baskets. Global multi-asset funds are a good place to start, available from the likes of HSBC Global Strategy, Vanguard LifeStrategy, Blackrock Consensus and L&G Multi-Index.
4. Choose what you want to invest in before considering which platform to hold it/them on.
5. Keep an eye on ongoing costs for funds and platforms - they shouldn't be the primary consideration but can make a noticeable difference over the long term.
6. Use a Stocks & Shares ISA as a tax-efficient wrapper to avoid liability for income and capital gains tax.

Hopefully you'll see after spending some time on these sites that buying shares via a bank really isn't a sensible approach!

Radiantsoul

1. Something else
2. You can only lose what you put it with shares, they have limited liability.
3. If you use funds rather than shares(see below) you can probably start with £50.
4. Funds or EFT which are lots of shares bundled together are better for the beginner and probably most people. Funds can invest in other assets(bonds, commodities, etc)

The first question is probably why? Why do you want to invest.
If it is for retirement, do you have a work pension. If it is a bit closer then you should look at ISA. If it is for the next five years or sooner then stick it in a marcus account(other savings accounts are available).

Albermarle

3.

As a start what would be a decent amount to start towards shares as error and trial ?

If you buy individual company shares , then this is very risky and best left to experienced investors .
Follow the links posted by eskbanker and read his advice until you understand a bit more about investing.
Then feel free to come back with questions .

jaybeetoo

Biil wrote: »

2. If I bought 200 pounds worth of shares and share prices go down am guessing I lose some of my money or all of it?

You only lose money if you sell the shares at a lower price than you bought them. If they are trading at a lower price and you haven’t sold them then you haven’t lost anything!

sevenhills

Biil wrote: »

2. If I bought 200 pounds worth of shares

It would cost you £10-15 to buy the shares and the same agaqin to sell them.
So £200 is not enough, I would say £500 should be a minimum investment.
I buy mine in an online ISA

eskbanker

sevenhills wrote: »

It would cost you £10-15 to buy the shares and the same agaqin to sell them.

Not necessarily - there are significantly cheaper options, such as Freetrade, or even X-O or IWeb, etc.

I do agree with the conclusion that it's still not a good idea to trade individual shares in very small quantities though, and as above would steer a newbie investor away from them altogether!

btcp

I am in a similar position to OP besides the fact that I am ready to invest around 5k and go up to 20k potentially. I have been reading this forum, other materials and also talking to some family members who invest in the US. One of my family members invests in individual stocks but she also has pension invested in funds. Another one only invests in funds. I see that stocks can potentially give faster return ( provided you learn how to do it). Many people on this forum advise to stay away from stocks if you are a beginner and invest in funds. But how do you get from a beginner to an experienced one if you invest all money in the funds and don’t start trading stocks? You will not learn trading if your money are in the fund, this is a different type of investment ..Any suggestions?

Thrugelmir

sevenhills wrote: »

It would cost you £10-15 to buy the shares and the same agaqin to sell them.
So £200 is not enough, I would say £500 should be a minimum investment.
I buy mine in an online ISA

Even £500 is on the low side. As there's stamp duty to be considered. Depending on the stock traded could be a wide buying/selling spread as well.

eskbanker

btcp wrote: »

One of my family members invests in individual stocks but she also has pension invested in funds. Another one only invests in funds. I see that stocks can potentially give faster return ( provided you learn how to do it).

I'm not convinced that's valid or meaningful - good stocks will outperform bad funds and good funds will outperform bad stocks, but those facts don't really support your conclusion about any general principle.

btcp wrote: »

Many people on this forum advise to stay away from stocks if you are a beginner and invest in funds. But how do you get from a beginner to an experienced one if you invest all money in the funds and don’t start trading stocks? You will not learn trading if your money are in the fund, this is a different type of investment ..Any suggestions?

It's clear from the way that some posters ask pretty basic questions that there's a huge amount to learn when considering investing - one thing being that's it's generally considered different from trading (which would typically be seen as a short-term activity).

There's nothing inherently more complex about buying a stock than buying a fund but to me the huge differentiator is the amount of research that's needed to invest well. On the premise that wide diversification is desirable, the amount of due diligence needed to identify a suitable portfolio of individual stocks would be staggering, whereas passive trackers are IMHO much more suited to those in the early stages of their investment journey, and maybe even those much later on too, if they don't have the time, desire or aptitude to devote themselves to researching on an ongoing basis.

In other words, I don't see individual stocks as the ultimate target for investors to aspire to once they progress from beginner through intermediate to expert, it just doesn't really work like that as far as I'm concerned....

btcp

eskbanker wrote: »

I'm not convinced that's valid or meaningful - good stocks will outperform bad funds and good funds will outperform bad stocks, but those facts don't really support your conclusion about any general principle.
....

I am not convinced myself that this is a general principle, just share experience of 2 people I know and trying to make some sense for myself. I am also not sure how good of investors they are. What I’ve noticed that the one who is investing in stocks is able to make a few thousand a day (not every day) and the one who invested in funds doesn’t gain much at once, doesn’t sell anything and have a slower increase. If take these 2 examples, I was thinking if you sell/buy stocks more often on hi/low then you can potentially end up with a higher return. You need to research individual companies that you select. While for the funds I am not sure what to research as they include many ingredients selected by someone else, and seems you just trust someone’s knowledge and hope for the best for a few years. I’d appreciate additional insight.