Simplest method to purchase £5k worth of shares as a one-off

kev2009

apologies @eskbanker .
Kev

port_of_spain

kev2009 said:

I recall in 2008 crash i think Barc got to 50 or 55p and i was tempted to purchase some but i thought the price was bit too low that they may fold so i held up, then few months later they were much higher and i kicked myself for not taking a chance...

Well, considering that Barclays only avoided calling on financial support from the Government by means of a fraudulent capital raising, perhaps you in 2008 had a point

Thrugelmir

port_of_spain said:

kev2009 said:

I recall in 2008 crash i think Barc got to 50 or 55p and i was tempted to purchase some but i thought the price was bit too low that they may fold so i held up, then few months later they were much higher and i kicked myself for not taking a chance...

Well, considering that Barclays only avoided calling on financial support from the Government by means of a fraudulent capital raising, perhaps you in 2008 had a point

Bob Diamond had a masterstroke in buying the rump of Lehmans London operation. Propelled Barclays into an investment bank comparable to some of the US majors. 

bowlhead99

kev2009 said:

really? lloyds seems pretty low already compared to RBS and BARC... i'd have thought LLOY couldn't really go too much low? Agree that Barc & RBS could fall lower.
Kev

When you look at a company to see it's 'worth', you can't judge its value from just looking at its share price. The total value of all the shares in the company (market capitalisation) is a function of multiplying all the shares in issue by the price per share. 

LLOY shares are 30p each but there are a lot of shares in issue so the total market cap is £21 billion
BARC shares are priced at 87p each but there are not as many shares in issue so the total market cap is £15bn
RBS shares are 105p each, but it is the least valuable company overall at £12.6bn, only 4x its last annual profits while LLOY is valued at 8x its last annual profits.

Of course there is a difference between snapshot valuations versus reported profits versus annual sustainable profits going forward. But if your idea is that Lloyds can't fall much further because it already has a low share price, while RBS and BARC have a share price of more than a pound, or almost a pound, so they could fall lower ... that seems to be a fundamental misunderstanding.  LLOY could fall to 20p instead of 30p, a 1/3rd drop, and it would still be a more valuable company than RBS.  Meanwhile RBS could fall from 105p to 70p, the same proportionate drop.  Whatever a company's share price happens to be at a point in time, it could always lose 20%, 30%, 50% of it, even down to shares that trade at a fraction of a penny each. 

As port_of_spain mentions, worst case scenario is that the bank is worth 0 pence for any current shareholder and meanwhile the bondholders and other creditors take over as shareholders, (bail-in), perhaps with the help of a rescue plan from the government (bail-out). 

So especially with customers having less to save, borrowers failing to repay loans  and credit cards because of tough times in a recession, house prices crashing due to people losing their jobs or no longer needing to live near public transport because they realised they can work from home long term... a bank like Lloyds or RBS or Barclays with exposure to retail lending, business lending and residential and commercial mortgages could quite easily 'fail' from the perspective of a current investor in it, but still exist on the high street because it's 'too big to fail'.

Sailtheworld

007mse said:

Hi,
For some time I've considered purchasing some shares but never had the courage to actually go ahead and invest. I feel now may be the right time.
My aim is simple. I would like to invest £5000 in an one-off trade. The entire £5k's worth of investment will be with a single UK company's stock.
Once purchased, my aim is to leave it alone for 5 years before I look to cash-in and sell all the shares in one go. I anticipate the shares will be worth £10k at the 5 year mark.
With all said, what is the simplest and cheapest method to do this?
If a trading platform is required can someone please suggest a suitable one to meet my needs?
Thank you.

I'd stick it in A J Bell / Youinvest trading account and buy the shares. It'll cost you £9.95 for the trade and a few pennies a year in holding costs. Then revisit in 5 years and sell for another £9.95.

They also have a regular investment route which I use to reinvest dividends but you could do that to save a few £s. You open the account, set up a regular investment for £5k/ month; in month one you get your £5k of shares and then cancel the regular investment. These trades cost £1.50.

I'm sure there are cheaper routes but if you're doubling your money in 5 years time a £10 difference in costs probably doesn't matter.

Alexland

Sailtheworld said:

I'd stick it in A J Bell / Youinvest trading account and buy the shares. It'll cost you £9.95 for the trade and a few pennies a year in holding costs. Then revisit in 5 years and sell for another £9.95.

For a general investment account this is one area that HL is going to be cheaper than AJ Bell as HL have no ongoing charge on their Fund & Share Account and AJ Bell charge 0.25% capped on their Share Dealing Account. So while HL costs an extra £2.00 to trade the AJ Bell option would lumber you with a £12.50 pa ongoing fee and needing to remember to keep the account balance topped up to pay.

If the OP is just after a cheap and simple option to buy £5k of shares then Jarvis X-O would be better as their Nominee Account has no open/close/ongoing costs and the trade would be £5.95.

However if the OP wants to hold it in an ISA wrapper then iWeb would be cheaper as although it's a £25 setup and a £5 trade there are no ongoing costs (HL at 0.45% and AJ Bell at 0.25% for ISAs) and no closure fee (Jarvis X-O at £50+vat for ISAs).

Sailtheworld said:

I'm sure there are cheaper routes but if you're doubling your money in 5 years time a £10 difference in costs probably doesn't matter.

Even without growth AJ Bell would cost £72.45 (£9.95 + 5x£12.50) compared to Jarvis X-O at £5.95 or for an ISA wrapper iWeb at £30.00 (£25+£5) so using AJ Bell would be paying more than twice as much as required. Plus adding the eventual sell down trade at £9.95 on AJ Bell, £5.95 on Jarvis X-O or £5.00 on iWeb. However it gets more complex if dividends need reinvesting...

port_of_spain

Alexland said:

However it gets more complex if dividends need reinvesting...

OTOH, that's not a problem if dividends continue to be cancelled. And if the shares go totally kaput, you save the cost of the sell down trade, too, so it's win-win

Alexland

port_of_spain said:

OTOH, that's not a problem if dividends continue to be cancelled. And if the shares go totally kaput, you save the cost of the sell down trade, too, so it's win-win

In which case the cheapest option is probably to burn your money in private to avoid any fees.

Old_Lifer

It seems to me that the OP's whole approach is back to front .   Not only does the OP get the name of the platform the wrong way around  but with no experience of investing,   proposes  as a first purchase,   investing  £5000 in a single company.    Surely most people  before doing this,   would spend a few years gaining investment experience first . 

LobsterMemory

The last time I called a post pompous I got a telling off so I'm not going to do that again.