Halifax Sharesaver

meester

debbie42 wrote: »

I can sympathise with the actual as opposed to virtual portfolio, in terms of the psychology.

Couple of approx. examples, on £1000 share purchases:
RBS (tight spread, 340.25 - 340.5)
294 shares @ 340.5 = £1001.07 + 11.95 charge + £5 stamp = £1018.02
effective share cost = 346.26
so getting on for a 2% loss just for the trade, before you start including selling costs.

The total cost effectively on £1k with someone like Selftrade (£12.50 charge):

£12.50 (each) to buy and sell (2.5%)
0.5% of 97.5% = 0.4875% stamp duty
0.1% for the bid/offer spread
= ~3%

WHich is quite high. If you plan to sell soon, it's an appreciable cost, certainly higher than something like a UK Equity Income OEIC with full discount for holding for one year.

The £25 is the problem, relative to the £1k. Ideally you'd be investing more like £5k at a time.

eggedd2k

Don't forget that with the halifax account at the minute there are no trading charges until 30 June 2008 so apart from stamp duty which is minimal you can trade with nearly your full monthly amount.

All things considered and having slept on it I think the best way forward (for me anyway) will be to initially trade free of charges for April May and June and then subsequent months I'll trade every other month. Sticking with shares in the same company for a few months, then switching to another for a few months then coming back. Every other month though else like Debbie said above the charges (even at £1.50) still eat into an amount like £25/£30.

johng_uk

Yeah it's a tough call. As previously stated I am saving for house deposit + paying off debt (interest free), so there is no way I could deal in hundreds of pounds atm, never mind thousands! Once I am financially secure and comfortably affording my mortgage, things may change. Also, the only 'exposure' I have had in stocks and shares is from magazines and books. Therefore until I build up experience (potentially cheap with Sharebuilder), I wouldn't throw my cash around anyway.

egg - I can see your point about buying the same shares for pound cost averaging purposes. Won't this bore you month after month buying the same one or two shares? Also, if you happen to pick a bad 'un (not that you will of course!), with a relatively small investment minus 3 - 4 % to costs to begin with, you could be starting again in no time flat. Also, all the literature I have read, states that your portfolio should be balanced in different sectors and you should hold up to 10 different shares. This minimises market exposue and potential losses. Without doing this, your portfolio could be at risk.

John

This is why I am humming and ha'ing at the moment.

regards

John

eggedd2k

i know what you mean - I've been thinking the same.

i think it could potentially get boring just investing in the same company every couple of months. it's a difficult decision.

To make it a bit more interesting I'd possibly invest in company a for a few months, then go on to company b, then back to company a and then introduce a company c.

I can't see any other way to make it interesting without having to invest a couple of hundred at least each time (which I'm not going to do).

You've really gotta have shares in different sectors - with the sharebuilder this would have to be done over time.

Anyone got any other suggestions?

debbie42

Have you thought about funds? HL allow drip feeding, I think.

johng_uk

It's a difficult decision. If you were going to drip feed money into one company, you may as well fill up a fund or an ISA as debbie says. I think the idea though is to actively invest and research your own investments. I guess the charges for funds would probably lower a small investments worth in the same manner, albeit as a percentage fee rather than a £1.50 + 0.5%.

Your looking at a helluva long period of time to build up an anywhere near half decent portfolio spread - Possibly 10 years or more. This would give you a decent spread but with not much cash invested in each sector. And all along the way your investment has to make 3.5 - 4% before you even break even. As you say, I can't think of any other way to make it interesting either bar chucking cash at it!

debbie42

johng_uk wrote: »

As you say, I can't think of any other way to make it interesting either bar chucking cash at it!

The overheads are a big barrier to investing in shares for small amounts. Some colleagues at my old place of work had a share club where they pooled funds and voted on purchases etc. which looked like fun, if you could agree, of course...

eggedd2k

yeah that's interesting actually - i read about investment clubs.

John I agree the idea of the halifax account is to actively invest and research which I'm keen to do - as much to learn as to save some cash.

It's a shame that you have to invest loads in shares to really make some decent cash with charges etc but small amounts are no big deal really.

Ok so it's not gonna make you thousands but it's a start that's for sure.

Even with just 30 quid going in a month or whatever I'll still really enjoy checking what it's worth a few times a day. I'd rather do it this way and at least save some money than have a virtual system and spend the 30 quid on nothing. Even if I just break even it's worth a punt.

The only reason I wouldn't put in say £100 a month is because it's risky - but once I've done it small time for a year or two I might progress to that.

Could be worse I could be sticking on horses.

Waffle over.

johng_uk

Lol no waffle mate - Point made and echoes my thought's really. I'm just trying to put myself off doing it for some reason!!!

I read about investment clubs in "What Inevestor" the other week there and they seem like a good idea. The trouble is with my job I move around every 3 - 4 years so getting a local club would prove difficult.

I couldn't be bothered checking a virtual system although you wouldn't lose any cash on them (not to rubbish your good idea Debbie). And I also agree it would be good fun to check a few times a day.

Just a thought and it very much depends on your opinion of risk. Being as it's a small amount of money that you are prepared to lose as QUOTE: "Remember the value of your shares may be less than you actually invest" - It might be an idea to research penny shares and stick the cash on that?

Imagine the excitement as any small percentage drop/raise would substancially effect the portfolio value. I had a mate who used to do deals at £2k on one share at a time and he used to check teletext at work all the time.

This could potentially negate the relative high charge. Ok it could be seen of more of a gamble than investing in something else, but it would be more exciting and these companies can still be researched.

eggedd2k

I've got a book called The Naked Trader and the author slates penny shares - far too much risk in his opinion. Good book though. He reckons you need to trade a good few thousand each time when doing shares.


I like the idea of checking share prices during the day - even if it's just a few pence added or taken away from the price of my shares.

The point about having shares in different sectors seems important - I've read that on a few sites and I think somehow it'd be wise to incorporate that into the sharebuilder account. You're basically talking investing in company a for a few months in one sector, then researching companies in another sector and stop investing in company a and move on to company b for a few months.

I'm quite looking forward to getting going with it - it's good being able to get into shares without the mega bucks commitment.