Newbie Advice on Investing in Shares

Hi, I have been contemplating putting some savings into shares for a few months now and think I have made my mind up to do so.

I have read up on certain advice but there is so much out there. Wonder if anyone can assist?

I have a fried who has invested for several years and he always bought shares through a Stock Broker. He says that although there are high fees involved that is better as you get the actual Share Certificate.

However I have read online that you can buy through an online company such as HL and the fees are much less.

Does anyone know what the best way of buying shares is and the advantages/disadvantages of each are? Do I still get Dividends if I buy through HL rather than a Broker?

Any advice is much appreciated.

Thanks :beer:
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Comments

  • James145
    James145 Posts: 16 Forumite
    I used to use Degiro, as in my experience they are the cheapest and provide a good service.

    However, if you are going to hold shares in an ISA/SIPP, most non-advised clients seem to use HL.

    You will still receive the dividends if you invest through HL, but they will be held in your HL account until withdrawn. Degiro is a stockbroker, so you would also receive dividends in this case too.

    HL and Degiro won't send you the share certificate, as they are online-only, but in my opinion share certificates are outdated now anyway. Also, as you alluded to, the fees are normally higher with share certs and they charge extortionate fees to replace a lose certificate.
    [FONT=&quot]No part of this post should be viewed as advice.[/FONT][FONT=&quot][/FONT]
  • eskbanker
    eskbanker Posts: 30,401
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    IMHO the best advice to newbie investors considering buying shares is: don't!

    It's far more sensible to buy into collective investments such as funds as these mitigate the risks inherent in buying shares in individual companies by diversifying, i.e. putting your eggs into many baskets.

    There are plenty of threads on here about approaches for novice investors, and other places to research would include:
    https://www.moneysavingexpert.com/investments/
    http://www.monevator.com
    http://diyinvestoruk.blogspot.com/
  • Thanks, all good advice!

    I have looked at the possibility of Funds too although it feels like a bit of a cop-out way of investing.

    I have a friend who is my age (26) and has held various shares since he was 18 and swears by it. He has on the whole made a success through not much research
  • BLB53
    BLB53 Posts: 1,583 Forumite
    Just be aware that individual shares is very high risk and most investors go with funds or investment trusts.
  • Nasqueron
    Nasqueron Posts: 8,631
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    Thanks, all good advice!

    I have looked at the possibility of Funds too although it feels like a bit of a cop-out way of investing.

    I have a friend who is my age (26) and has held various shares since he was 18 and swears by it. He has on the whole made a success through not much research

    If he started 8 years ago, just after the crash when everything tanked then if he bought sensibly it wouldn't be hard to make money just betting on the FTSE 100 which was as low as around 3800 in late 2009 and is now well above 7000. I wouldn't take that as meaning it's easy for a novice to pick companies that will do well.
  • IanManc
    IanManc Posts: 2,069
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    Thanks, all good advice!

    I have looked at the possibility of Funds too although it feels like a bit of a cop-out way of investing.

    I have a friend who is my age (26) and has held various shares since he was 18 and swears by it. He has on the whole made a success through not much research

    I agree with Nasqueron.

    Your friend has just been lucky to have been investing in a very long bull market. They've just used a less than optimal method at a very favourable time.

    If your friend had invested in the same way at a different time then there'd probably have been a lot of a different sort of swearing. ;)
  • MK62
    MK62 Posts: 1,442
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    I have a friend who is my age (26) and has held various shares since he was 18 and swears by it. He has on the whole made a success through not much research

    Most likely through luck rather than anything else - we have had a good run over the last 8 years tbh, so you'd have had to have been an unlucky stockpicker to make an overall loss over the period (though that's still possible of course).
    You'd have to quantify that success though - you can underperform a rising market quite badly and still make money (though if you pick the right shares, you can outperform it too.....but that's a lot harder than it sounds)

    As eskbanker says, it'd be less risky to invest in a fund (OEIC), investment trust, or perhaps even an ETF - there are numerous choices in just about anything mainstream that you want to invest in, within reason.
    You can choose trackers, which invest in everything within an index (eg, FTSE AllShare, S&P500) and so track the index (minus small(er) charges), or go for an actively managed fund, where a manager decides what to invest in (within the scope of the fund).

    However, it's your money, and hence your decision. Nobody can say you won't do well picking individual shares, but the odds are against you vs investing in collective investments.
  • eskbanker
    eskbanker Posts: 30,401
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    I have looked at the possibility of Funds too although it feels like a bit of a cop-out way of investing.
    An odd comment - copping out of what exactly? The (detached perception of the) thrill of picking winners, despite this inevitably being coupled with the crushing disappointment of losers? How do you think it would have felt to be owning a holding in Carillion earlier this year, for example?
    I have a friend who is my age (26) and has held various shares since he was 18 and swears by it. He has on the whole made a success through not much research
    Is this the same friend who "says that although there are high fees involved that is better as you get the actual Share Certificate"? If so, you might wish to take his comments with a large pinch of salt, as anyone choosing to pay over the odds for a piece of paper is unlikely to be as financially savvy as you may have thought....

    "Making a success through not much research" sounds suspiciously like sticking a pin in a list when blindfolded - do you feel lucky?
  • pafpcg
    pafpcg Posts: 878
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    I have a friend who has invested for several years and he always bought shares through a Stock Broker. He says that although there are high fees involved that is better as you get the actual Share Certificate.

    However I have read online that you can buy through an online company such as HL and the fees are much less.
    You're right, but you need to understand what you really want to achieve.

    With an execution-only broker such as IWeb, JarvisX-O, SVS, HL, etc, you can create an account, load your account with the money you want to invest, select what you want to buy (and when), issue the buy instructions then sit back and watch the performance of your share portfolio and the arrival of dividends into your account.

    Your share holding will be held by the broker's nominee account. If you want to hold your shares yourself as share certificates you can do that instead of using the broker's nominee account - you just issue an instruction to "certificate" your share holdings and pay a fee to the broker (typically £25). There are advantages and disadvantages in using share certificates - again, that's something you need to research or ask for further help. For example, if you want to hold your investments in a Stocks-and-Shares ISA or a SIPP, then it's nominee accounts only.

    I'd suggest you look at what the execution-only brokers can offer and at what cost. You'll find that HL tends to be more expensive than other brokers (eg IWeb's charge for a single deal is only £5 and there's no custody charge for holding your shares in their nominee account) but HL does have a better reputation for 'hand-holding' their customers. (I'd be wary of Degiro until you fully understand what they offer and what they don't offer - I'm not aware of them offering the service to certificate your share purchases, nor can they accept your share certicates to add to their nominee service prior to a sale, something that I'd expect any mainstream execution-only broker to offer for free.) But NONE of these execution-only brokers will give you advice on what to invest in - that's your responsibility. To get that advice from someone else, you'll have to pay. Or do your own research or guess or read some tea-leaves or examine some chicken entrails or do whatever you want - it's your money you're investing.
  • bostonerimus
    bostonerimus Posts: 5,617
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    When it comes to finances friends and family often give the worst possible advice. So ignore your mate down the pub and Uncle Alfred and do your own research. There are plenty of good books and websites, but how about this as a starting point.

    Pay off any high interest debt like credit cards
    Save 6 months of spending to a bank account
    Learn the basics of investment funds
    Pay as much as you can into your company pension fund and open an ISA. Invest in low cost multi-asset funds using well respected platforms like H&L, iWeb, Vanguard, Fidelity etc.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
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