Platform and Share Choice - opinions/help?

[Zombi]

Hi all,

I've never traded in shares before, so this is my first foray into all of this. I read Motley Fool's guide to investing (the old edition). Please can somebody tell me their thoughts on my plans so far, or offer pointers maybe?

I've taken a look at the different ISAs and am interested in using Cavendish Online. I'll be trading in small amounts to start with ('small' meaning I'll buy stocks in up to 5 companies to start with, and will spend around £75 max on each, and then avoid buying any more than that until my financial circumstances improve (I'm the sole wage earner in my household, and finishing a diploma which should take around 2 more years to complete). I'm mainly looking to start investing now because I understand that it's a long-term commmitment and I'm already in my mid-30's, because I'd like to learn the ropes before my diploma completes (I'm confident it will earn me money once I graduate, since the industry I'm going into is largely self-employed and I've run a business before), and I have two very young nieces whom I would love to set up funds for in the future, if possible.

As for specific stocks, I'm interested in BT, Howden Joinery, Patisserie Holdings, Utilitywise and Restaurant Group, although I do have other preferred stocks to pick if any of those aren't ideal. I think they're good choices though, from what I can see.

Any thoughts?

P.S. And lest this all sounds a bit to-the-point and unfriendly... Hi! How y'al doin'?

[kiloran]

I've only had a quick gander at Cavendish Online, and it seems to me that they mainly handle funds/OEICs, Exchange Traded Funds and Investment Trusts. I couldn't see any reference to buying normal shares such as BT, etc (Odd since Investment Trusts are companies, pretty much like BT etc)

£75 per investment does seem very low (and if typical broker fees are involved, they would be a VERY large percentage of each investment). At this early stage, I would just consider a single general-purpose investment trust or ETF, then start thinking about individual companies when you can invest perhaps £1000 at a time.

--kiloran

[dspp]

I use ii (http://www.iii.co.uk/) who are one of the cheaper platforms (£80/yr inc 8 free trades) and even so I would struggle to justify buying £100 lumps of a single company unless it was part of a regular monthly purchase plan. Using Cavendish to do this sounds odd to me.

I have PatVal as a holding. Gotta love the ticker, CAK. One of the more speculative picks in the portfolio, but a minor one.

Regards, dspp

[Urbandreamer]

Any thoughts?

P.S. And lest this all sounds a bit to-the-point and unfriendly... Hi! How y'al doin'?

Hi yourself. I'm doing well and so, I'm happy to say, are the bulk of my investments.

As Kiloran says £75 seems a bit small. I'm with YouInvest and they would charge me £9.95 for a standard purchase. Sure I could reduce that cost (and do) by using their "regular investment" method that trades on the 10th of the month,

The point is that you would be paying 13%. Simply by skipping a month and investing £150 will dramatically improve your performance because your costs will be less.

Costs are going to be a huge issue for you. Don't forget that there will also be a quarterly charge for administration.

Most "standard" advice would be to achieve diversification by buying a single ETF, tracker, fund or IT which might also avoid the custardy charge.

However you clearly want to be more hands on than that, and I aplaude you for it.

I'm a bit dubious about your selections though.

Take the example of RTN, who I own shares in. They shot themselfs (somewhere) by having a huge expansion plan. The same customers had a choice of which of their restaurants to eat in, but physically could only eat in one at once! Then the market moved against them with the likes of Just Eat moving in and taking buisness. You may wind up buying my shares!

Utilitywise has, I believe, just changed it's accounting methodolagy. The new method does not show their earnings in quite so rosy a light. Pop into W H Smiths and see if there is a copy of IC on the shelf. Utilitywise is mentioned on page 10.

BT has a large pension issue, troubles with the regulator over broadband, has spent a fortune on Sports for it's TV offering and all that ignores the up and coming spectrum auction. Fines and a profit warning, not for me.

I find free podcasts from the likes of the FT and the Investors Chronicle very usefull in guaging the market and suggest that you investigate them.

Finally congratulations on making a start.

[tjh290633]

I've taken a look at the different ISAs and am interested in using Cavendish Online. I'll be trading in small amounts to start with ('small' meaning I'll buy stocks in up to 5 companies to start with, and will spend around £75 max on each, and then avoid buying any more than that until my financial circumstances improve (I'm the sole wage earner in my household, and finishing a diploma which should take around 2 more years to complete).

I would have thought that Halifax Sharebuilder would be more suitable for you. They have cheap dealing days when the commission is c.£2 a go for purchases. You might also like to think of buying fewer shares at say £150 or £200 on each, to reduce the cost.

TJH

[melonfool]

When I started out I bought ETFs - a FTSE100 and FTSE250, plus a UK dividend one. At the time ETFs had no trading fees for some reason.

I think with small amounts you might as well just drip feed a tracker for a couple of years really. The amount of research to buy into abstract holdings is disproportionate, not to mention the fees as a percentage of the trade.

Once I had enough coming in to buy more I started with £1k tranches to keep costs down and went for blue chip, FTSE100, high yield, high divi cover firms like HSBC, Shell etc. Once that grew I bought in £2k tranches and topped up the initial shares from £1k to £2k.

Then, having felt I was scraping the barrel with those, a few more ETFs - small caps and US to give more diversity, and when I had £10k spare and couldn't be bothered with the research I chose a couple of funds for that money.

All that depends on you having no debt, mortgage well under control (i.e. over paying or at least very low), savings for medium term spending (holidays, car repairs/new car as necessary, etc), and emergency fund of 6 months of outgoings. If you've not got hat sorted then focus on that first.

And don't forget to think about pension at some point. I didn't pay into one for ages as there was no advantage at the time over an ISA, but I had at least *thought* about it and made that decision (and am now paying in as my co pays 5% and refunds the employer NI into it too).

Mel

[paulnumbers]

Echoing much of the sentiment above, for an investment of £75 x5 = £375, I think you're far better not buying individual shares.

I believe Cavendish charge 0.25% annual fee. Vanguard might be a better choice at 0.15% and no dealing fee's.

https://www.vanguardinvestor.co.uk/inve ... lained/isa

With Vanguard, you can purchase something vanila like the following, which has a fee of 0.24% per year.

https://www.vanguardinvestor.co.uk/inve ... erview-tab

So your total fee's are going to come to 0.39% or £1.46 per year.

If you really want to go down the individual shares route, have a look at Trading 212 or Degiro.

[Tortoise1000]

Read the Motley Fool guide again and you will see that at an early stage, Chapter 7 in my copy, it recommends making a monthly saving into a tracker and leave it at that. Just set that up and forget about it, get on with your diploma and in due course you may be pleasantly surprised with the result. Warren Buffet advises this too.

Alternatively and even better in some ways, some investment trusts offer monthly saving schemes that cost nothing. They are better I think not only because they are cheap but also because one is more inclined to leave them alone.

Thinking about it, actually you could do the tracker the same way I think. Legal and General have index trackers and they offer an ISA where you can save into them regularly. I havent looked at it recently, but I dont think it would cost anything and it would be another good 'buy and leave alone' investment. Its important to keep buying when the market goes down and a direct debit ensures you do this.

The only reason to start making tiny trades in individual stocks is if you are a really keen nerdy young stockpicker who is going to work away at this, put the hours in, lose money but maybe over time learn to become a successful private investor. It's a job though, it takes a lot of time and attention. I don't honestly think that is you. Where is your edge, do you think? Your post sounds quite naive. Apologies if you are not! Of course it is hard to tell from a post.

I think if you do this, you will first of all find that after the dealing costs and the spread and the fact that shares annoyingly often go down the minute you buy them , you will be looking at a portfolio that is showing a discouraging loss , and then after a while you will be wondering whether to sell, and really the money would have been better in the building society all along.

Of course if you just want to have a punt, get your feet wet as it were and probably lose the £375 which after all is not much either way, then fair enough.

For choosing a broker , Monevator keeps an up to date comparison table

http://monevator.com/compare-uk-cheapes ... e-brokers/

T

[DiamondEcho]

IME the first purchases I made were the riskiest, as I relied more heavily on recommendations in the media without myself fully understanding the shares being tipped. IME it is also quite easy to want fast results, to prove your approach is working, and simple to get blinded by the suggestion of easy riches. Fads come and go, 25 years ago Japanese equity warrants were the thing... the thing some of us youngsters blew ourselves up in 17 years ago similar happened in the dot.com bust, which once-bitten etc I avoided. Recognise likely fads and avoid them. Boring is good, boring, solid and predictable, the same way the tortoise beats the hare.
So in your shoes I'd start with low-fee funds, as several people have suggested above. Decide how much you can put aside each month, automate the purchase as far as possible so you don't have to do much if anything for the purchase to take place. That way might help you avoid stopping a purchase if 'things are a bit tight this month'. Then keep on going. Mentally partition your investment, so you don't consider the funds as still on the table, accessible if you need them.

[WessexBoy]

Hi all,

I've never traded in shares before, so this is my first foray into all of this. I read Motley Fool's guide to investing (the old edition). Please can somebody tell me their thoughts on my plans so far, or offer pointers maybe?

I've taken a look at the different ISAs and am interested in using Cavendish Online. I'll be trading in small amounts to start with ('small' meaning I'll buy stocks in up to 5 companies to start with, and will spend around £75 max on each, and then avoid buying any more than that until my financial circumstances improve

(I'm the sole wage earner in my household, and finishing a diploma which should take around 2 more years to complete).

I'm mainly looking to start investing now because I understand that it's a long-term commmitment and I'm already in my mid-30's, because I'd like to learn the ropes before my diploma completes (I'm confident it will earn me money once I graduate, since the industry I'm going into is largely self-employed and I've run a business before), and I have two very young nieces whom I would love to set up funds for in the future, if possible.

As for specific stocks, I'm interested in BT, Howden Joinery, Patisserie Holdings, Utilitywise and Restaurant Group, although I do have other preferred stocks to pick if any of those aren't ideal. I think they're good choices though, from what I can see.

Any thoughts?

P.S. And lest this all sounds a bit to-the-point and unfriendly... Hi! How y'al doin'?

Hi Zombi, I'm also a newbie wrt stock & shares despite being perhaps twice your age. So I fully appreciate your wish to learn the ropes on investment - I'm doing the same.

My tuppence worth is the following:

From what I have gleaned here, and makes sense from an economic pov as well as general risk assessment, you should avoid putting all eggs in few baskets, meaning only a few individual shares, and in any event it seemed sensible to me that part of my education before selecting individual shares I should first understand something about markets and about my risk tolerance.

** Tax is also an issue, not only tax on income but also how to invest using pre-tax monies, ie your salary/wage before tax and NI are deducted. **

(The cost issues associated with investment have already been mentioned by those who know much more than I do.)

1. If you are a wage earner - you say that you are - then saving (& investment) via a pension is very worthwhile as someone else has mentioned. Not only is what you put in invested for you before tax is deducted, but so too is the (often larger) contribution made by your employer. My 'occupational' pension has served me well in delivering a healthy pension, but of course that all depends upon what is available to you and how you progress in your 'occupation' - you imply you will be going down the self-employed path, but do not ignore the benefits of a pension with whomever you are employed, especially when you are young.

2. Related to this, and to the pension scheme your employer operates, there is the Self-Invested Pension Plan (SIPP) route, which also includes a 'stocks & shares' SIPP. I am newcomer to that but have recently acted on some salary, investing that and having the SIPP firm claim back the tax I paid on that amount. I then chose products that were skewed towards equities and also tracked 'emerging markets'. This was to explore how risk-averse/tolerant I am before investing larger sums: and boy how they have fluctuated (largely due to movements of £/$ for companies and products dependent upon foreign income).

3. I also decided to open an ISA with Vanguard, as one poster has already advised, opting for one of their LifeStyle products which tracks a diversified set of markets, rather than buy individual shares. I've chosen LS80% - which is high exposure to equities, and therefore both high risk and high return. As I wanted to learn more about markets, I also added the VUSA product, which tracks the US S&P 500 Index.

4. As for the young nieces, there are Junior ISAs which are worth checking out.

5. It would seem that trackers can be beaten, but the very wise do seem to stress that "Time is your friend and impulse is your enemy. It's the market return that's going to be your best investment for a lifetime."

As I said, I'm a Newbie to investment in stocks & shares so others should stand by to correct, but I would advise that you use both your employer (if you have one) or SIPP to gain upfront by using pre-tax (and NI) monies, and your relative youth to best advantage. (And I can afford to be very risk tolerant with Indexes, and soon with shares, because I have 'safe' monies from pension.)

hth