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Low cost/free stock ownership

Investment discussion for beginners. Why you should invest your money, get help getting started
GeoffF100
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Re: Low cost/free stock ownership

#112099

Postby GeoffF100 » January 20th, 2018, 3:04 pm

BRK-A is currently priced at $320,238.00 per share. IG commission rates are "by negotiation" for trades of that size, but you appear to be able to hold USD in their account, and FX conversion is at 0.3%. iWeb would convert everything to sterling at an extortionate rate. You are probably going to have to contact some brokers. A US broker might be your best bet, e.g.:

http://content.schwab.com/web/internati ... 20150149:s

paulnumbers
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Re: Low cost/free stock ownership

#112154

Postby paulnumbers » January 20th, 2018, 5:44 pm

1nv35t wrote:Thanks Geoff. My thoughts however were more along the lines of longer term buy and hold. A paper certificate could be locked away, you were registered on the companies books as a shareholder and had a certificate that you could hand to any broker of your choosing who was able to trade those shares. I'm assuming that is no longer a option so looking for the next best alternative to that. Crest I suspect, but I believe even that is in decline. Ideally where you're not locked into a broker/manager/provider and at the whim of them changing terms and conditions/fees/takeovers etc. Reduce/eliminate counter party risk, ideally down to one on one between the company and myself.


If you want to buy 1 share at £230k, then FX charges are the most important thing in the short term.

HSBC investdirect allegedly do not charge any FX fees when buying and selling, and I use their ISA and shares account to hold BRK-B for this reason. They charge £42 per year to have the account open, but in comparison to IG's one off charge of 0.3% (£690) you're better off sucking up the yearly charge for quite a while.

I say allegedly, because I don't find it anywhere in writing, but they've confirmed it on the phone, and I've confirmed with one or two trades that it was correct. If you want me to double check some recent notes I'd be happy to.

Will this be held in an ISA/Pension, or clean? If clean, have you considered purchasing the equivalent in brk-b shares so that each year you can harvest some gains for CTG purposes?

If you do use HSBC and you're bothered about the £42 per year charge, you can transfer them out to something like IWEB for small fee. Personally I keep them in HSBC as it qualifies me for their premier account which gives worldwide travel insurance (a very good policy, worth at least £150 to me) and a %5 regular saver which also gives me around £75 interest per year on an average investment amount of about £1500, which covers the £42 anyway.

I hear what you're saying about counterparty risk. I did look into if it was possible to hold them in certificate form, but never found a practical way to do it, and anyway have managed to bed&isa most of my brk-b now anyway. I consider HSBC a sensible custodian, though of course realize I'm breaking Warrens advice about keeping as few people between your money and yourself as possible.

Another option is Degiro with 0.1% FX charge, but I'm sure you would never consider them. TD Investdirect used to allow you to hold USD in your account, and have a 3rd party do the transfer, so that may also be an option, but then their flat fee is something like £80 a year just to have the account now anyway.

In conclusion, cheapest way to do it that I know of is

1) Open HSBC Investdirect, make purchase, cost $30 (£21), pay first quarter fee £10.50
2) Open Iweb, cost £25 (I wouldn't really like to hold so much in IG Index, as PYAD might say, I don't like the smell).
3) transfer shares from HSBC to IWEB, cost £15
4) close hsbc investdirect.

total cost, £71.50, no on going costs.

paulnumbers
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Re: Low cost/free stock ownership

#112164

Postby paulnumbers » January 20th, 2018, 6:40 pm

Perhaps clean isn't the correct word but you got the point ;-)

I can certainly see your worry. I have a vague recollection that even the nominee doesn't hold the shares directly when they're US shares, and they're actually held at DTCC. Though I might have that wrong.

Isn't it possible to have Berkshire convert the shares to B class without triggering CGT? Presumably there would be a cost, but it may enable to you do a little well timed bed&isa'ing each year. Fair enough if you're able to hold them forever.

Have you asked your current broker if there is any way for them to convert the shares to certificates?

We have a bank account with HSBC and they often ask me to book a appointment with one of their advisors that I've always declined, best perhaps if I do book a session as another of my favourites is FT250 and I believe their tracker is reasonable.


No particular reason to hold only HSBC funds within HSBC investdirect.

If you do find a way to convert them to certificates do let me know please, for sentimental reasons I'd quite like 1 'B' shares ;-)

GeoffF100
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Re: Low cost/free stock ownership

#112407

Postby GeoffF100 » January 21st, 2018, 8:34 pm

Converting an A share into B shares may well be a CGT event in the UK. I suggest that you check that very carefully before doing it.

If you transfer your shares to a US broker, you may cut down the number of custodians between you and your money. US compensation limits are also much higher than the UK limits, and US brokers usually carry extra insurance. I believe that US investment protection laws are also stronger.

paulnumbers
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Re: Low cost/free stock ownership

#112423

Postby paulnumbers » January 21st, 2018, 11:03 pm

1nv35t wrote:If you hold shares directly registered with Berkshire Hathaway you can just write and ask for A -> B conversion on their register. When held in nominee you have to get them to do the conversion. IIRC Buffett's will is to distribute BRK shares in B form, so it looks like a A to B is a non taxable event in the US. Here in the UK if you sell one investment to buy another that is considered the same then I believe that doesn't induce a CGT event when within the 30 day rule period, so I guess A -> B conversion isn't a CGT liable transition in the UK either, but a tax advisor would be required to confirm that or otherwise.

I have my doubts about whether BRK-B shares might continue to not pay dividends or return capital. My hope/expectancy is that A series might whilst B series might not after Buffett's demise. If so continuing to hold A would be the better for our personal objectives. Splitting the difference however and converting 1 retaining the other does however have some appeal for earlier distribution to others, tax harvesting, ISA migration and diversifying holdings (nominees) purposes.


What gives you the idea that the shares be treated differently for dividends? How would that change the relative value of them (currently x1500 iirc) and who would come up with a valuation of the shares to do that? I dont think you could use the market value of the shares to do the adjustment, Warren would be crawling out of his grave to give a lecture on the fallibilities of Mr. Market.


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