Starting out with shares

[limpsfield]

I would say that £200 is too small an amount to start with to be honest. If you assume you are going to be paying a tenner to buy and the same to sell then straight way you need to be at least 10% ahead to break even - and that's lumping it all one one stock. You might just find it a little demoralising that putting in a lot of work ends up with no real return.

[xr287]

I'm only going to answer #4 really. Yes many pies, may sound like a total cliche but do diversify! If your into your maths and the technical aspects of it you want investments that are not strongly positively correlated or if you can find them negatively correlated so you can hedge against losses elsewhere. Remember though that increased numbers of holdings = increased transaction costs that will eat in to any profits if you are only dealing in small amounts.

[Dakkon]

I would suggest not buying shares in less than 500 pound amounts and maybe really 1000 pounds. I understand your concern about loosing such a sum of money, but you need to think of the trading costs.

I am with iWeb who have different accounts for share dealing, but as I am not a big day trader it costs me ten pounds a trade, that is ten pounds to buy the shares and ten pounds to then sell then.

This means I have to make at least twenty pounds on the shares to see any profit.

How about just investing 50 or 100 pounds per month into a FTSE tracker, you can put this in an ISA so it would be tax free too?

Edited becuase I can't type today

Edited by Dakkon on Thursday 8th October 13:02

Edited by Dakkon on Thursday 8th October 13:02

[Fittster]

What kinds of annual return are you looking for?

[n1ckt001]

Currently reading Warren Buffet's book, and whilst I am still in the first few chapters, one thing has become abundantly clear... research... he really really did his research and knew the stocks inside out so he found those undervalued stocks and took a long term position on those...

.. so I guess I am asking - Is 30 mins research a day going to suffice to make any real progress if you are buying individual stocks and obviously trying to find those with 'value' with the aim of getting a decent return over the trading costs?

[Mattt]

With that amount, I wouldn't bother.

Look at CFD instead - but fully understand it before getting involved.

[Dover Nige]

I started out playing with £200 earlier this year, thinking I could afford to lose it. I've sunk another £100 into it since I started.

What I've got is now valued at £845.40.

All I'll say is do loads of research and only put in what you can afford to lose.

With hindsight I'd have put everything I had in and would now have bought that Gallardo or V8 Vantage I'll have one day, but I couldn't afford to lose all my savings.

Even though I've done alright with my tiny sum, I'm always wary of it and know it could vanish at any time.

[Dakkon]

IL_JDM said:

Dakkon said:

I would suggest not buying shares in less than 500 pound amounts and maybe really 100 pounds. I understand your concern about loosing such a sum of money, but you need to think of the trading costs.

I am with iWeb who have different accounts for share dealing, but as I am not a big day trader it costs me ten pounds a trade, that is ten pounds to buy the shares and ten pounds to then sell then.

This means I have to make at least twenty pounds on the shares to see any profit.

How about just investing 50 or 100 pounds per month into a FTSE tracker, you can put this in an ISA so it would be tax free too?

I've thought about this also, but seems like the returns will be pretty appalling unless I'm looking at it wrong?

But as other have said it is all about diversifying your assets, put some money into a cash ISA, put some money into a FTSE tracker ISA and play with some money on the stock market, have some high risk shares, have some low risk steady shares, but a few bonds.

Forget about making a quick buck and think about long term growth and having a little nest egg for a rainy day.

[limpsfield]

IL_JDM said:

Dakkon said:

I would suggest not buying shares in less than 500 pound amounts and maybe really 100 pounds. I understand your concern about loosing such a sum of money, but you need to think of the trading costs.

I am with iWeb who have different accounts for share dealing, but as I am not a big day trader it costs me ten pounds a trade, that is ten pounds to buy the shares and ten pounds to then sell then.

This means I have to make at least twenty pounds on the shares to see any profit.

How about just investing 50 or 100 pounds per month into a FTSE tracker, you can put this in an ISA so it would be tax free too?

I've thought about this also, but seems like the returns will be pretty appalling unless I'm looking at it wrong?

But if you lump your £200 into one share then you are 10% behind before you start due to stamp and commission.

As has been said, it is not a lot to start with. Yes you could hit on something that increases 10fold in the next year but the odds are massively against that. Someone else mentioend CFDs but if £200 is all your risk capital i don't think you have any place trading margined products.

[matsmith]

as has been said, £200 isnt really enough for daily trading. as limpsfield has mentioned dealing costs mean you need 10%+ to break even, it would need massive luck for you to buy and sell with a decent % profit in a week, but if you want to have a go at it then dont go splitting it among more than one share as your cash will just end up disappearing in dealing costs. find one good one and stick to that until you have more money to split up

1) i use barclays stockbrokers, its a good site and is easy to use
2) many will try to put you off saying its near impossible to make money, its far from easy, but its not impossible
3) you'l need to develop your own technique, but i would say that great returns arent very likely at this point on FTSE 100 companies, the high risk/reward is in the smaller companies
4) already mentioned
5) even with £200, be prepared for your life to be taken over

[Dakkon]

Whatever stocks you decide to buy, really research that company, their own website, has that company been in the news for other reasons, any articles on some of the financial sites.

Check out the motleyfool website - http://www.fool.co.uk, decent site and decent forum.

Research, research, reseach.

[Fittster]

Dakkon said:

Research, research, reseach.

Or simply believe efficient-market hypothesis (EMH), prices already reflect all information therefore it's not actually possible to outperform even with Research, research, reseach.

Maybe invest some of your £200.00 in A Random Walk Down Wall Street: A Time-tested Strategy for Successful Investing

Edited by Fittster on Friday 9th October 10:41

[Backtobasics]

matsmith said:

5) even with £200, be prepared for your life to be taken over

and thats the truth!

[Scrogger]

Take a look at interactive investor - www.iii.co.uk

Good for general research on shares coupled with low dealing charges.

I would suggest setting up a self select share isa which can put in lump sums and would also allow you to invest in your own choice of shares on a monthly basis with cheaper dealing costs.

You really need to task yourself to increase your available capital as best you can.

Edited by Scrogger on Wednesday 14th October 17:04

[JonX2C]

I dont think this has been mentioned, but have you ever thought about spread betting.

Its tax free and £200 is a good startin point of you want to run long term spreads on individual shares.

I started using this, but spread on indexes which got me into a bit of trouble.

I have learned my lesson and now look at small amounts on individual stocks.

Not the greatest thing in the world but a bit of fun.

IG index do an in depth course for new people.

[Dr_Gonzo]

Fittster said:

Dakkon said:

Research, research, reseach.

Or simply believe efficient-market hypothesis (EMH), prices already reflect all information therefore it's not actually possible to outperform even with Research, research, reseach.

Maybe invest some of your £200.00 in A Random Walk Down Wall Street: A Time-tested Strategy for Successful Investing

Edited by Fittster on Friday 9th October 10:41

With hundreds of very bright people working full time analysing the market, can you really complete with them in your spare time?

[AngryApples]

JonX2C said:

I dont think this has been mentioned, but have you ever thought about spread betting.

Its tax free and £200 is a good startin point of you want to run long term spreads on individual shares.

I started using this, but spread on indexes which got me into a bit of trouble.

I have learned my lesson and now look at small amounts on individual stocks.

Not the greatest thing in the world but a bit of fun.

IG index do an in depth course for new people.

I'd agree with this


Id add that if you go this way, choose a company that has quite a high margin (that is, the % of the stock value you have to take out of your available funds to bet 1 point (£1) on the stock)

This way, as a newbie you are less likely to get carried away

When I first started on CMC, their margins were one heck of a lot lower than they are now and I screwed up (though luckily not in a big way) with trying to get in too fast, too soon

Now, with their higher margins I've calmed down and have quite got the hang of it all and what's more I'm really, really enjoying it

Also, be sure to use your stop losses and stick with them!

[Dakkon]

AngryApples said:

JonX2C said:

I dont think this has been mentioned, but have you ever thought about spread betting.

Its tax free and £200 is a good startin point of you want to run long term spreads on individual shares.

I started using this, but spread on indexes which got me into a bit of trouble.

I have learned my lesson and now look at small amounts on individual stocks.

Not the greatest thing in the world but a bit of fun.

IG index do an in depth course for new people.

I'd agree with this


Id add that if you go this way, choose a company that has quite a high margin (that is, the % of the stock value you have to take out of your available funds to bet 1 point (£1) on the stock)

This way, as a newbie you are less likely to get carried away

When I first started on CMC, their margins were one heck of a lot lower than they are now and I screwed up (though luckily not in a big way) with trying to get in too fast, too soon

Now, with their higher margins I've calmed down and have quite got the hang of it all and what's more I'm really, really enjoying it

Also, be sure to use your stop losses and stick with them!

If your new to spread betting then make sure you set up stop losses.

Might be worth reading a book called 'The Naked Trader' by Robbie Burns

[AngryApples]

Dakkon said:

AngryApples said:

JonX2C said:

Some stuff.

Some more stuff

Even more stuff

Stop losses, bla

Naked trader, bla

Err, yup, I already said about the stop losses!

But agree 100% about naked trader - good book!

Edited by AngryApples on Monday 16th November 21:39