Any share dealers here?

m1stergeorge

Well-known Member
I've got a First Direct sharedealing account and am thinking about just putting cash into shares for to ultimately go towards my deposit in around 4-5 years time. It doesnt cost anything to have other than for the trades themselves.

That said, I'm happy to just invest and (semi) forget about them. I haven't got much at the moment, just a few hundred pounds, but will look to increase that over time.

I think I'm too late to jump on the bandwagon of the banks as the shares that were 40p once upon a time (RBS) are long gone. Does anyone have any advice for a sharedealing n00b?
 

imightbewrong

Distinguished Member
With a small amount it's tough to make money as your trade costs will eat up a large portion of your capital - e.g. if you buy three companies' shares with £500 then that is a minimum of £60 in fees (three buys and three sells @ £10 each) which is over 10% of your investment.

I normally recommend people take a look at the Naked Trader (book The Naked Trader: How anyone can make money trading shares: Amazon.co.uk: Robbie Burns: Books website The Naked Trader - Robbie Burns' trading diary) - he explains in pretty straight-forward terms how to research companies and when to buy and sell. I've been following him for a few years and have had some very nice wins on his long termers.

Just on RBS, they are at 327p at the moment (http://www.shareprice.co.uk/RBS/ROYAL-BANK-SCOT-ORD-100P) BUT there was a 10-1 share consolidation (reverse-split) in 2012 (BBC News - RBS share consolidation takes effect) because the shares got so cheap - so you say they were once 40p, but they are actually at 32.7p now in those terms, or about 20% below 40p.
 
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m1stergeorge

Well-known Member
With a small amount it's tough to make money as your trade costs will eat up a large portion of your capital - e.g. if you buy three companies' shares with £500 then that is a minimum of £60 in fees (three buys and three sells @ £10 each) which is over 10% of your investment.

I normally recommend people take a look at the Naked Trader (book The Naked Trader: How anyone can make money trading shares: Amazon.co.uk: Robbie Burns: Books website The Naked Trader - Robbie Burns' trading diary - he explains in pretty straight-forward terms how to research companies and when to buy and sell. I've been following him for a few years and have had some very nice wins on his long termers.

Just on RBS, they are at 327p at the moment (http://www.shareprice.co.uk/RBS/ROYAL-BANK-SCOT-ORD-100P) BUT there was a 10-1 share consolidation (reverse-split) in 2012 (BBC News - RBS share consolidation takes effect) because the shares got so cheap - so you say they were once 40p, but they are actually at 32.7p now in those terms, or about 20% below 40p.
Thanks for the great advice!

I've downloaded that book in Kindle format so will be reading that imminently.

I reckon I'll sink my current funds into two companies. One probably well known brand and another that has potential.
 

booyaka

Moderator
If your saving for a house deposit - don't invest it in shares.

You need some kind of security with your cash if your set on getting a certain amount for a house. With the volatility of share prices, who's to say your money ain't for 10% of what you've invested in 5 years time? (conversely it could be worth 500%!)
 

m1stergeorge

Well-known Member
That's an entirely fair point. To be honest, I pluck the deposit out of the air as it was the first thing that came to mind. I'm happy to essentially leave this money for a number of years to grow.
 

domtheone

Distinguished Member
You could play it safe and buy a few large cap FTSE100 shares that yield 5%+. Reinvest the dividends for a few years and the returns (even assuming zero capital growth) would be better than sticking it in the bank.

With moderate capital growth it'd obviously be much better than a bank.

Alas, no guarantee that the share price won't tank either.

No matter how good the company, if DOW in the USA tanks (and it is at an all time high) then everything will get dragged down.

If that coincides with when you need your capital back....
 

imightbewrong

Distinguished Member
That's an entirely fair point. To be honest, I pluck the deposit out of the air as it was the first thing that came to mind. I'm happy to essentially leave this money for a number of years to grow.
As booyaka says it may never grow :) Naked Trader has a few recurring 'core' rules for trading, probably the biggest of which is:

- Is it money you can afford to lose? If your money is in the next Enron or Polly Peck or Marconi or Lehman Brothers it could be 100% gone. Other companies will take a massive drop and take a huge timescale to even recover (e.g. RBS as you mention).
 

RBZ5416

Distinguished Member
You'd probably be better off looking at what National Savings have on offer, maybe even Premium Bonds. As already said, you can be doing very nicely with a small portfolio but all it takes is one bummer to wipe it all out. This from someone who bought into RBS at 99p (pre consolidation) & has had a few other £1,000 purchases that have effectively evaporated.
 

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