How to start in share dealing #investments
Share dealing is fraught with problems and it is something you have to learn by experience. First, you need a good stock broker and you will almost certainly use a nominee account. This means they hold the shares on your behalf. I think nominee accounts stink, they don’t give private shareholders enough rights or influence over the company that they collectively own.
Making your first investment
With a nominee account, you can deal online and if you have a broker with a good service they offer other things like research services and they give you a valuation of the stock you own. I don’t give advice but if I did, I would advise a fairly low risk share to begin with. Something that is in the FTSE 100, one the top companies and one that pays a dividend.
Discount share dealing
I use Halifax share dealing because it is reliable and efficient but it is also expensive. Next Wednesday, for two hours they will discount their commission to 3.95 a trade instead of the usual 12.50. The discount will only be for 2 hours and so I’ll consider trading then. There is also stamp duty of 0.5% when you buy stock.
Looking at the FTSE 100 list of companies, some were hit by the Brexit vote and so their share prices still seem low. The banks look like they are a bargain at the moment but they are suffering from the low-interest policy. I have bought Lloyd’s Banking group (again) and I considered Barclay’s. Insurance companies weren’t doing too well but they have all raised their premiums by around 20% recently and so they are worth considering. Shares in RSA Insurance seem to be picking up now and I think the AA will do better with higher premiums. Pharmaceuticals have seen price falls this week after Hilary Clinton said negative things about the price of drugs. I think this is a temporary fall, she didn’t mean all pharmaceutical prices.
You have to consider risks when your start share dealing. It is better to start with low risk companies and build up a diverse portfolio. Invest more in safer companies and a lot less in the risky companies. While the AIM market can give huge returns, it’s not a good place for the new investor. You have to be prepared to lose all you money whatever you invest in but that is doubly true for the AIM market.
I have been share dealing for a few years and I’ve learnt to stay calm and to not panic when I see the market in free-fall. Losses are just on paper or on the computer screen. You don’t really lose until you sell your shares at a loss. Seeing a lot of red on your computer screen can spoil your day, though! The Brexit vote trashed my portfolio and it still hasn’t recovered but my long-term plan is still working and I did pick up some shares at a good price because of the Brexit vote. Now I am trying to limit my risk before article 50 is triggered. This week, I’ve been beating the indices and I’m about 1% up, that translates into a big increase in my returns on investment.