what should i consider in investing in shares?

Question

i have very little amount at my disposal but very many companies offering shares in the market

Answer 1

Not between May and September.

Not with money you can't afford to lose.

You can get 10% for 12 months with a bank regular saver account (£250 per month) for a year. That's guaranteed.

What's guaranteed if you deal in shares is that you will pay commission when you buy and when you sell, plus tax at one end, so that 3% (minimum) of any profit would be lost.
There will also (probably) be a minimum charge to trade, so that to buy £500 worth of shares may attract as much charges as to buy £1000 or even £2000 worth. Shop around. I found it best dealing in £1200 or £2000 lots.

Do not try to catch a falling knife.

NEVER trade at "best price". Look online at current trades. Decide what you want to buy or sell at - ask for that.
"Best price" is not what it seems!

Be aware of cut-off dates for entitlement to dividend. The price will generally take a dip immediately after dividend issue.

Spread the risk. Buy diverse shares.

Good Luck!

Answer 2

How much is very little ?
If you're talking about anything less than several thousand pounds then the economics of investing in individual shares doesn't work in your favour
You'll pay anywhere between £7.50 and £12.50 to buy and sell your shares plus stamp duty of 0.5% plus the buy/sell spread.
So if you're only talking about say £500 then you've got £25 commission and about £2.50 stamp duty.
The buy/sell spread will be typically around .5p on a £1 FTSE100 share so that's about another £2.50.
So for your initial £500 you have an investment worth about £470, so you need to make just over 6% to break even.

I would recommend that you ask yourself what you're savings goals are.
How much can you afford to invest ?
How long can you leave the money tied up ?
Do you have sufficient cash savings to tide you over in an emergency ?

Have a look at the Motley Fool site, read their excellent articles, subscribe to their newsletters, pose questions on their forums.

I realise that this is probably a more downbeat answer than you are looking for but there are no easy ways to make money in shares and an awful lot of ways to lose money quickly.

Answer 3

1. Don't buy shares directly, it is too expensive to buy and sell, even £10 a trade will hurt.
2. Don't "invest" money you can't afford to lose or at least tie up for a long time, possibly 4 - 5 years.
3. Save regularly in a cash ISA to build up a lump sum first of all, this will get you in the habit and you can prove to yourself there is no need to access the money
4. If and when you have saved a substantial sum invest in another ISA but choose a general funds which will itself invest in a wide range of stocks and shares. Motley Fool website will tell which are worth looking at.

Answer 4

Suggestion: Do some research first.

You are better off going for the Halifax Share builder account, you can put in your 50 quid (or whatever you can afford) and every month it will automatically buy the stock you set it to every month. (cost averaging)

If you pick one company in the FTSE100 in 5 different industry segements, (eg Mining, Pharmaceutical, Retail, Intrnet, telecoms, etc) you will expect a better long term return. It is only £1.50 per tranaction, so if you bought £10 of shares, you will in reality get £8.50 worth as the transaction fee is covered in that. Start small, think long term. Use a Buy and Hold strategy

If you were thinking of doing TRADING, forget it for a small amount of money. The cheapest transaction rate I could find was £10. At fifty quid a month, its not worth your while as you would have to make 20% before you broke even!

Start with the buy and hold on that. In time you will have a reasonble amount to play with, you can trade in half your stocks and get trading with that.

Basic rules: Do not put more than 20% of your trading money in one stock.

Work from there.

Remember, there are no hot tips, no quick hit profits. Getting rich is long term, getting rich is boring! £50 a month is great for buy and hold. Its how the richest and most successful traders all started. How about you model their patterns and you will probably get the same results!

If you were going to be trading soon, get a share magazine, I get mine from tesco, and often in the back it has a matrix of all the online traders with athe charges listed. You can make you own mind up. There are some geared towards people like yourself who won;t be making more than 10 transactions month and so on..

I personally use the Halifax share builder for my buy and hold (for a rainy day or longterm gain) and I trade with eTrade as I trade in Uk and US stock and it allows me to do both. US stocks provide me more chioce and better returns generally.

Answer 5

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Answer 6

Why don't you try investing in a variety of shares? This eliminates the risk involved in buying in a sole company and gives you the opportunity to monitor a number of companies at once.

Answer 7

The first thing to do, if investing in shares for the first time is to do a little bit of studying at these sites to help you get your head round things + pick up a few leads on companies to invest in:
http://www.fool.co.uk
http://www.everyinvestor.co.uk
http://www.fool.com
http://www.investopedia.com
http://beginnersinvest.about.com/cs/warrenbuffett/a/aawarrenbio.htm

The next thing, is to shortlist a few companies you like the sound of and look up their ticker symbols @ http://quote.fool.co.uk
At the moment, from recent leads from articles on Fool.co.uk I'd suggest:
Royal Bank of Scotland (RBS)
Kelda (KEL)
BHP Billiton (BLT)
Severn-Trent Water (SVT)
Boots (BOOT)
Halifax Bank of Scotland (HBOS)
British Energy (BGY)
National Grid (NG) - note you may have problems getting quote results for this one (I usually do when I try).

when you've typed the symbol into the search box to get the details for that company, first thing I click on is the link "Forecast" which shows you how the company is expected to perform over the next couple of years.
The 2 bits on there I look at first are the "EPS Growth" column.. it helps if the number there is in blue text and has a + symbol next to the figure...... the other is the "P/E" ratio column. from what i've read, the figure in there should be shrinking each subsequent year, e.g. 10.7 - 9.8 - 9.5, etc.
The other I look at is the "Dividend" column... this is how much per share held (in pence) the company is prepared to repay it's investors from it's profits.... this is good, as you're essentially getting "free" money from them.... which you can use to contribute towards buying even more of their shares, and get even more dividend paid out to you next time it's being paid out.

The next thing to look at is the "fundamentals" section (different page), which shows you how the company's accounts are doing + what they (the company) do...... they should be making a profit, and not owe too much money (+ one or two other factors I can't recall at the moment).

Finally, it usually helps to have a peep at the "Directors Dealings" section to see if those in charge of the company have been buying / selling off their own shares in the company.....if they've been buying... or at the very least hold at least SOME shares in the company, which can show how well the company is doing / they expect it to do + they're taking an interest in the company they're running.

When you've picked your chosen company(s), and if you opt to buy via HALIFAX SHAREBUILDER (as i suggested below).... invest at least £120 on each one to get enough shares to cancel out the cost of the purchase commission fee as soon as possible when their value rises....... if you go for one of the brokers who charge £10 commission fee, then you'll need to invest at least £1000 to get the same effect.

Remember the prices quoted are in PENCE not POUNDS
e.g. 1,027p = £10.27, not £1,027

Answer 8

It depends whether you want to go for the long haul or just a quick buck?

Long haul-- You should want to consider company's in the fields of power, education and pharmaceuticals.

Quick buck-- Close your eyes, get a pencil and stab it in to the paper randomly to pick your company to invest in.

Hope this helps... bar that there is a horse running in the 3.20 at Exeter called "Hit and Hope"

Answer 9

if you are unsure, then reconsider alternatives. you could invest on trading platforms; i.e no credit, with an opportunity to win a prize as the top investor. if you look on the web, you'll find sites which give you 5,000 gifted credit and allow you to invest as an imaginary day trader. this could be a good starting point as you'll learn much. no harm will come to your investments; i.e no money is needed. enjoy this alternative?...

Answer 10

Never invest more than you are prepared to lose.
Remember, the value of shares can go down as well as up.