Investing for the first time?

Question

Hi I'm and interested in investing . I've been reading about the "Certificated service" on the Lloyds TSB website, and have a few questions since I'm quite new to it all:

>What are costs (apart from buying shares)- it says on the site "Buy or sell online using share certificates for just £27.50". It also says "No account fee and no fuss". What does this mean? Is the £27.50 the cost for starting investing or a regular payment?

>What's the biggest loss that I can make? I mean is there any way I can lose the money in my normal bank account (that I haven't invested) or is it that I'll only lose some/all of the money that I had invested?

>Is my basic understanding correct, that I purchase shares in a company that I think will do well, and when the price per share has risen, I sell them on for more?

Sorry if these questions are a little stupid. I'm only 16 and I want to do something useful with my EMA grant. Thanks! ^_^

Answer 1

Firstly, don't use a certificated account! They are expensive and time consuming. Shares often get lost when sent to the brokers. Opt instead for a nominee account. Your broker will hold your shares electronically. Don't however pay any inactivity fees. They are for suckers.

£27.50 is the basic commission. If you trade in a nominee dealing charges will reduce. Selftrade (for example) charge a flat £12.50 if you trade online. The total consideration (ie what you pay) is commission plus cost of shares and stamp duty at 0.5%.

You are correct in thinking that when a share price has risen you can sell it on for more. Remember that it has to have increased sufficiently for you to cover the commission when you sell! It may also decrease if you pick a dog. You can potentially lose everything you have invested.

I knew one man who had £40k knocked off the value of his portfolio in an afternoon...

Also you cannot hold shares in the UK if you are under 18. Your parents may be able to set up a designated account for you. They will have authority to deal on your behalf.

Good luck!

Answer 2

All investors had a first time, so don't worry, there are no stupid questions :)

I have two simple recommendations for you:
1 - get some stock investing training, and learn a complete system. There is a lot of misc information out there, but getting the whole picture takes a while. By taking a course you invest very little money (compared to what you could loose or win) and save a lot of time. A good starting point for training recommendations is http://online-investing-review.com/blog/online-stock-trading/

2. Practice trading stocks or options with Virtual money, on a Virtual Stock Exchange. This allows you to go through all the process from researching potential stocks (from your training system) to actually placing the order to buy and to sell. Find the virtual trading link in this page: http://online-investing-review.com/blog/ressources/

3. Keep good records of each trade you make, and I mean all of them, especially the virtual trades because they are such a good learning tool, and definitely your loosing trades. Review your closed trades to learn from them and adapt your trading system.

Answer 3

To get bigger returns, you will desire to settle for bigger possibility. do no longer start up procuring person shares. you're competing against investment specialists, and you will no longer win. purchase a maket index ETF like QQQ, which invests in an index and has very low costs. you're making an investment contained available in the industry as an entire. Or, purchase a mutual fund, and you pay a cost (a share of your funds) to the managers for figuring out on your shares. in case you think of which you would be able to elect the expert which will %. shares greater suitable than all the different specialists, then purchase a mutual fund, and the greater desirable return would be somewhat actual worth the greater desirable costs. do no longer fool your self into thinking which you would be able to %. shares greater suitable than the specialists. If there replaced right into a extreme-return, low-possibility investment, the specialists could have already got jumped on it, bidding up the cost until the expeected return matched the envisioned possibility. Open a Roth IRA. positioned funds into it. you will no longer get a tax deduction now, however the money will advance tax-loose, and once you're taking the money out, you will no longer pay tax on it. Your tax cost once you retire is enormously much actual going to be bigger than your tax cost now, so that could be a solid deal. (in case you think of your tax cost would be decrease in retirement, positioned your funds right into a familiar IRA, which gives you a deduction now, however the money is taxed as familiar earnings now once you're taking it out at retirement.) positioned the money into an index ETF like QQQ. do no longer sell every time the industry drops. you desire to purchase low and sell extreme, and promoting whilst the industry drops is the different of that.

Answer 4

i would suggest an ISA as you are young and should not tie up your money for too long until you have a better idea of saving and investing. an ISA ia tax free saving and you can invest in cash (like a bank but with better interest) or stocks and shares depending upon your attitude to risk.

your local bank branch should be able to give you advice for free, if you take a plan out they will receive commission but are not likely to charge you fees.

good luck

Answer 5

Don't.

It's a giant casino and all the games are fixed against you by the big boys.

Did we all forget the 1930's already.

Stay out of it, it is corrupt and rigged and designed to take your money off you.

Answer 6

yeah, roll the dice!