Need some help about shares
Discussion
I am looking to invest some of my money into the stock market while at uni.
However, I or noone in my family has any experience in the stock market.
I just generally need to know how I can enter into the stock market and genreally how it works and the do's and dont's. I gather that this is quite a big sector and maybe hard to get all the relvant information down.
Any helpful input would be massively appreciated.
However, I or noone in my family has any experience in the stock market.
I just generally need to know how I can enter into the stock market and genreally how it works and the do's and dont's. I gather that this is quite a big sector and maybe hard to get all the relvant information down.
Any helpful input would be massively appreciated.
mlj said:
I am looking to invest some of my money into the stock market while at uni.
However, I or noone in my family has any experience in the stock market.
I just generally need to know how I can enter into the stock market and genreally how it works and the do's and dont's. I gather that this is quite a big sector and maybe hard to get all the relvant information down.
Any helpful input would be massively appreciated.
Get books from the library. Read them.However, I or noone in my family has any experience in the stock market.
I just generally need to know how I can enter into the stock market and genreally how it works and the do's and dont's. I gather that this is quite a big sector and maybe hard to get all the relvant information down.
Any helpful input would be massively appreciated.
Study the basics of risk. If you don't understand risk then you will never make any money.
Take several financial news sources such as the FT.
Pick a group of listed companies which you can see in your everyday Uni life and try and work out how they operate, study their market, understand them. Once you understand one you understand the basics of all of them.
Avoid bulletin boards at all costs. Never read them, they are full of complete s
t about crap stocks, crap strategies and crap attitudes to risk.Avoid small caps. They are small because they are too s
t to be big.Avoid anything that seems exciting like Mining, Exploration and Technology, if they are not scams they are under funded, if they are not under funded they are run by clueless people, if they aren't run by clueless people they won't be finding what they are looking for.
Go boring, go sensible, understand risk, understand the business model = laughing.
Obviously, you will ignore this and you will inevitably invest in crap small caps and try spread betting and lose your money.
I am in a similar position, having put about half of my savings into stocks while I am studying, as the returns are better than term deposits, on average (over the long term). What would be reccomended is to invest in blue chip stocks (ie very large companies), listed on the FTSE, NASDAQ, etc. Look for companies that pay a decent dividend (yeild <5%), as it is generally a lot harder to try and pick capital gains in order to rely on these as your return.
It is probably not necessarily the best time to be buying, but what you need to remember is that you are (I am assuming), not investing large monetary sums, so any price movements will not affect you very much in terms of actual $. As someone mentioned earlier, small stocks are very illiquid, so you may find you are unable to sell them when you need/want.
You need to invest at least 1500 pounds at a time, otherwise the transaction costs will be too high, and it will not be a worthwhile investment. What is your degree of financial literacy? It is important to at least have a basic understanding of financial and market terms. Liquidity, cash flows, accounting policy effects, are the kind of things it is useful to have an understanding of.
Try and invest with the long term in mind, as it will make things much easier for you. If you are thinking short term you will just get too anxious as prices move up and down, and may make some rash decisions. Someone at work said he lost 6 grand when he was at uni making large bets on price movements. When you take a long term view, you can generaly sit back and not worry too much; today I noticed that one of my stocks has taken off, and is up 30 from when I bought it, so you may get nice surprises.
Make sure you keep all relevant documents, such as contract notes from transactions (brokerage fees are tax deductible; most likely in the UK too), dividend statements, and try and read the annual report.
Just make sure that you are happy with the investments you have made, and decide your risk appetite. Diversify to an extent (ie, buy oil stocks and aircraft stocks), as this is very good for mitigating risk. As an example, I hold insurance and building stocks, so when there was a natural disaster this year one went up and the other went down. Having a general awareness of the business news, and of course an understanding of the companies you invest in is important.
Sorry for the rambling, scrambled answer; I have just been writing things down as they pop into my head. I am sure you will find it is not as difficult as you think, just make sure you keep some cash reserves.
It is probably not necessarily the best time to be buying, but what you need to remember is that you are (I am assuming), not investing large monetary sums, so any price movements will not affect you very much in terms of actual $. As someone mentioned earlier, small stocks are very illiquid, so you may find you are unable to sell them when you need/want.
You need to invest at least 1500 pounds at a time, otherwise the transaction costs will be too high, and it will not be a worthwhile investment. What is your degree of financial literacy? It is important to at least have a basic understanding of financial and market terms. Liquidity, cash flows, accounting policy effects, are the kind of things it is useful to have an understanding of.
Try and invest with the long term in mind, as it will make things much easier for you. If you are thinking short term you will just get too anxious as prices move up and down, and may make some rash decisions. Someone at work said he lost 6 grand when he was at uni making large bets on price movements. When you take a long term view, you can generaly sit back and not worry too much; today I noticed that one of my stocks has taken off, and is up 30 from when I bought it, so you may get nice surprises.
Make sure you keep all relevant documents, such as contract notes from transactions (brokerage fees are tax deductible; most likely in the UK too), dividend statements, and try and read the annual report.
Just make sure that you are happy with the investments you have made, and decide your risk appetite. Diversify to an extent (ie, buy oil stocks and aircraft stocks), as this is very good for mitigating risk. As an example, I hold insurance and building stocks, so when there was a natural disaster this year one went up and the other went down. Having a general awareness of the business news, and of course an understanding of the companies you invest in is important.
Sorry for the rambling, scrambled answer; I have just been writing things down as they pop into my head. I am sure you will find it is not as difficult as you think, just make sure you keep some cash reserves.
I've only invested a few hundred pounds, did it through Halifax online share dealing. Whilst the initial commission charge left me in a -ve position, the shares have risen enough to have me in profit. It's just a bit of fun at the moment and I'll get into it more seriously in a few months.
Oh, and I've gone for the oil and mining side of things..!
Oh, and I've gone for the oil and mining side of things..!
If your idea of trading in shares is buying and selling every day then just don't do it.
If you think you are going to pick a tiny start up company and watch your money grow as it turns into the next Microsoft then just don't do it.
On the other hand...
The FTSE is currently in the upper five thousands, you have missed the bottom of the market but adjusted for inflation the last peak was 7200 and the one before that nearly 9200. So spread the risk over a few FTSE companies and aim to sell at an FTSE of 6500 or 7000 if you're feeling like a bigger risk. Don't panic if the market moves up or down a little bit, you are not playing that game, this is a waiting game.
One I'm looking at: RR at 600p, was 650 not long ago and is tiped to go to 700. They are in a strong position at the moment compared to their competitors. I reckon that last figure is a bit hopeful but that is the risk (I wouldn't cry over missing 700p, I'd sell at 650! ) They pay dividends in B shares, not money, so you have to convert those (without checking I can't recall exactly how).
If you think you are going to pick a tiny start up company and watch your money grow as it turns into the next Microsoft then just don't do it.
On the other hand...
The FTSE is currently in the upper five thousands, you have missed the bottom of the market but adjusted for inflation the last peak was 7200 and the one before that nearly 9200. So spread the risk over a few FTSE companies and aim to sell at an FTSE of 6500 or 7000 if you're feeling like a bigger risk. Don't panic if the market moves up or down a little bit, you are not playing that game, this is a waiting game.
One I'm looking at: RR at 600p, was 650 not long ago and is tiped to go to 700. They are in a strong position at the moment compared to their competitors. I reckon that last figure is a bit hopeful but that is the risk (I wouldn't cry over missing 700p, I'd sell at 650! ) They pay dividends in B shares, not money, so you have to convert those (without checking I can't recall exactly how).
Some nice feedback guys.
I'm looking at just over a grand to invest and was thinking of either banks, IT or oil.
It's not something I'm going to look at and see i've made a bit after a week and sell them, I want this to be an investment over a minimum of my uni course so about 3 years, maybe more.
I will try to find some books about it and do some research.
Again thanks.
I'm looking at just over a grand to invest and was thinking of either banks, IT or oil.
It's not something I'm going to look at and see i've made a bit after a week and sell them, I want this to be an investment over a minimum of my uni course so about 3 years, maybe more.
I will try to find some books about it and do some research.
Again thanks.
mlj said:
Some nice feedback guys.
I'm looking at just over a grand to invest and was thinking of either banks, IT or oil.
It's not something I'm going to look at and see i've made a bit after a week and sell them, I want this to be an investment over a minimum of my uni course so about 3 years, maybe more.
I will try to find some books about it and do some research.
Again thanks.
3 year, unmaintained portfolio would suggest using 'defensives' rather than the standard 'glamour' stocks.I'm looking at just over a grand to invest and was thinking of either banks, IT or oil.
It's not something I'm going to look at and see i've made a bit after a week and sell them, I want this to be an investment over a minimum of my uni course so about 3 years, maybe more.
I will try to find some books about it and do some research.
Again thanks.
With $1000, you will only realisticaly be able to make two or three trades at the most (I am not sure what the standard brokerage fee in the UK is). Sure, you can read a lot of books about valuation etc, but with such a small sum it may be hard to apply much of what you read. Also, if you are not a student well versed in business many of the books will be a bit difficult to understand, though I am guessing you are somewhat knowledgable in this area, so this might be less of an issue. The hardest part can often be trying to find a point to begin researching. With however many hundred stocks to choose from, it can be a bit overwhelming. An efficient research method I find useful is to use the research databases that brokerage firms provide (which you can access when you sign up with them), and look at the stocks they have rated.
Pick some rated 'buy', and do a bit of reading about that company. Then repeat, and draw comparisons with other companies. Analysts ratings should not be taken religously, bbut they do give a useful starting point for doing your own research. Just remember you are not trying to pick the next Google, Microsoft etc, and if you can get a 6-7% dividend yield and/or 10-15% capital gain after a few years then you have done well.
Pick some rated 'buy', and do a bit of reading about that company. Then repeat, and draw comparisons with other companies. Analysts ratings should not be taken religously, bbut they do give a useful starting point for doing your own research. Just remember you are not trying to pick the next Google, Microsoft etc, and if you can get a 6-7% dividend yield and/or 10-15% capital gain after a few years then you have done well.
DonkeyApple knows what he is talking about but frankly I think it is a waste of your time.
There are an almost limitless number of fund managers out there who DEDICATE THEIR LIVES to beating the market and making good investment returns.
You aim to beat these people with no experience and while studying at uni.
Just put it in a tracker and go and enjoy uni.
Sure if you want to go into "the city" or fund management when you leave uni then some time learning business basics/trading and losing money in the markets will help you, but you should treat the money lost (and you will lose) as an investment into your future. Like an unpaid internship, for example.
The amount you will make as a banker will far outweigh any potential gains your investments might make over the next 3 years unless you are EXTREMELY lucky.
I genuinely don't understand why every PHer thinks that with a little hard work they can beat the market.
You can't.
Encouraging this myth simply lines the pockets of share trading companies.
There are an almost limitless number of fund managers out there who DEDICATE THEIR LIVES to beating the market and making good investment returns.
You aim to beat these people with no experience and while studying at uni.
Just put it in a tracker and go and enjoy uni.
Sure if you want to go into "the city" or fund management when you leave uni then some time learning business basics/trading and losing money in the markets will help you, but you should treat the money lost (and you will lose) as an investment into your future. Like an unpaid internship, for example.
The amount you will make as a banker will far outweigh any potential gains your investments might make over the next 3 years unless you are EXTREMELY lucky.
I genuinely don't understand why every PHer thinks that with a little hard work they can beat the market.
You can't.
Encouraging this myth simply lines the pockets of share trading companies.
I'd probably agree with Walm. If this is supposed to be an investment, then just invest it, and leave it alone.
It,s very likely that you'll do worse if you actively trade. If you really do want to trade, though, either because it appeals, or, to learn now for use later, then you need to fi d the most efficient way to do it. Spread betting with someone like City Index might be your best bet, but watch out for the hidden costs (you have to pay to fund some positions, bid/offer spread can be large, etc.)
It,s very likely that you'll do worse if you actively trade. If you really do want to trade, though, either because it appeals, or, to learn now for use later, then you need to fi d the most efficient way to do it. Spread betting with someone like City Index might be your best bet, but watch out for the hidden costs (you have to pay to fund some positions, bid/offer spread can be large, etc.)
Yep, tracker all the way. Think long term. Wish I'd been aware of this when I was at Uni. I am only getting in to them now.
By long term I mean 10+ years.
I've been recently reading the Motley Fool book, of course it's trying to get you to look at their site and use their services (which I do anyway) and apart from some awful chunter and slang now and again it's quite good and makes for simple reading, quite enlightening. I picked up an old copy in a local charity shop - 90p well spent!! Although it is a 2002 ed. (2nd rev) it all still applies!!
If looking at trackers, look at those with low TER.
Good reading : http://www.fool.co.uk/Investing/guides/Why-Tracker...
and this article, which got me thinking about investing in a different way : http://www.fool.co.uk/Your-Money/guides/the-miracl... (actually it's not that article, but there was one a few years ago about investing the money you spend on coffee in shares and how it could gain a lot in value, due to the compound interest being re-invested) http://www.fool.com/investing/brokerage/how-to-inv...
read this : http://www.fool.com/investing/general/2004/01/16/t...
Compound interest!!!
By long term I mean 10+ years.
I've been recently reading the Motley Fool book, of course it's trying to get you to look at their site and use their services (which I do anyway) and apart from some awful chunter and slang now and again it's quite good and makes for simple reading, quite enlightening. I picked up an old copy in a local charity shop - 90p well spent!! Although it is a 2002 ed. (2nd rev) it all still applies!!
If looking at trackers, look at those with low TER.
Good reading : http://www.fool.co.uk/Investing/guides/Why-Tracker...
and this article, which got me thinking about investing in a different way : http://www.fool.co.uk/Your-Money/guides/the-miracl... (actually it's not that article, but there was one a few years ago about investing the money you spend on coffee in shares and how it could gain a lot in value, due to the compound interest being re-invested) http://www.fool.com/investing/brokerage/how-to-inv...
read this : http://www.fool.com/investing/general/2004/01/16/t...
Compound interest!!!
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