Stockmarket newbie

A question about : Stockmarket newbie

I have tried to research a lot on the stock market and the more I research the less I know!

So I figured the only way to get a good feel of the stockmarket and understand it better is to buy some shares. I understand the risks involved and ready to take the gamble with Ј500.

I'm in IT so was looking to buy some shares in the technology sector.

What's the best way to start this up?

After talking to a few friends, they suggested I look into Hargreaves and Landsdowne and Barclays Stockbrokers. Are there any better alternatives for a newbie with relatively low fees for smaller transactions?

Best answers:

• If you've never invested before then buying small amounts of single company shares is a very risky plan and, in my view, a bad idea.
  Unless you can invest Ј50,000 in a mix of shares then you're better off using funds. You can get technology funds so you could get them if it's an area you're interested in. But having just that sector would again be high risk especially if you're employed in it too, any downturn may affect employment as well as your investment.
  I guess overall it depends if you want to build an investment portfolio to grow long term or are just looking to gamble where the risk of losing your money is high.
• good stuff - go for it! I think if you have the inclination and the curiosity then its a great thing to do.
  it is the only way to learn - ignore the ones who say you'll lose your shirt (even if you do) and certainly ignore anything that says you need to start with Ј50k - thats ridiculous!
  read some more though and beware that at Ј500 your costs (spread, dealing costs and stamp duty) will be a high % of any gains (or magnify any losses) you make. With that in mind, you need the cheapest execution-only broker you can find - i think theres one who does it for Ј5 per trade X-O or something. I use iii. and shareprice.co.uk The latter charges Ј9 if you use a mobile device. Its unlikely that Barclays will provide the lowest cost service, but i could be wrong.
  do read more - the book "the naked trader" by robbie burns is a great starting place i think> i read it a couple of years back - even though i'd been trading / investing for some time then. He has a very good way of explaining and logically setting out the homework you should do on each stock that you consider. its also very easy to read (or listen to - i got the audiobook for the car)
• I have started to learn passive investing with funds which is different to what you're doing. From what I understand though you have to think about what you want out of it. So are you picking a company with a good record of high dividends so it doesn't matter if you lose some of the 500 if their share price drops as the dividend income helps balance it out. Or are you picking someone with lower dividends and betting they are the new big thing and their share price will go up. If it is the latter how long are you thinking of holding the investment for, as if it is a year or two or three and that doesnt happen, and the dividends don't even cover the fees how long will you hang on, or keep adding more shares to it before you cut your losses. Do you know if it drops to a certain price, or rises to a certain price that will be when you sell. Are you a hrt payer and are you doing this within an isa as the tax might also take a chunk of your profit from the dividends too.
• I would have to agree with jimjames in that I think individual shares is risky to invest in if you are totally inexperienced unless you would be ok with losing the lot if the technology sector takes a big hit in the next few years. I am not sure what you would learn from that other than taking that approach is just like gambling and you may as well stick it on a horse. I would also think that buying individual shares is expensive and if you do not buy them within an isa you are going to have to keep tax records.
  I am new to investing as well and agree that the best way to learn is to take the plunge with investing as there is such a wealth of written information out there and it does seem the more you research the more you understand that there is no one size fits all in terms of investment strategy and it becomes a bit overwhelming. To that end I am starting with dipping my toe in the water first by investing in a multi asset global fund which is low cost, very easy to set up and does not involve massive risk (although of course there is some).
• I know the feeling- the more answers you find, the more questions arise too.
  I have dipped my toe into the world of investing this year, but have gone for a couple of funds to spread the risk plus this doesn't seem to swallow up as much in charges.
  I've gone with TD Direct, there's a 0.3% platform fee on the ISA (plus Ј30 annually if you don't meet one of their other conditions, but I've set up a regular payment to avoid this). To be honest though, I just really liked the fund selector tool. Its easy to narrow down what options are in the field that you want to invest in. I don't know how this compares to the (seemingly) million other providers but it felt like I could have spent my life reading and never making an investment!
• It all depends, OP, whether you are interested in the stock market for trading/speculating/excitement/fun, or for investment.
• Buying a small number of individual shares is highly risky, but the only way to really understand investing is to do it. To feel rather than just watch the highs and lows as the market moves. I guess most of us started in that way and learnt the lessons. So I think that with Ј500 it could be a good educational experience. Research the shares, choose the ones you like and see what happens. It may cost you a bit but the education could well be worth it. Then go back to the books with a better understanding and start your investing again.
• What do you plan on doing with the shares you buy - are you planning to trade on the stock market or hold on to them? If you're willing to put Ј500 because that's the best way you learn then I applaud your conviction. Bear in mind, investors typically have to put in a lot of research into companies they're planning on buying shares in. Please don't just buy shares in companies on a whim. I'm just getting into passive investing myself, I feel that it will give me a greater understand of the 'big picture' before getting into the world of stock picking.
• I use SVS Securities - Ј5.75 per trade.
  I opened a self-select ISA a couple of ago and pick the occasional share (basically anything that's tumbled 20%+ in a few days that catches my eye).
  I filled it with Foxtons and Serco for a few months but got out of both this week (as I want to be fully liquid for a while just in case the Greece thing goes pear-shaped and affects the markets). Made +30% on Foxtons, -5% on Serco.
  Swings and roundabouts...
  I treat it as a bit of fun, but naturally I'd be annoyed if I lost my original stake. Plan is to take that out once (if) I double my money - then whatever's left is 'free'. I need to get there first of course
  PS Definitely have a bash with practice money first to see if it's for you!
• Read The Naked Trader book and start listening to the ADVFN podcast. Don't by any means think either will have all the answers but the podcast in particular will start getting you used to the terminology and what to try and look out for.