General stock market investing question

[firsttimeted]

Hi there

I have decided to invest a sum of money (about 2,000) in the stock market for the year ahead(and beyond). I have a few questions which I'd really appreciate an answer to.

1. What/ where is the best place to purchase shares?
I have an online AIB and BOI account which do it but would like to know who charges the lowest transaction fees etc.

2. What websites are best for tracking the prices or researching companies?

3.What are the potential pitfalls apart from the usual risky stuff (buying all high tech/biotech stock)

4. Any other general advise and tips would be greatly appreciated!

 

[Gautama]

I'll give you a few answers. These are not perfect, but my own experiences.

Hi there
1. What/ where is the best place to purchase shares?
I have an online AIB and BOI account which do it but would like to know who charges the lowest transaction fees etc.

I've used Goodbody online. At the time, three years ago, I compared prices (commissions, annual charges, etc) and found them the best value for money.
I wasn't intereted in non-online firms.

2. What websites are best for tracking the prices or researching companies?

I just use Yahoo. Set up an account, enter your portfolio details, then you see the prices rise and fall.
the downside of this is that you'll be tempted to buy and sell.
2k is very small (more anon) so charges would eat it all if you did a lot of buying and selling.

3.What are the potential pitfalls apart from the usual risky stuff (buying all high tech/biotech stock)

You should diversify your portfolio. With 2k, that'll be difficult.
Barstool tips are another pitfall. Getting a tip from someone's that made a packet on a stock is of little use. You need to buy when they buy, not afterward.

4. Any other general advise and tips would be greatly appreciated!

There's an "Introduction to the Stock Market" course run by UCD, given by a Goodbody's guy. Cost me €260 a few years ago. Great course, would highly recommend it. I think it only runs in the Autumn. 8 weeks.

One tid-bit I remember is that he said that €5k was a "bite size" trade. I began with €10k, bought five or six stocks, and realise now that he's right. It's a small amount really. Since that first purchase I'd spend 2-3k on just one stock. Basically, diversified the portfolio at the start (though thinly spread), then bought €2k-3k of one stock. Now I've a mortgage so no mo mon'!
The plan is to sell shares every year, up to a profit of 1,270 to utilise my CGT tax free allowance (it can't be carried forward), or has been the case, had Jurys and Eircom bought off me.

One other piece of advice. There no point in comparing AIB with CRH or C&C. You need to compare those in one sector, eg AIB with BOI, ILP, IFG and Anglo. Determine the best value for money, then buy.
With this in mind, I bought Irish only. Small market but easier to keep an eye on. I've almost doubled my money in two-three years. Not dot-com era gains, but not dot-com era losses.

Read Mr Burgess's main article on investing, on stocks. Sound and solid.

 

[firsttimeted]

thanks for the sound advise. Where coulod I find this Mr Burgess article? By the way I know that 2,000 is peanuts but I am a trainee at the moment and my salary aint the highest so im just trying to learn the basics. Thanks again!

 

[Gautama]

By the way I know that 2,000 is peanuts but I am a trainee at the moment and my salary aint the highest so im just trying to learn the basics. Thanks again!

No bother.
Hope I didn't sound like I was condescending/belittling.

 

[Delboy]

thanks for the sound advise. Where coulod I find this Mr Burgess article? By the way I know that 2,000 is peanuts but I am a trainee at the moment and my salary aint the highest so im just trying to learn the basics. Thanks again!

you should really consider the charges involved. Goodbody online have the following:
Commission Rates

EUR32 per trade minimum commission.
1.25% commission up to EUR25,000.
0.50% commission on balance
Stamp Duty

Stamp duty is chargeable on the purchase of Irish and UK shares. The rates are:-
Irish Shares : 1.0 percent
UK Shares : 0.5 percent
Ancillary Charges

EUR26 per annum account maintenance charge
EUR13 Share withdrawal charge per stock.
EUR40 Account closure share withdrawal charge.


there are also some charges for buying shares in particular companies. So it's not cheap if your only thinking of going in with 2k.

 

[Murt10]

Bernice Cohen had a series on Channel 4 years ago and wrote a book of the same name for the series called Mrs Cohen's Money. It's now on Amazon for $5.25. I found it a great read.

My tip - Don't fallin love with a particular share. When the time comes to part company with them, just let go. If a share has halved in value, it's not time to buy more and average down, it's time to dump it and take your losses, because as sure as anything it's going to half again and again

Here's a 5 year graph of the share price of Elan and because it's traded in dollars the rollercoaster ride is even worse than this.


http://finance.yahoo.com/q/bc?s=ELN&t=5y&l=on&z=m&q=l&c=


Murt