Brendan Burgess
Founder
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We don't allow speculation about shares prices on Askaboutmoney, but here are some general guidance notes. These apply to all shares.
If you have borrowings, other than a tracker mortgage, you should repay those borrowings before buying any shares.
Most people understand that they should not borrow money at 3.5% to buy shares which might go up or down in value. But they don't understand that if you have a mortgage costing them 3.5% and €20,000 cash, by buying shares with the €20,000 they are effectively borrowing to invest.
If you have cash left over after paying off your mortgage, there might be better things to do with your cash.
For example, have you contributed the maximum allowed to your pension fund?
This is likely to provide a better long-term, after-tax return than buying shares directly, i.e. not through a pension fund.
The best way to invest in shares is through a diversified portfolio or through an Exchange Traded Fund
No matter how good you think a particular share is, it's risky to invest a high proportion of your assets - say more than 5% - in that share. So if you want to buy shares, buy shares in at least 10 different companies diversified according to industry (e.g. banking, airlines, construction, engineering,etc.). You should also diversify according to where they earn their profits from. Most large blue-chip companies have sales in the EU, America and elsewhere in the world.
AIB is one single industry banking highly dependent on one economy - Ireland.
"But won't AIB be priced by the government at an artificially low price to ensure a successful sale?"
Many people buy as many shares as possible in a flotation on the grounds that the price will rise immediately after the flotation.
This happens from time to time, but it's not always the case. Buying any one share is risky, at an IPO or not.
"But aren't the stockbrokers tipping these shares as a good buy?"
Stockbrokers have a terrible record in forecasting share prices. What they say is pretty much irrelevant. Ignore them.
Stock brokers make their commission through their clients buying and selling shares. (Although they are not getting paid for selling the shares in this IPO).
"I fancy a punt, how do I buy them?"
AIB flotation process - Guide and FAQ for those who are thinking of buying shares
If you have borrowings, other than a tracker mortgage, you should repay those borrowings before buying any shares.
Most people understand that they should not borrow money at 3.5% to buy shares which might go up or down in value. But they don't understand that if you have a mortgage costing them 3.5% and €20,000 cash, by buying shares with the €20,000 they are effectively borrowing to invest.
If you have cash left over after paying off your mortgage, there might be better things to do with your cash.
For example, have you contributed the maximum allowed to your pension fund?
This is likely to provide a better long-term, after-tax return than buying shares directly, i.e. not through a pension fund.
The best way to invest in shares is through a diversified portfolio or through an Exchange Traded Fund
No matter how good you think a particular share is, it's risky to invest a high proportion of your assets - say more than 5% - in that share. So if you want to buy shares, buy shares in at least 10 different companies diversified according to industry (e.g. banking, airlines, construction, engineering,etc.). You should also diversify according to where they earn their profits from. Most large blue-chip companies have sales in the EU, America and elsewhere in the world.
AIB is one single industry banking highly dependent on one economy - Ireland.
"But won't AIB be priced by the government at an artificially low price to ensure a successful sale?"
Many people buy as many shares as possible in a flotation on the grounds that the price will rise immediately after the flotation.
This happens from time to time, but it's not always the case. Buying any one share is risky, at an IPO or not.
"But aren't the stockbrokers tipping these shares as a good buy?"
Stockbrokers have a terrible record in forecasting share prices. What they say is pretty much irrelevant. Ignore them.
Stock brokers make their commission through their clients buying and selling shares. (Although they are not getting paid for selling the shares in this IPO).
"I fancy a punt, how do I buy them?"
AIB flotation process - Guide and FAQ for those who are thinking of buying shares