Does anyone have experience of investing in shares within the FTSE or otherwise? If so is it worth it and could you make a ROI, through investing small amounts e.g £25 p/w? I am considering this, but given the state of the global markets at present, knowing where to invest is a research topic in itself.
It depends entirely on how much money you have to invest and what kind of returns/risk you are looking for. Some stocks pay good dividends, and are relatively stable. With a reasonable investment you could make a small income from them, but you've got to remember the underlying share price may fluctuate quite a bit and wipe out your investment in the short-medium term, you've got to weigh up the risks and how long you can afford to keep your shares. The best thing to do is speak to a broker, they will give you an idea of investment risk and return, and give you different choices for your money. To be honest I'd be very wary about managing the stocks completely by yourself and employing a broker XO, it's not an easy thing to get right. If you're particularly good at maths then you might find option trading to your liking, it can be a risky business, but pays well if you can get it right.
Other thing to bear in mind is dealing costs. i.e. The cheapest "execution only" (i.e. they give you no advice or recommendations as to which shares to buy) share brokers are online, and charge about £7 to buy/sell. The average for the bigger name brokers is about £12. That cost is per share, so if you're only buying £25 worth at a time, that's a very inefficient way to buy as you'll need your shares to rise massively just to cover the cost of buying and selling. Halifax and III used to have "sharebuilder" accounts which would let you make regular purchases for £1.50 a time. They worked by basically aggregating your order with lots of others, but depending on the platform, you might find you had placed an order on a Monday but nothing was bought until Wednesday due to waiting for required minimum number of orders from individual buyers - during which time the share price can go up or down. Had a quick look on their websites just now and can't find links to those accounts any more. You should also be aware that most online share dealing brokers only offer you "nominee" accounts. Basically means you are entitled to the beneficial interest (i.e. profits on a sale and dividends), but not all of them will allow you to attend and vote at the relevant company's Annual General Meeting. You may not be bothered about that, but something to bear in mind. If you want to hold the shares in an ISA for tax efficiency, I think they have to be nominee accounts.
Yes, I believe they do. As a reference, the stockbroker's where I currently work (small, independent place) charges as such for FTSE stocks: • £25 for each transaction up to and including a value of, £1,515.15. • 1.65% for each consideration above £1,515.15 Then 0.5% pa for Advisory Managed and 0.75% pa Discretionary for up to £250k, commission offset. And various charges for AIM etc if you want to get fruity.
If you want to sensible then you need a broker, doing it yourself is not easy and with small amounts it's not worth the time you put into it, yet alone the transfer costs. Investing for returns: I've got around £5,000 in shares at the moment, small amount I feel relatively safe investing, it was a sort of experimental dipping of my toes. Most of that sits with a friend of mine who's a broker and it makes a small safe return each year (we're expecting around 5% this financial year). Investing for laughs: A small part of that, I invest 'for fun', which in my case means in very low league football club shares (literally a penny per share sort of costs). My likely return for the next few years = £0, my possible losses are nearly nil (unless the club becomes insolvent). The point? not a lot really, it's kinda fun to 'own' part of several football clubs. You never know a rich sheik may take an interest and the shares will rocket I make more money each year from ISA's and much more from matched betting. If you're unsure those two options are much safer! But then I know sod all about shares and just use my broker!
Slightly off topic but still investing (sort off) Have you heard of Peer2Peer lending? http://en.wikipedia.org/wiki/Person-to-person_lending Below are the 2 biggest Zopa http://uk.zopa.com/ZopaWeb/ RateSetter https://www.ratesetter.com/ You lend money to borrowers via a company - they get a better rate than a loan from the bank, and you earn better interest than a savings account. Still risk involved but is explained and expected rates given. I have only just started loaning so cant give any results as yet, but feel rather safe with Ratesetter and their Provision Fund.
interesting, but you can get more from a free savings account: 8% interest from first direct, 6% from halifax and around 6% from a cash ISA, so the added risk doesn't seem worth it?
I have already used my ISA allowance for this year and like the OP, i have always liked the idea of investing in shares. Due to charges and the small amounts i would be investing, it doesnt seem worth it. Im not saying Peer2Peer lending is best thing since slice bread, just something I am trying out (1st month)
You realise that it's identical to what established bank do. Take your money then lend it to another person profiting from disparity in interest. This is the same but offering much better rates for higher risk. Also where can you find 6-8% rates(from established banks)? Apart from a few one year current account bonus deals even bonds are only yielding 4%.
The highest bank I've found is (atm) Bank Of Scotland, and they're at 2.7%. Anyway, buying shares as "fun" is doable by yourself, limit your risk and it's okay. "Investing" small amounts regularly (25pound a month say) is eaten up by expenses, there are bankplans or funds that offer this for a reasonable amount a year though. I've used a bonus a few years back as "play-money" and have neary gotten out what I put in ten years ago (Okay, if GM hadn't happened I'd be in the plus for over 50%)
As I already said First direct savings account does 8% as long as you are a current account holder. they also give you £200 for opening the account and a further £200 if you leave. Santander do 5% + £100 bonus, but I wouldn't touch Santander for any money. Halifax do a straight £5 a month regardless of your savings.
