# Minimum amt of shares that can be bought



## joanmul (11 Mar 2007)

My son, who is a mature 3rd level student, doesn't have a fixed income.  However, from time to time, he works part-time.  He is thinking of buying shares occasionally, from time to time, when he has a bit of surplus cash, to build up a portfolio gradually.  What is the minimum amount he can buy?  For example, he is thinking of buying Ryanair. If he opens an account with, e.g. Goodbody, what would his expenses be?


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## CCOVICH (11 Mar 2007)

If he is buying small amounts, he would be better off investing through a unit linked fund, e.g. Quinn Life or Rabodirect.  Both allow small monthly investments.

Investing directly in shares is almost certainly not feasible due to the costs.

Please don't mention individual shares.


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## ClubMan (11 Mar 2007)

The minimum amount of shares that can be bought directly in a company is 1.


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## joanmul (12 Mar 2007)

Clubman, I meant the minimum that would justify the charges.


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## CGorman (12 Mar 2007)

Taking one of the cheapest Irish brokers, Davy Direct, heres the costs for a €500 Ryanair transaction bought and sold over one year...

€25 (to Buy)
€25 (to Sell)
€5 (Stamp Duty)
€80 (Annual Account Fee)

Total Costs: €135

So, _just to break even_ you would need the shares to rise in value by over 25% in one year.

If we deal with a €1,000 purchase and sale...

€25 (to buy)
€25 (to sell)
€10 (Stamp Duty)
€80 (Annual Account Fee)

Total Costs:€140

Here you'd need a rise in value of 14% over a year.

Obviously the larger the sums the smaller the costs as a percentage. If he is dealing with small sums, he should either get a cheap online broker or just do €50 once off trades with Sharewatch.

I'm also a 3rd level student getting ready to delve into the stockmarket. Ive decided the minimum investment I'm prepared to make is €2,000 in a single trade. At that figure the pure transaction costs would equal 3-4% and hopefully I can spread the account fees across several trades (using a joint account with a family member).


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## ClubMan (12 Mar 2007)

CGorman said:


> Taking one of the cheapest Irish brokers, Davy Direct, heres the costs for a €500 Ryanair transaction bought and sold over one year...
> 
> €25 (to Buy)
> €25 (to Sell)
> ...


Actually more after _CGT _is taken into account. If the shares appreciated by 25% then your gain after tax would be €100 so you would still be out of pocket.


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## CCOVICH (12 Mar 2007)

Buying a single share is a high risk play.

Buying and selling within a year is not really a viable strategy.

€10k is a figure that is _generally_ quoted as the minimum for direct share purchase.

Many brokers may not be able or willing to fill small orders.


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## CCOVICH (12 Mar 2007)

ClubMan said:


> Actually more after _CGT _is taken into account. If the shares appreciated by 25% then your gain after tax would be €100 so you would still be out of pocket.


 
Isn't there an annual exemption of €1,270 per person?


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## ClubMan (12 Mar 2007)

Oops! Of course. My mistake.


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## CGorman (12 Mar 2007)

CCOVICH said:


> Buying a single share is a high risk play.



Fully agree, if I go ahead, i'll be dealing with 4-5 shares, not one.



CCOVICH said:


> Buying and selling within a year is not really a viable strategy.



I was just making the above example as simple as possible to illustrate to the original poster how unviable small share dealing is.



CCOVICH said:


> €10k is a figure that is _generally_ quoted as the minimum for direct share purchase.


 
I'd agree with that figure (indeed its the exact figure i'm dealing with).


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## CCOVICH (12 Mar 2007)

Yes, I have no doubt *you* would be adopting a sensible strategy CGorman .

It doesn't sound like the OPs son will have €10k to invest (immediately anyway).

Of course another strategy is to save until you have €10k (or whatever) to invest directly and then do so.

This thread in the Best Buys forum may be of interest to the OP.


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## CGorman (12 Mar 2007)

Have been researching my options heavily in the past few weeks (much thanks to the many excellent trends on AAM) and have noticed a US firm called Firstrade.

Apparently they charge the equivilant of €5.30 to buy and the same to sell US Equities, with no other obvious fees. My point is, if the OP's son wants to start off small, those rates make it quite possible to do so. At €5.30, he could even invest in 5 companies at €500 each (€2,500)... a nice spread of risk at low cost. 

I have not fully researched this company yet, all I know is a AAM poster recommended them and that they are one of a surprisingly small number of foreign online brokers to allow Irish people to set up accounts. 

OP, note that sharedealing can have significant tax implications. I've spent the evening on revenue.ie getting up to speed on CGT and dividend implications.

* Having spent some time researching my options, i've compiled a table of firms which accept Irish citizens and there relevent costs. If anyone would like me to post this table (about 8 firms), i'd be happy to do so.

_NOTE: Using US/UK brokers will leave the OP's son venerable to currency movements_


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## CCOVICH (12 Mar 2007)

CGorman said:


> * Having spent some time researching my options, i've compiled a table of firms which accept Irish citizens and there relevent costs. If anyone would like me to post this table (about 8 firms), i'd be happy to do so.



That would be very useful.  Could you post it in the Best Buys forum?


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## adam (13 Mar 2007)

Not sure if this is any help but I recently set up a Davy's online A/C - it was very straight forward - downloaded forms etc.. You did need a min of 2,000 euro to deposit with them to start off though. Presume Goodbody's are much the same.


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## CGorman (13 Mar 2007)

CCOVICH said:


> That would be very useful.  Could you post it in the Best Buys forum?



Done


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## CCOVICH (13 Mar 2007)

Fantastic CGorman, many thanks for your work.


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## CGorman (13 Mar 2007)

CCOVICH said:


> Fantastic CGorman, many thanks for your work.



No problem, sure I'd all that data sitting on my pc, why not share it and save others the work?

BTW: When you take into account stamp duty, the huge range of US shares and the cheapness of Firstrades commissions it seems mighty attractive to trade frequently in the US and try and aim for small quick gains of 5-10% rather than leave it all sitting in boring FTSE 100 firms! 

However, in the end I think the currency stability of the sterling outweighs the pros of jumping to the states... sure 0.5% stamp duty is'nt too bad.... I think i'm going to end up putting the 10k into Hoodless Brennan.


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## BIG (13 Mar 2007)

It is possible to trade for 2.5K, I also use firstrade and at $6.95 per trade its very easy to deal with small portfolios plus you done have the 1% stamp duty on irish shares.
The only downsides is the currency fluctuation, but the euro is worth ~1.32$ at the moment so i think it possibly it could work in your favour.
The other limitation is funding the account, you need a electronic funds transfer from your irish bank who will charge you 15-30Euro and you probably will be charged at the other end too for recieving the money (~30$) plus whatever commsion the bank charge on the currency conversion.
Also you cant trade any irish/uk shares (unless the are listed in the US).
Wouldnt go near irish stockbrokers unless you have a lot of money to trade 10-20K+as the commisions are ridiculous.


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## robd (13 Mar 2007)

joanmul said:


> My son, who is a mature 3rd level student, doesn't have a fixed income.  However, from time to time, he works part-time.  He is thinking of buying shares occasionally, from time to time, when he has a bit of surplus cash, to build up a portfolio gradually.  What is the minimum amount he can buy?  For example, he is thinking of buying Ryanair. If he opens an account with, e.g. Goodbody, what would his expenses be?



Some of the last few threads seem to be digressing into arguing particular points with each other rather than answering joanmul's question.

As clubman pointed out (and this is my experience too), €10000 is about the min worthwhile transaction in Irish shares.  You could just about do €5000 if you're using someone a little cheaper like Sharewatch who I use.  As was also pointed out by another poster due to risk it's not a good idea to purchase shares in just 1 company.  I'd recommend 4 to start with.

I don't agree with the recommendation for investing with US brokers.  He would be investing in US shares which are more liquid, more volatile and carry a $ currency risk that has been hanging around the last 2 years.  Yes it's much cheaper to invest in the US but not necessarily a good idea for a novice with small funds.

The best suggestion given (which I concur with) is to buy into funds such as those from Quinn Direct, Rabobank or others.  Given your son is in university it's unlikely he has time to track individual companies he would be investing in and it's a bad idea to buy without having done the homework.  I would recommend Euro Funds at the moment as the returns are > 10% with a much lower risk than other global funds which aren't preforming much better (or in some cases worse).


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## joanmul (14 Mar 2007)

Thanks for all the info folks. I had enquired from Goodbodys and the costs, either online or through AIB would be prohibitive for my son. I have now started enquiring about investment learning clubs and think he might go down that route for a while anyway.


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## dam099 (15 Mar 2007)

robd said:


> I don't agree with the recommendation for investing with US brokers. He would be investing in US shares which are more liquid, more volatile and carry a $ currency risk that has been hanging around the last 2 years. Yes it's much cheaper to invest in the US but not necessarily a good idea for a novice with small funds.


 
You could mitigate the risk somewhat by investing in ADR's of European shares but there are still the costs of converting Euros to Dollars and back again when you take your profit which might outweigh any savings on commissions.


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## jrewing (15 Mar 2007)

Dam099,
Can you please explain an ADR ?


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## CCOVICH (15 Mar 2007)

An ADR is an American Depositry Receipt


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## sherib (19 Mar 2007)

AFAIK there is no Annual Account fee charged by Campbell, O'Connor. No mention was made of this when I recently opened an account with CO'C. Here are the commission charges: 1.5% up to €8,888 subject to a minimum of €25.40 (or GB£20).

There is a 1% Stamp Duty charge on Irish Registered Shares and a 0.5% on UK Registered Shares.

"_When dealing in a non-Irish or UK stock you will also have to pay an agent's commission fee; US commissiions are approx. 0.5%, subject to a US$50 minimum commission on top of our normal commission per deal."_

In view of these charges, the minimum amount invested in Irish shares should ideally be €1,700 at a cost of €25.50 plus €17 stamp duty (1%). Since it is usually recommended on AAM that investment in shares should be long term, it would hardly be likely that a person would sell in the first year especially with a share like Ryanair?

My own view as a newcomer is that if the annual gain is at least 10% _after all charges are deducted,_ it is still twice as much as a deposit account would yield. More would be great! Thanks to *CCOVICH* for mentioning the annual exemption of €1,270 - very encouraging for a beginner with moderate ambitions regarding profit.

PS  Is the annual exemption cumulative on an annual basis?


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## ensonique (20 Apr 2007)

CCOVICH said:


> Isn't there an annual exemption of €1,270 per person?


 
Hi CCOVICH, 

What exactly you mean here by this exemption? Can you explain?

Ens


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## CCOVICH (20 Apr 2007)

The first €1270 of gains per individual in any one tax year are exempt from CGT.


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## ClubMan (20 Apr 2007)

ClubMan said:


> The minimum amount of shares that can be bought directly in a company is 1.


Actually - I guess it could be less than one - e.g. an ADR/ADS that represented a fraction of one underlying share.


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