Advice on how to successfully enter stockmarket

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windo77

Registered User
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79
Hi,

I would like to invest in the stockmarket. I have €1,000 to invest - I am prepared to lose it as have a pension and I believe that I also have a good spread of 'safe' investments earning 4 - 7% p.a.

Given that the minimum commission charges are typically €20 - 100 per trade, I reckon I would need to limit myself to two trades. Does anyone disagree with my way of thinking?

Also, do I lodge money with the stockbroker or do I transfer money from my bank account each time I wish to make a transaction? I have a current account with NIB. So, I am thinking of using them as their commission charges are relatively low. Any comment?

I know very little about spread betting but given there are no commision charges and the minimum trade is often €1 (meaning that I could risk less per trade than if I buy shares), perhaps this is a better option for me. I understand that the risks involved are greater but if so, I am thinking that maybe I should take that risk after I learn what I need to know - I am currently reading The Financial Spread Betting Handbook by Malcolm Pryor and The Naked Trader by Robbie Burns. Any comments on these books? Any other recommedations for reading?

Finally, if I open an account with a non-Irish-based stockbroker / spread trader, do I need to open a bank account in the country in which they are based?

Thanks in advance for any advice.
 
windo77 said:
I would like to invest in the stockmarket. ...
I know very little about spread betting but given there are no commision charges and the minimum trade is often €1 (meaning that I could risk less per trade than if I buy shares), perhaps this is a better option for me...
Click to expand...

First, establish in your own mind whether you want to invest or to gamble.
 
windo77 said:
Hi,



Also, do I lodge money with the stockbroker or do I transfer money from my bank account each time I wish to make a transaction? I have a current account with NIB. So, I am thinking of using them as their commission charges are relatively low.
Click to expand...

If you go with NIB you will need to open a custody account, this is easily done in your local branch. There is an annual charge of €40 for this a/c but if you have free banking you don’t pay this.

You can then buy up to the cleared balance in your a/c.

Suits me, easy to use, €20 for small on line trades, and no annual fee.
 
Padraigb said:
First, establish in your own mind whether you want to invest or to gamble.
Click to expand...

Hi, I am prepared to risk losing the €1,000 and while I recognise that a deal on a share may be less risky than a spread bet (is that true?), spread betting attracts me because I can bet very small amounts in a given bet and there is no commission.

Or are there other, better ways of investing on the stock markets?
 
With such a small amount, there's no point in you buying shares. I've used the Sharewatch small trades service to buy before (used them because I wanted to take collection of the share certificates myself). They charge €50 a trade. So if you've got €1,000 and want to make two buys, you immediately need your investment to rise by 20% before you break even when you sell (remember there's a €50 fee for selling as well!).

To me, it sounds like spread betting is what you're after. Have a look at www.theirishinvestor.com, there's a chap there who actively spread bets. You might get some pointers and information on who to best spread bet with.
 
"I would like to invest in the stockmarket. I have €1,000 to invest - I am prepared to lose it as have a pension and I believe that I also have a good spread of 'safe' investments earning 4 - 7% p.a."

What exactly are the safe investments which earn 4 - 7% p.a.? Do you mean cash in the bank or are you invested in funds which may have an exposure to the stockmarkets with or without your knowledge?

For a small sum like 1,000 euro, I would not recommend taking a wild risk "Just to try it". You stand a very good chance of losing it all, never returning to the stockmarket and missing out on attractive long-term returns. Have you considered paying into a monthly fund like Quinn Life's freeway? This would reduce the risk and give you a wide spread of exposure to world stockmarkets for your money.
 
When I refer to 'safe' funds, I am referring to accounts with AIB, EBS, etc. - they are not returning the kind of money I am after when I contemplate the stockmarket investment but the funds are protected by the gurantee.

Thanks for the pointers to Quinn Life and the http://www.theirishinvestor.com site. I'll check both out. I have invested in the 'Freeway' type of fund that Quinn Life offer before and I have lost money (not with Quinn Life though). However, they have a good reputation and I shall explore that option.

When I start investing, I don't think I will be "taking a wild risk". At that stage, I'll have done my research and that will minimise the risk involved. I am prepared to take risk losing all of my €1,000 but that would not put me off returning to the stockmarket in the future.

I am not yet fully aware of the risks involved in spread betting but as I understand it, I can minimise my losses by setting a stop loss when I make the trade. Is this view too simplistic?
 
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