Investing in Irish Shares

Mr E

Given how quiet this forum is, I might need to post elsewhere, but I'll give it a go

My parents just sold their house, bought something smaller, and now they have some cash to spare. Dad wants to invest in shares for AIB and BOI (long term investment), and isn't sure what is the best way to do it.

He believes that he heard of a website out there where you can buy the shares online, and pay for them in a few weeks (which sounds whacky to me).

Whats the best way to go about buying these shares (for a complete trading newb)?

Thanks in advance...

Edit-Disclaimer - I'm not seeking legal or financial advice, anything mentioned here will be researched fully.

Blackjack

AFAIK there's a few out there - Sharewatch etc, but none that I'm aware of where you pay a few weeks after you trade.

A few years ago technically you paid a week after you purchased (Trade date +5, and +7 at one stage) but this has gradually reduced down to T+3 and the markets were looking to move to T+1 in the long term, however, I've not seen or heard anything progressing this in the past 2-3 years.
Most Brokerages will need to have access to the funds via direct debit or the like or pre-funded account before giving the credit, depending of course on the size of the client relationship.

hmmm

As Blackjack says. Otherwise whats to stop people buying shares and reneging on paying if they drop in the meantime!

If your Dad has significant money in hand, I'd suggest he gets some independent advice. In particular he will want to spread his risk - e.g. putting all his money into Irish banking shares is not good diversification, particularly in the middle of a housing bubble.

Prob best to contact either:

NCB, Goodbodies or Davys

I would go with hmmm
You can now reduce unsystematic (extra) risk with a good portfolio.
Any of the above names should be able to put that together for him.

Also, since you are newbies, the urge to tinker with your portfolio will be strong. You are prob best to leave it well alone in the case of interim fluctuations as broker fees, stamp duty, and other charges can create quite a large hit on your investment as you jump around chasing a minimal return - remember, you're in this for the long haul!

The_Minister

This forum is not to be used for giving financial advice. I will be drawing a charter up soon, but for now, I would appreciate it if the OP could add something to his post stating that he is not taking this as financial advice (a la Legal Discussion rules).

Mr E

Sorry, Moderator.

I was not seeking legal or financial advice, just basic info on the sites that are out there that offer these services. Any ones mentioned will be researched fully.

To the "0 posts" user who PMed me privately offering their services, I politely decline. You might want to add something about that to the charter too.

The_Minister

There was an administrative error. I am mod of economics only. So take my post as friendly advice.

Muscling in already eh???????

Tut tut tut!

Mr E

Makes sense anyway, Minister.

The_Minister

Thanks. You should probably report that 0 post user, who offered you advice. Shilling by PM is not on either.

keynesian

i know of one place, give 10days credit but that was on stock befor IPO. You need to be referd, sorry don't know ya and i've only started using them.

AlyB

As far as I can remember from finance in college you can buy a call or a put option which means you can say you will buy a share on a certain day for a certain price, therefore if the price of the share goes up you will be paying the lower price - however if the price of the share goes down, you can opt out of buying it... talk to a financial advisor about your options but as far as i remember this can be done

Blackjack

AlyB wrote:

As far as I can remember from finance in college you can buy a call or a put option which means you can say you will buy a share on a certain day for a certain price, therefore if the price of the share goes up you will be paying the lower price - however if the price of the share goes down, you can opt out of buying it... talk to a financial advisor about your options but as far as i remember this can be done

You do have these instruments, however the options do come at a price, and they are exactly that, being Options, (not obligations) to buy or sell, for which you pay for the option at the time of striking the deal.

Futures on the other hand are obligations to buy or sell at a later date, at a price agreed when the deal is booked.

I work in overseas property and also the AIM stock market in London (Alternative investments market).
From my experience i would be a bit suspicious of purchasing online, I think the best way is to find a broker you trust, who has a bit of savvy etc. Invest something small with him or her see that it works and then work your way up. Of course as a broker I would say this, but Im really using my familys experience of trading in shares. My Dad traded a lot in the past, and had a great relationship with his broker, played tennis with him etc and he got good advice and worked it that way. I think he was happy to pay the brokers commission because he was making money. But can be sure these online trades are getting some commission somewhere along the line.

The only thing is that i know there are some brokers that will tell you anything to sell you a few stocks, boiler room style, but youve got to use your own intuition on that. big reputable companies still employ young enthusiatic staff who will do anything for a quick trade so they can make a quick buck. for me its about building up a long term relationship and staying with that broker for good once you know he is on the ball

RainyDay

Can any broker demonstrate that they can consistently beat the market indices in the long term?

I know the odd person who would have a brilliant streak of predictions, but i see even the best making mistakes.
Most of the top brokers I know (including myself ) will try and spread your capital over a few different stocks. For example in IPOs and small cap companies if you buy shares in 5 companies at 2 cents and two of them are successful and hit 20cents plus, it doesnt matter if the other 3 fail, you still make good money.

RainyDay

Deleted User wrote:

I know the odd person who would have a brilliant streak of predictions, but i see even the best making mistakes.
Most of the top brokers I know (including myself ) will try and spread your capital over a few different stocks. For example in IPOs and small cap companies if you buy shares in 5 companies at 2 cents and two of them are successful and hit 20cents plus, it doesnt matter if the other 3 fail, you still make good money.

You can do the same yourself through unit-linked funds and pay much lower charges than the broker commissions. You also don't have to worry about CGT when you sell, though you do have an exit tax of course. If you choose a very cheap index-tracking fund, you let the market do the work for you at very low fees.

I don't really see why you would want to pay for brokers' advice?

As a broker we would do a few other things, for example a company called yellow cat is in the IPO stage at the moment, and we have met with the management a few times and know the company intimately, ie. the history of the directors, the ins and outs of their mining permissions and zones etc. I think it gives you an edge as a broker when you know a bit more about the company.

and also the internet doesnt tell you when the best time to sell is

Blackjack

Deleted User wrote:

As a broker we would do a few other things, for example a company called yellow cat is in the IPO stage at the moment, and we have met with the management a few times and know the company intimately, ie. the history of the directors, the ins and outs of their mining permissions and zones etc. I think it gives you an edge as a broker when you know a bit more about the company.

Investment management firms selling Unit linked products do the same with listd companies.

RainyDay

Deleted User wrote:

and also the internet doesnt tell you when the best time to sell is

Again, can you show any broker with a consistent track record in identifying the best time to sell?

On the selling side yes, its easier to predict then if a company is going to take off or not, but im specifically speaking about the AIM market

Tazz T

I use TD Waterhouse in the UK. They allow T+10 trading.

RainyDay

Deleted User wrote:

On the selling side yes, its easier to predict then if a company is going to take off or not, but im specifically speaking about the AIM market

OK - Show us your track record please.

China Goldmines 90% gains
Dome Petroleum 25%
chrome 20%
altair 400%
brinkly mining 5p at IPO 30p at floatation
Celtic Resources 5p ipo now trading at 170p

hmmm

Deleted User wrote:

China Goldmines 90% gains
Dome Petroleum 25%
chrome 20%
altair 400%
brinkly mining 5p at IPO 30p at floatation
Celtic Resources 5p ipo now trading at 170p

That's some solid blue chips there. Everyone's an investing genius in a bull market, the real test is over 10 years

BTW can you explain to me the difference between an IPO and a floatation?

A company about to float will generally go through 3-4 stages of fundraising before they float on the market. 1st stage they may look to raise funds at an attractive price to the institution, say 10p, the institution agrees to give them 2mil at 10p after doing a diligence on the company. the instituition holds all the stock themselves or puts a little in a fund. the company uses that 2 mil to expand, R&D etc and become bigger and stronger. they then do a second stage of funding but because they are bigger and better they raise 3mil at 15p per share. The institution keeps the stock themselves increasing their stake in the company,a little may go into a managed fund, but private investor still hasnt got access at this stage/. company uses funds again and 6 months later are looking to float on the market and are now raising 5mil at 20p p share. Now the private investor will get access to the IPO with an expected flotation price of 25p within 3 months.
What I do is get people in at the 1st and second stages of the IPO process which is where the institution ie. bank usually cleans up
a bit of a rushed explanation but clear enough i hope

RainyDay

Deleted User wrote:

China Goldmines 90% gains
Dome Petroleum 25%
chrome 20%
altair 400%
brinkly mining 5p at IPO 30p at floatation
Celtic Resources 5p ipo now trading at 170p

That's not a track record - that's an unverified list of round numbers. So let's have your full track record over a number of years - purchase dates, amounts, sell dates - your successes as well as your failures - then we'll see who beats the market

Sonnenblumen

RainyDay wrote:

That's not a track record - that's an unverified list of round numbers. So let's have your full track record over a number of years - purchase dates, amounts, sell dates - your successes as well as your failures - then we'll see who beats the market

RainyDay, have you heard the Russian proverb about the idiots in the market? One asks too many questions and the other too few.

Seems to me you're more the balance type, ie, a chip on each shoulder. Next time the miracle worker comes around, I'm sure you'll get a call........but meanwhile...........

El Rifle, spot on!

RainyDay

RainyDay wrote:

That's not a track record - that's an unverified list of round numbers. So let's have your full track record over a number of years - purchase dates, amounts, sell dates - your successes as well as your failures - then we'll see who beats the market

My friend, my intial posts were with the intention of representing brokers and what we can do for the investor, not to stand on the top of a mountain and say i am the best. I do good work, as do a lot of brokers.
Ive had success stories and failures.
If you want to use the internet option go for it its your choice.

RainyDay

Deleted User wrote:

not to stand on the top of a mountain and say i am the best. I do good work, as do a lot of brokers.
Ive had success stories and failures.
.

I'm not expecting you to prove that you're the best. If you want to highlight how great brokers are, my simple request was that you show any broker who has a consistent track record in beating the market indices over a number of years.