Brokerage

seven-iron

Hi,
Im new to this page.

Anyone any advice on what brokerage firm to go with? Im looking for an execution only account.

Im thinking Fexco they seem to have the lowest comission rates and signing on fee. I would be looking to trade on the FTSE and AIM exchanges as well as the ISEQ.

Ok I might be throwing myself to the lions here but Im thinking of borrowing 30K. Ryanair, IL&P and another very risky biz on AIM. 10k in each. Im 19 so Im not risk averse.

Thanks

Idu

seven-iron wrote: »

Hi,
Im new to this page.

Anyone any advice on what brokerage firm to go with? Im looking for an execution only account.

Im thinking Fexco they seem to have the lowest comission rates and signing on fee. I would be looking to trade on the FTSE and AIM exchanges as well as the ISEQ.

Ok I might be throwing myself to the lions here but Im thinking of borrowing 30K. Ryanair, IL&P and another very risky biz on AIM. 10k in each. Im 19 so Im not risk averse.

Thanks

Wow!! Firstly you won't get a loan foe this unless it's from a relative and even then it's one of the worst ideas ever. You really want to saddle yourself with 30k of debt when your 19? Seek psychiatric help

seven-iron

Firstly you won't get a loan foe this unless it's from a relative

I have already submitted loan applications to three banks 10k each and have gotten the yes from each. Just need to confirm it with them now. Im in the workforce already (Accountant) at a growing practice so that is probably why.

You really want to saddle yourself with 30k of debt when your 19?

But sure most people in Ireland are saddled with debt. For me it will just be with good debt. As Mr B says be greedy when others are fearful.

Seek psychiatric help

ha

Blackjack

seven-iron wrote: »

I have already submitted loan applications to three banks 10k each and have gotten the yes from each. Just need to confirm it with them now. Im in the workforce already (Accountant) at a growing practice so that is probably why.

But sure most people in Ireland are saddled with debt. For me it will just be with good debt. As Mr B says be greedy when others are fearful.

ha

Crazy person. Good luck.

pocketdooz

This is a totally stupid and ridiculous idea.

Seriously.

I hope for your sake that you don't do it.

daveirl

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dblennon

Goodbody online is the best for your situation,

but I agree there are much better stocks out there and I cannot recommend taking a loan to buy stocks.

1. Watch CRH they were down around 14 and are higher now on the back of obama, < 15 probably a good buy.

BP & GE are good buys as there Yeild is high and you really want to reduce risk when buying leveraged.

There is not going to much positive news internationally for over 6 months so there is no hurry.

Time Magazine

seven-iron wrote: »

Im thinking of borrowing 30K. Ryanair, IL&P and another very risky biz on AIM. 10k in each. Im 19 so Im not risk averse.

The consensus here, and I'm going to put this in bold for you, is to not gamble on loaned money. Ryanair don't pay dividends; IL&P are an Irish banking share (may as well be putting money on the role of the dice) and "another very risky" investment on money that's not yours is insanity.

Raskolnikov

Hold on here. There's nothing wrong with borrowing to buy shares, assuming you have the ability to pay back what you owe. Afterall, people borrow to buy holidays, things that are intrinsicallyworthless.

I've used the Sharewatch small trades service before to purchase Irish equities (http://www.sharewatch.com/smalltrades.php). They only let you buy shares to a combined value of €15k though. They are a heck of a lot cheaper than other Irish brokers though.

radioactiveman

I wouldn't use ANY Irish brokerage, or buy ANY Irish shares at the moment.

All of the Irish brokers are a rip off, especially the banks. Some of them charge a comission % on the entire value of the shares you've bought. You can go to an online service and get a flat rate of 20-30 euros, or less, for a transaction. If you research it well you should be able to find a reputable online broker. And if you're really worried about them running off with your money, get them to certify the shares for you, and get listed on the companies list of shareholders.

Also why buy Irish shares in particular? There are a lot more secure shares out there with a lot more potential. It will take a *LONG* time for foreign investment money to come back into Ireland and we will probably underperform other markets for the next while with our reputation the way it is.

Also remember if you buy Irish shares, the government will also charge you 1% stamp duty on the purchase of them (as well as charging you capital gains tax when you sell).

So e.g. if you set up a goodbody's account with AIB, you will pay:
40 euros to set up the account
20 euros or so for the purchase of the shares
300 euros stamp duty (if 1%)
300 euros commission for the bank (if it's 1% of the transaction value?)
Selling: another 30 euros?
-> about 600 yoyos just to buy and sell so I would definitely avoid the banks although fexco, sharewatch might be ok.

Online :
- ~30 euros to buy, 30 to sell
- no stamp duty unless they're UK or American stocks, but the duty in this case is still less (0.5% I think).

Ironically the fact that these charges are so high and Irish people will not complain and accept them could be the reason why investing in the banks is actually a good investment!

soddy1979

radioactiveman wrote: »

- no stamp duty unless they're UK or American stocks, but the duty in this case is still less (0.5% I think).

You always pay stamp duty on purchases of Irish stock. The broker and whether it is online or not is irrelevant.

Blackjack

radioactiveman wrote: »

- no stamp duty unless they're UK or American stocks, but the duty in this case is still less (0.5% I think).

There is no Stamp on US stocks. There is an SEC fee built in to Brokers commission of something like .0037% or another immaterial amount, but that's not visible unless you're making a significant purchase.

Stamp on UK equities is 0.5%.

daveirl

This post has been deleted.

pocketdooz

Raskolnikov wrote: »

Hold on here. There's nothing wrong with borrowing to buy shares, assuming you have the ability to pay back what you owe. Afterall, people borrow to buy holidays, things that are intrinsicallyworthless.

This is ridiculous imo. Not a valid comparison at all.

Terrible advice really. You should NEVER borrow to buy equities. And least of all when you haven't a clue what you are doing.

Raskolnikov

pocketdooz wrote: »

This is ridiculous imo. Not a valid comparison at all.

Terrible advice really. You should NEVER borrow to buy equities. And least of all when you haven't a clue what you are doing.

You don't have a clue.

If an opportunity presents itself, that you think will yield a return greater than that of the interest rate on the loan, there's no reason not to borrow money. That is all assuming that you have the income to pay the loan back.

When Sumner Redstone was forced to unload part of his substantial holding in Viacom, a trader friend of mine borrowed to buy Viacom stock. The potential upside greatly exceeded that of the possible downside and he did very well out of the trade.

Time Magazine

Raskolnikov wrote: »

You don't have a clue.

If an opportunity presents itself, that you think will yield a return greater than that of the interest rate on the loan, there's no reason not to borrow money. That is all assuming that you have the income to pay the loan back.

When Sumner Redstone was forced to unload part of his substantial holding in Viacom, a trader friend of mine borrowed to buy Viacom stock. The potential upside greatly exceeded that of the possible downside and he did very well out of the trade.

If you invest with some money you've saved, the worst case scenario is that you lose your investment. If you invest with money you've borrowed, the worst case scenario is that you lose your house. Investing with borrowings thus carries extra risk, € for €, than investing with your savings.

When it comes to investments, people are typically rewarded for risk. This makes sense: risk is generally a bad thing. By investing with money that you owe to the bank, you're automatically placing yourself at greater risk but without the higher expected return that's normally associated with greater risk.

So when evaluating whether or not to take on the risk for the return, you'd better want it to be a damn certain deal. "Ryanair, IL&P and another very risky biz on AIM" are not a very good deal by any stretch of the imagination. It's a dangerous punt, with money that isn't yours.

You then have to consider that with 30k, it's relatively easy to diversify well. Those three shares are not a diversified portfolio. The OP has asked for advice and this forum's most respected posters (Idu, pocketdooz, daveirl...) all told him to reconsider. They've saved people tens of thousands of euro on these forums in the past six months, people who were thinking of investing in banking shares and people who were thinking of borrowing to do so.

Hopefully the OP will keep this in mind.

daveirl

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seven-iron

Some great feedback there folks appreciate it.

Im very suprised so many people think its a risky strategy? As Raskolnikov says there is really no problem with borrowing as long as you can service the debt. Using this leverage is merely a way to accelerate the buying. My five year plan is just to buy buy buy and this depressed market is a good thing for me as a lot the stocks are way undervalued. Im at the start of my professional and investing careers and this is the reason Im being risky. Theres no point in starting off conservatively and being risky when Im about to retire.

A lot of you also made valid points in that I may be looking to narrowly at just the Irish equities but the reason Im not going further a field is because I am a lot more familiar with Irish businesses.

Diversification was another point brought up. My stance on this is that the portfolio I mentioned is in fact well diversified, if I were to diversify further then I would be hit with additional transaction fees. For any newcomer to investing (me) you need at least 10k per equity.

The Economist (poster not the magazine) mentioned there about Ryanair not paying dividends so they are not a great investment. This is what I want as an investor. Dividends are subject to income tax, capital gains are at the cgt rate. Also I dont want to have to continually make investment decisions, I would rather Micheal O'Leary do it for me.

Thanks guys
seven-iron

Raskolnikov

The Economist wrote: »

Ryanair don't pay dividends.

Warren Buffett doesn't either, for that matter.

Raskolnikov

The thing I take issue with would be your stock picks is less so diversification, but the the risk. IL&P is an extremely dangerous proposition with the possibility of nationalisation and complete wipeout. Ryanair too is in a cyclical industry that can swing from boom to bust. If these are risky punts, I'd love to know the AIM-listed company that is even riskier.

It's understandable that you would rather look at Irish companies as you understand them more. Given that, I think there are plenty of much more stable Irish companies that are worth more consideration. I would suggest taking a look at these companies. I have no interest in either.

C&C: Pros - The speculative froth has been wiped off the share price, new management team with a good track record, high-margin and branded product(s), takeover target in the future.
Cons - Debt over working capital is a little higher than I'd like, but it's still servicable, dividend is likely to be cut as profits still have to take another hit.

FYFFES: Pros - No debt, sitting on a nice pile of cash thanks to DCC insider trading case, company has a moat (industry isn't easy to start off in), P/E looks cheap considering earnings won't be too volatile.
Cons - Days of banana quotas are over - no more crazy profits, I do not like the look of the 40% stake that the company has in Blackrock Land (not sure if they will be liable for losses sustained there).

radioactiveman

seven-iron wrote: »

My five year plan is just to buy buy buy and this depressed market is a good thing for me as a lot the stocks are way undervalued.

Best of luck but if you're going to do a lot of buying, make sure you're informed about what you're doing or you will inevitably make mistakes.
Also don't be surprised if in the 5 years you have set out, shares don't rocket the way you want them to and instead stagnate or drop - there's no guarantee that they will rise in 5 years.
If you're buying individual stocks you have to be prepared to research them fully and keep an eye out for potential problems down the road .... e.g. how will oil prices affect Ryanair in the next 5 years? Maybe not too much, maybe their business plan will far outweigh that risk, maybe not...

daveirl

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seven-iron

Hence I'm pushing you towards ETFs, there's a world of selectivity you can get now, very specific sector ETFs, you can get gearing on them, get short ETFs etc. Well worth looking at to see what's out there

exchange traded funds? im not sure how they work exactly.
any chance you could explain?

radioactiveman

Hi
You can find out about them in wikipedia but they are index tracking funds usually containing the biggest firms in a sector (usually in terms of capitalisation although they might be selected specifically by the fund managers).
E.g. the ISEQ ETF fund is composed of the biggest Irish companies on the Irish stock exchange. If e.g. a bank goes bust and no longer figures in the index, the fund will be re-adjusted to track the biggest companies. The index will drop but only inasmuch as that stock affected it overall.
The advantage is you buy a single stock, the ETF, and you get the same diversification as if you bought 19 or 20 companies. But you only have the transaction fees of a single stock. And you don't have to worry about watching individual stocks...
I think Warren Buffet has said they're very good for the ordinary Joe, most professional fund managers do not outperform the S&P 500 index (75% don't) so they're well worth looking at.
You could invest the 30k in one index and still get quite a good level of diversification. E.g. in the ISEQ fund you would get Ryanair, ILP and the whole lot.

pocketdooz

Raskolnikov wrote: »

You don't have a clue.

If an opportunity presents itself, that you think will yield a return greater than that of the interest rate on the loan, there's no reason not to borrow money. That is all assuming that you have the income to pay the loan back.

When Sumner Redstone was forced to unload part of his substantial holding in Viacom, a trader friend of mine borrowed to buy Viacom stock. The potential upside greatly exceeded that of the possible downside and he did very well out of the trade.

lol, Thanks - I needed a good laugh. Lever up mate - sure, as long as you think it'll yield more than your interest rate you can't go wrong

seven-iron

thanks radioactiveman!
great explaination

heno55

hi radioactiveman do etfs pay a dividend or are you expecting their value to rise

radioactiveman

Both - they do pay a dividend which is usually fairly average - it's not as big as some high dividend yielding stocks but this is to be expected when you are getting the dividends from a wide selection of companies. Over time their value should rise in line with the index they're tracking.

heno55

thanks