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I want to Buy Shares.

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    #62
    Electric Boobs
    Banned (with Prison Access) Posts: 179 ✭✭Electric Boobs


    So my understanding of an index fund is that you let others invest your money in a set of similar companies from a certain financial market, which is probably incorrect. I also don't understand why they are considered to be a more reliable way of making profit?

    I trade in my Dad's Goodbody account. I'd imagine it wouldn't be possible to use Goodbody to invest in an index stock!?


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    #63
    Recondite49
    Closed Accounts Posts: 1,004 ✭✭✭Recondite49


    Electric Boobs wrote: »
    So my understanding of an index fund is that you let others invest your money in a set of similar companies from a certain financial market, which is probably incorrect. I also don't understand why they are considered to be a more reliable way of making profit?

    I trade in my Dad's Goodbody account. I'd imagine it wouldn't be possible to use Goodbody to invest in an index stock!?

    Hi Electric Boobs,

    Index funds can in theory track any sector or market. In the case of VEUR for instance it tracks the performance of the top earning companies in Western Europe.

    Part of the reason they make money over time is that they mirror the overall stock market and don't try to outguess it.

    With an index fund tracking the top companies there is also inherently less risk but when one company has a particularly poor year for instance, this doesn't cause your investment to plummet as much as your money is spread across all the top earners.

    Most importantly with an index fund, quite a number of trades are being made per day to reflect the allocation of shares in the market overall e.g if 10% of all shares in the top earning companies are Facebook then the fund buys shares accordingly to mimic this.

    In plain English this means you're spared hundreds of Euros/Dollars/Pounds in trading fees.

    One excellent book you can read to explain more about index funds and why they are the best way to grow your wealth is "A Random Walk down Wall Street." It's available for a few pennies on Amazon.

    I had a look at Goodbody's website and it seems they do offer online brokerage services and can follow the European and US markets so it seems you're along the right lines.

    We've already discussed Vanguard Index Funds ; they're not the only poker game in town but they do operate on a not for profit basis.


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    #64
    FURET
    Closed Accounts Posts: 685 ✭✭✭FURET


    Yes, imagine a book. At the back of the book is an index of hundreds of entries representing every concept or idea mentioned throughout the book.

    If the European stock market was a book, you could look at its index and you'd see Nestle, HSBC, SAP, Lloyds, Ryanair, Swatch, BP, Shell, Bank of Ireland and many more.

    A total European stock market ETF would own a little bit of all the companies in the index.

    You can also buy USA ETFs, Asian ETFs, or global ETFs.

    The thing is though, for Ireland-based investors, taxation is an issue. There's a good thread on Askaboutmoney about ETF taxation in Ireland. In a more tax-friendly environment ETF investing is a no-brainer. In Ireland I'm not so sure...


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    #65
    sperm_whale
    Banned (with Prison Access) Posts: 27 ✭sperm_whale


    Electric Boobs wrote: »
    How old would you be?

    Yeah, if you're not that experienced yet, then I'd just stick to the Irish market. Something like Kerry Group, you can't go wrong with. But don't expect to make a lot out of it. Or if you want to be a little bit more bold, try Ryanair!

    id have thought that someone who is not " that experienced " would be better to avoid individual shares and go with index funds

    as for the companies you recommend , both are good companies but are they expensive , kerry certainly appears to be and ryanair is pretty volatile

    id consider both much less risky than bank of ireland but were i as inexperienced as the OP , i would consider them to be not safe enough

    stocks are expensive right now which is why so many people are interested in buying , an auctioneer once said to me , no one wants to buy property when its cheap , same with stocks , they were for absolutely nothing as recent as two years ago and at a generational low around 2009 in the usa and as recent as early 2012 in the eurozone


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    #66
    sperm_whale
    Banned (with Prison Access) Posts: 27 ✭sperm_whale


    Electric Boobs wrote: »
    So my understanding of an index fund is that you let others invest your money in a set of similar companies from a certain financial market, which is probably incorrect. I also don't understand why they are considered to be a more reliable way of making profit?

    I trade in my Dad's Goodbody account. I'd imagine it wouldn't be possible to use Goodbody to invest in an index stock!?

    not nescesserily , an index fund is a passive way of investing in that while the fund is structured by a particular provider ( ishares , vanguard etc ) , it is not managed on an ongoing basis like a mutual or managed fund

    fees for ETF,s are usually about a tenth of the cost of what an investment house would charge


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