Is €1,000 too little to invest?

Squall Leonhart

Hi,

I was considering putting 1,000 euro into shares. I have no experience in the area, and I see people on boards.ie are talking sums like "I have 20k spare to invest, what should I invest in" and "my sister has 40k to invest", all huge sums to me. Is it completely pointless, am I wasting my time investing this little?

Was considering AIB (10c) or BOI (38c). I'm not even sure where to begin with this...

All help greatly appreciated!

Tombo2001

Squall Leonhart wrote: »

Hi,

I was considering putting 1,000 euro into shares. I have no experience in the area, and I see people on boards.ie are talking sums like "I have 20k spare to invest, what should I invest in" and "my sister has 40k to invest", all huge sums to me. Is it completely pointless, am I wasting my time investing this little?

Was considering AIB (10c) or BOI (38c). I'm not even sure where to begin with this...

All help greatly appreciated!

Depends what you want to get out of it.

If its an investment to 'get you into' stockmarkets and more closely following markets, then maybe.

But if its money you cant afford to lose, then no.

If its money that you are hoping to double in three years, then no.

Your starting point shouldn't be , which stock. It should be , whats the cheapest way I can buy and then sell a stock.

I am guessing that the cheapest way you can buy and then sell a stock is circa 5% commission all in, for that amount. That means you have to see the share go up 5% to make a profit. The average return on markets is probably 6-7% over time at best.

Finally, you could only really afford to buy one stock with that amount, this a very risky way to invest, by virtue of the fact that diversification reduces risk.

But as I said at the outset, if you simply want to 'dabble in stocks' and aren't too concerned about actually making money or indeed losing it, then by all means.....

First find the cheapest way to trade (I don't know what that is).

* Also the share price is largely irrelevant.....if anything its better to avoid penny stocks unless you want a lot of risk. There is a reason they are penny stocks, its because they've fallen a long way.

A stock that's 10c and goes up 1c is the same as a stock that's worth 10Euro and goes up 1euro.

In other words, in both cases the (perceived) value of the company must rise by 10% for the share price increase to occur.

Squall Leonhart

Thanks very much for your feedback.

The only reason I'm even toying with the idea is because, yes, if it comes to it, it's money I can afford to lose. Obviously nobody WANTS to lose money, but if this thousand euro was wiped, I'd be ok.

By the sound of it, you're recommending having a larger sum of money to split between several pots and reduce risk that way, rather than putting all my eggs in the one share basket so to speak?

Tombo2001

Squall Leonhart wrote: »

Thanks very much for your feedback.

The only reason I'm even toying with the idea is because, yes, if it comes to it, it's money I can afford to lose. Obviously nobody WANTS to lose money, but if this thousand euro was wiped, I'd be ok.

By the sound of it, you're recommending having a larger sum of money to split between several pots and reduce risk that way, rather than putting all my eggs in the one share basket so to speak?

I'm not recommending having a larger sum per se. You don't have a larger sum.

I'm saying that with that sum, you will be unable to diversify, which makes the investment per se more risky. So you need to understand that. (At the end of the day, you are responsible for your own investment decisions, therefore you need to understand the risks you are taking on, and be comfortable with that).

Squall Leonhart

Oh I completely understand that I am wholly responsible for what I decide to do with my money, and no matter what financial advice, or opinions I receive, (no matter how sound), at the end I'm still responsible for my own decisions.

Are you aware of any good sources of information for beginners to invest, or even somewhere that I can understand a breakdown in standard fee structures with brokers etc etc?

Tombo2001

Squall Leonhart wrote: »

Oh I completely understand that I am wholly responsible for what I decide to do with my money, and no matter what financial advice, or opinions I receive, (no matter how sound), at the end I'm still responsible for my own decisions.

Are you aware of any good sources of information for beginners to invest, or even somewhere that I can understand a breakdown in standard fee structures with brokers etc etc?

I don't know, apologies.

Dunston

I am just starting off as well and have 2K to invest. Want to split in on two stocks trading on the LSE. I have just applied for an account with Saxo Bank. This was the first place I've tried after doing some research. I got a call from them a few minutes after applying. The broker said usual minimum deposit is 6k but 2k would be fine. The fees seem quite good and manageable for that this some of money. 25GBP quarterly inactivity fee. 5GBP monthly account fee. 0.01% entrance and exit fee for every trade. Because my trades will be so small I will be charged 8GBP which is the minimum and well above 0.01%. Not bad overall though I think. Just need to send in proof of identity docs and I should be good to go before COB today. Any advice appreciated as I have very little experience in this area.

Squall Leonhart

Sounds good Dunston, but if 6k is the "usual minimum" and they're letting you invest with 2k, then this probably isn't something for me with 1k.

But best of luck with it!

gordongekko

Stay away from aib and boi. You need to do more research

http://www.independent.ie/business/irish/michael-noonan-dont-buy-aib-shares-theyre-overvalued-30750814.html

Tombo2001

Dunston wrote: »

I am just starting off as well and have 2K to invest. Want to split in on two stocks trading on the LSE. I have just applied for an account with Saxo Bank. This was the first place I've tried after doing some research. I got a call from them a few minutes after applying. The broker said usual minimum deposit is 6k but 2k would be fine. The fees seem quite good and manageable for that this some of money. 25GBP quarterly inactivity fee. 5GBP monthly account fee. 0.01% entrance and exit fee for every trade. Because my trades will be so small I will be charged 8GBP which is the minimum and well above 0.01%. Not bad overall though I think. Just need to send in proof of identity docs and I should be good to go before COB today. Any advice appreciated as I have very little experience in this area.

€2000

£25 / €35 Quarterly Inactivity Fee plus £5/ €7 monthly account fee plus £8 / €10 purchase fee, plus stamp duty at ? 1%.....

Means that if you buy two stocks for 1k each, and hold for 1 year, then you have incurred circa €220 in fees....assuming 3 inactive quarters....

or 11% of your investment.

No wonder he rang back quickly.

Did I calculate this wrong?

daheff

to be honest with you op...if you had this (relatively speaking) small amount to invest, I would be more inclined to look at investment funds or ETFs.

Something like a rabo investment fund can be bought into for a min (I think) of 100eur. That way you could spread your investment across a number of investments and minimise your risk

similar with an ETF...but you might still have that issue of account fees wherever you purchase the ETFs

Prezatch

Tombo2001 wrote: »

€2000

£25 / €35 Quarterly Inactivity Fee plus £5/ €7 monthly account fee plus £8 / €10 purchase fee, plus stamp duty at ? 1%.....

Means that if you buy two stocks for 1k each, and hold for 1 year, then you have incurred circa €220 in fees....assuming 3 inactive quarters....

or 11% of your investment.

No wonder he rang back quickly.

Did I calculate this wrong?

Saxo would be a poor choice of broker for the "once off" investor due to their fees. Also there is no stamp duty on shares or ETFs, only investment funds.

Going by the obscure share picks the op mentioned in another thread, I think a lot more research is needed! Both have market caps under 100m...

AFC.L - AFC Energy plc
AMC.L - Amur Minerals Corporation

Dunston

Tombo2001 wrote: »

€2000

£25 / €35 Quarterly Inactivity Fee plus £5/ €7 monthly account fee plus £8 / €10 purchase fee, plus stamp duty at ? 1%.....

Means that if you buy two stocks for 1k each, and hold for 1 year, then you have incurred circa €220 in fees....assuming 3 inactive quarters....

or 11% of your investment.

No wonder he rang back quickly.

Did I calculate this wrong?

Thats the problem with investing such a small amount, you get stung with fees as a high percentage of investment.

Everyone has to start somewhere, if you know of anywhere else that I could invest for cheaper then I would be glad to hear?

I could easily set aside an extra 600 and invest 200 in the 2nd, 3rd & 4th quarter to avoid inactivity fees.

Nothing was said about stamp duty but I think I read somewhere that this only applies to irish stockbrokers.

So for a 2600 investment over year one and holding all 5 trades at year end there would be fees of 139€ or 5.35% of 2,600€.

Thats assuming I don't close out of any position of course, fees would go up to 7.46% if I closed out of all 5.

I don't think I'll get much better than that for this size of investment.

fits

I was able to start by experimenting with small amounts through my bank, less than 1000 euro. The bank doesnt trade in Ireland. I went in with the attitude that it was money I could afford to lose, and knowing it wasnt the cheapest way to invest, but allowed me to get a feel for it. It has been fine. Maybe try something like that?

Squall Leonhart

Thanks everyone for your views and opinions.

@daheff, I'll look into your suggestion further. I know it's a relatively small amount, I'm just inexperienced in the area and testing the proverbial water. Thanks!

Dunston

JoeyD wrote: »

Saxo would be a poor choice of broker for the "once off" investor due to their fees. Also there is no stamp duty on shares or ETFs, only investment funds.

Going by the obscure share picks the op mentioned in another thread, I think a lot more research is needed! Both have market caps under 100m...

AFC.L - AFC Energy plc
AMC.L - Amur Minerals Corporation

Please suggest another broker than if you have a better option?

Just because they are obscure shares doesn't mean they aren't undervalued or that I haven't done my research.

I know its a risk but its money I can afford to lose, not that I want to.

Live at Three

I would recommend trying a simulator first. I have and app called Stock Market Simulator and it gives you 10,000 pretend money to invest on real stocks at real prices. It's a good way to learn for free, try out different strategies, see how news affects shares etc. I would mess with that for a few months first to get a feel for things. even though its pretend money you still get emotionally attached to shares and decisions you have made, you will learn a lot about your psychology and attitude to risk.

Also read the usual books with people recommend, The Intelligent Investor, Rory Gillen's 3 steps to investment success, Stock market for Dummies

Podcasts: D&H Unplugged, The Disciplined Investor, Wall Street Unplugged etc are all heplful I find.

Squall Leonhart

@Live At Three, thanks very much for the info. A simulator app actually sounds like a fantastic idea. Very interested to check it out, also thanks for the book recommendations.

mitresize5

have a look at the Rabo Drrect website as well to look at funds. Not the cheapest way to invest but no worse than buying single shares from a broker. I shove a couple of hundred euro in a month, won some and lost some but still have far more than if I saved it on deposit. A grand is more than enough to start with there

Ace2007

JoeyD wrote: »

Saxo would be a poor choice of broker for the "once off" investor due to their fees. Also there is no stamp duty on shares or ETFs, only investment funds.

Going by the obscure share picks the op mentioned in another thread, I think a lot more research is needed! Both have market caps under 100m...

AFC.L - AFC Energy plc
AMC.L - Amur Minerals Corporation

Regardless of what shares he wants to buy into, you saying that he needs to do more research clearly shows you don't have a clue of either of the above shares either - a quick search of AFC and you'll see the company signed a billion dollar contract within the last 2 weeks, is backed by Roman Abramovich, and the future (10+years) looks very bright for this share.

Now i'm not saying it's a good buy - everyone has different strategies and appetite for risk - if everything goes to play AFC will be a huge company and SP will shoot up, but it's going from being and R&D company to commercial so obv there are risks.

midland_pat

my advice is to do your research, do more research and keep researching.

I know that sounds cliché but honestly its the only way to learn and become familiar with the worls of stocks and shares.

Davy have a fairly good execution only account which needs a minimum €500 deposit and cost €20 ex VAT per quarter account maintenance fee. they post all of their other charges for buying and selling shares. They may not be the cheapest but they are a safe bet and you know what you get with them.

The suggestions of simulators and additional reading are all good ideas and well worth looking at. There is no rush on you to jump into investing so make sure you have a sound knowleged of the game before you play.

To finish up, a quick story of my buddy in the US who started investing with $6k in the mid eighties and is now worth in excess of $5 million. So to answer one of the earlier questions, a thousand euros invested well should go a long way over time but only if you are smart, patient and well informed.

best of luck along the way

midland_pat

my advice is to do your research, do more research and keep researching.

I know that sounds cliché but honestly its the only way to learn and become familiar with the world of stocks and shares.

Davy have a fairly good execution only account which needs a minimum €500 deposit and cost €20 ex VAT per quarter account maintenance fee. They post all of their other charges on their web site for buying and selling shares, third party charges and taxes etc.... They may not be the cheapest but they are a safe bet and you know what you get with them.

The suggestions of simulators and additional reading are all good ideas and well worth looking doing at a minimum. There is no rush on you to jump into investing so make sure you have a sound knowledge of the game before you play.

To finish up, a quick story of my buddy in the US who started investing with $6k in the mid eighties and is now worth in excess of $5 million. So to answer one of the earlier questions, a thousand euros invested well should go a long way over time but only if you are smart, patient and well informed.

best of luck along the way

hfallada

Use TD Direct Investing. Its only €15 a trade, which is reasonable. There is also Campbell O Connor in Dublin. I think they are €40 a trade

A pretty safe share is British American Tobacco. Its the only share fund managers are all recommending at the moment. Its not overpriced with QE and its a solid product they sell. Although sales of cigarettes are declining in the west. Sales are booming in the third world. The dividend is 4-5%, which is excellent for an European share.

BAT is a solid company to invest in.

RecordStraight

Just buy an index tracker, the cheapest you can find. Almost nobody beats the market in the long run.

Ace2007

RecordStraight wrote: »

Just buy an index tracker, the cheapest you can find. Almost nobody beats the market in the long run.

He's not looking to play the market or beat it - he wants to make a long term investment - in 10+ years time the shares could be worth 10/20 times what they are now, alternatively they could be worth penny's, but he is happy enough to take the risk and just leave it.

As long as he doesn't keep an eye on the shares he'll be grand.

hfallada

RecordStraight wrote: »

Just buy an index tracker, the cheapest you can find. Almost nobody beats the market in the long run.

There an article about an OAP in the US who did it. He had no formal investing training and didnt even have the internet. He died with shares worth 8 Million, as he only brought shares in companies that he knew. Search " Route to an $8 Million Portfolio Started With Frugal Living " on google to avoid the WSJ paywall.

How else has the same strategy of only buying in what you know? Warren Buffet.

RecordStraight

hfallada wrote: »

There an article about an OAP in the US who did it. He had no formal investing training and didnt even have the internet. He died with shares worth 8 Million, as he only brought shares in companies that he knew. Search " Route to an $8 Million Portfolio Started With Frugal Living " on google to avoid the WSJ paywall.

How else has the same strategy of only buying in what you know? Warren Buffet.

Yes, but he died. Do you want the OP dead?

Seriously, you can't rule out flukes and lucky runs. In the long run, the market will beat you.

Ace2007

RecordStraight wrote: »

Yes, but he died. Do you want the OP dead?

Seriously, you can't rule out flukes and lucky runs. In the long run, the market will beat you.

Yes in the long run if you play the market it will probably beat you, but for the poster who is going to put his money in 2 shares and leave it then it's ok.

Prezatch

Dunston wrote: »

Please suggest another broker than if you have a better option?

Just because they are obscure shares doesn't mean they aren't undervalued or that I haven't done my research.

I know its a risk but its money I can afford to lose, not that I want to.

I use TD Direct

Live at Three

How do you find TD direct? I have read mostly bad things about them here, but have you had positive experience?

From what I gather,
You can't tell how much you've gained or lost because the account screen is messed up BUT they have the best rates by far. i am tempted to go with them but have a few questions...

Is there much of a delay buying shares?
Is it easy to cash out?
Is there any proof that you own the shares?

Prezatch

Live at Three wrote: »

How do you find TD direct? I have read mostly bad things about them here, but have you had positive experience?

From what I gather,
You can't tell how much you've gained or lost because the account screen is messed up BUT they have the best rates by far. i am tempted to go with them but have a few questions...

Is there much of a delay buying shares?
Is it easy to cash out?
Is there any proof that you own the shares?

I have no complaints but then again I might only make a hanful of trades a year. It's true that their portfolio value page is messed up - you get what you pay for. FX rates are all over the shop as it confuses GBP amounts with EUR amounts and vice versa. I simply use google finance to keep record - it does everything you need.

Is there much of a delay buying shares?
No, just bring up a stock and bid/ask quotes are available. The quotes are available for about 10 seconds then you need to refresh. Trades settle on T+2 days, which is standardised among brokers I believe

Is it easy to cash out?
As above, you'll see the cash in your TD account 2 days after making the sale

Is there any proof that you own the shares?
There are pdf documents available to download when you make a trade showing buy/sell, price, no. of shares, ISIN etc. It's a large, regulated broker so I don't think you should have any worries there

Squall Leonhart

Ace2007 wrote: »

Yes in the long run if you play the market it will probably beat you, but for the poster who is going to put his money in 2 shares and leave it then it's ok.

You're completely right in what you said in another post, I'm not trying to beat the market , just invest in some shares and leave it sit for a time really.

Sonnenblumen

Dunston wrote: »

I am just starting off as well and have 2K to invest. Want to split in on two stocks trading on the LSE. I have just applied for an account with Saxo Bank. This was the first place I've tried after doing some research. I got a call from them a few minutes after applying. The broker said usual minimum deposit is 6k but 2k would be fine. The fees seem quite good and manageable for that this some of money. 25GBP quarterly inactivity fee. 5GBP monthly account fee. 0.01% entrance and exit fee for every trade. Because my trades will be so small I will be charged 8GBP which is the minimum and well above 0.01%. Not bad overall though I think. Just need to send in proof of identity docs and I should be good to go before COB today. Any advice appreciated as I have very little experience in this area.

If you intend buying 2 stocks to hold, avoid the ongoing a/c fees and buy (paying once off transaction commission fees etc) to a local Broker eg Campbell O'Connor ( other alternatives available). 2 LSE stocks I'd recommend virtually risk free over medium term if indefinite: National Grid (NG) and United Utilities Group (UU). Both pay excellent divis and good SP capital appreciation is also very likely. Look at the SP charts for more info.

hfallada

Sonnenblumen wrote: »

If you intend buying 2 stocks to hold, avoid the ongoing a/c fees and buy (paying once off transaction commission fees etc) to a local Broker eg Campbell O'Connor ( other alternatives available). 2 LSE stocks I'd recommend virtually risk free over medium term if indefinite: National Grid (NG) and United Utilities Group (UU). Both pay excellent divis and good SP capital appreciation is also very likely. Look at the SP charts for more info.

British American Tobaccos is a no brainer also

fits

hfallada wrote: »

British American Tobaccos is a no brainer also

Not everyone wants to invest in a company that makes their money from killing people slowly in the third world. And I expect you were awaiting that comment sooner or later.

fits

Squall Leonhart wrote: »

You're completely right in what you said in another post, I'm not trying to beat the market , just invest in some shares and leave it sit for a time really.

If you can increase your investment to 5k over time, there are no quarterly fees with TD Direct.

arrowloopboy

With a grand,spread betting is your only and by far the best option ,(to trade a small % per stock) ,you can trade 10c a point if your a new account.
At these levels you could risk only 2/3% of your account ,per stock .
Buy The naked traders guide to spread betting ,and your sorted .
I havnt read any of the previous replies,but this is your by far the best option.

arrowloopboy

fits wrote: »

Not everyone wants to invest in a company that makes their money from killing people slowly in the third world. And I expect you were awaiting that comment sooner or later.

Most people that like making money ,couldn't give a fcuk ,as long as their investment is performing :rolleyes:.
What a silly comment.

arrowloopboy

Sonnenblumen wrote: »

If you intend buying 2 stocks to hold, avoid the ongoing a/c fees and buy (paying once off transaction commission fees etc) to a local Broker eg Campbell O'Connor ( other alternatives available). 2 LSE stocks I'd recommend virtually risk free over medium term if indefinite: National Grid (NG) and United Utilities Group (UU). Both pay excellent divis and good SP capital appreciation is also very likely. Look at the SP charts for more info.

50% risk per stock,thats starting on the wrong foot.

laurenhiggins

1000 is fine it will allow you to dip your toe in the water and see if it works

Dunston

JoeyD wrote: »

Saxo would be a poor choice of broker for the "once off" investor due to their fees. Also there is no stamp duty on shares or ETFs, only investment funds.

Going by the obscure share picks the op mentioned in another thread, I think a lot more research is needed! Both have market caps under 100m...

AFC.L - AFC Energy plc
AMC.L - Amur Minerals Corporation

incredibly volatile start to my first ever investment, going in the right direction though!

Sonnenblumen

arrowloopboy wrote: »

50% risk per stock,thats starting on the wrong foot.

how do you as a spreadbetter work out that nonsense above?

Sonnenblumen

fits wrote: »

Not everyone wants to invest in a company that makes their money from killing people slowly in the third world. And I expect you were awaiting that comment sooner or later.

that's a fair point and yes I would agree, it is much better when there is an ethical dimension to investing in cos which make the world more benign etc.

Fol20

If you had say 10k, do you think putting 1k into 10 different blue chip stocks would be good? Every year the company's would give you a dividend that would be tax free as its below the 1270 limit. Then after 10year or whatever amount you choose you could sell the shares and even if they are at more or less the same price or a little above due to inflation, it wouldn't be too bad no.

Apologies if the above is completely incorrect as I'm a novice but I'm just interested to see what people think

Cute Hoor

Fol20 wrote: »

If you had say 10k, do you think putting 1k into 10 different blue chip stocks would be good? Every year the company's would give you a dividend that would be tax free as its below the 1270 limit. Then after 10year or whatever amount you choose you could sell the shares and even if they are at more or less the same price or a little above due to inflation, it wouldn't be too bad no.

Apologies if the above is completely incorrect as I'm a novice but I'm just interested to see what people think

It is incorrect, in the sense that you will pay tax, usc & prsi on dividends received. The €1,270 limit is on capital gains (selling for a profit)

Fol20

Cute Hoor wrote: »

It is incorrect, in the sense that you will pay tax, usc & prsi on dividends received. The €1,270 limit is on capital gains (selling for a profit)

Ah right ok. Besides the tax point of view. Would the method still be good for a novice as your diversifying your portfolio, receiving a few percent in dividends per year and have the potential to increase shares which you could sell off one or 2 a year to avoid paying any cgt.

Do you think the cost of the shares o enter and leave the market would be too expensive when investing only one k in each stock

JonDoe

Maybe buy some silver, goldmoney.com is highly liquid and GM holdings are "allocated" in respective Via Mat vaults, not "pooled" (Likely one of many claims over same metal).

Cute Hoor

Fol20 wrote: »

Ah right ok. Besides the tax point of view. Would the method still be good for a novice as your diversifying your portfolio, receiving a few percent in dividends per year and have the potential to increase shares which you could sell off one or 2 a year to avoid paying any cgt.

Do you think the cost of the shares o enter and leave the market would be too expensive when investing only one k in each stock

That's a difficult question to answer, if you are using an over the counter Irish broker buying Irish stocks the buy (commission + stamp duty) and sell (commission) costs will total at least €90 so you will need to make a profit of 9% just to cover your costs. If you intend holding for 10 years, and have a reasonable expectation of a good dividend, it should be worthwhile, selling every couple of years would probably eat up your profit in commissions. Of course if you are making significant profits it might be worth selling some every year to take advantage of the CGT limits.

Fol20

Cute Hoor wrote: »

That's a difficult question to answer, if you are using an over the counter Irish broker buying Irish stocks the buy (commission + stamp duty) and sell (commission) costs will total at least €90 so you will need to make a profit of 9% just to cover your costs. If you intend holding for 10 years, and have a reasonable expectation of a good dividend, it should be worthwhile, selling every couple of years would probably eat up your profit in commissions. Of course if you are making significant profits it might be worth selling some every year to take advantage of the CGT limits.

Iv heard td investing are not the best to use but are also one of the cheapest. And as long as you go over their 5k non activity charges wouldnt apply to you so it wouldnt be so bad for costs. Would you still need to pay stamp duty if you are buying from an online broker?

robp

Fol20 wrote: »

Would you still need to pay stamp duty if you are buying from an online broker?

Yes but not all stock exchanges are in countries that have this tax. Also most Irish domiciled ETFs lack stamp duty.

annaP79

hey
just went through this thread which i find very interesting and was wondering is it possible at all to trade in shares without the broker?
it seems all their fees make investing in shares even more prone to the loss than it already is?
sorry probably silly question for those familiar with the topic but for small investor starting from cost cutting would be good idea right?