How should I invest in shares?
|Financial Advice | General
Asked by jasper, submitted
18 May 2013.
I am a complete novice invester, apart from cash ISAs, the question I'd like to ask is how do I invest in, say, companies that i think will grow, for example Centrica , Glaxsosmithkline etc?
Do I have to buy individual shares? Or is there any other way of fine picking my investments, and build up a portfolio of individual companies of my choice? Or do I need to use a fund manager?
Answered by Justin on 28 June 2013
It's very simple to buy the shares yourself, just use a low cost online stock broker. There's plenty of info and cost comparisons in our guide to online share dealing.
Buying the shares within a shares ISA will avoid potential capital gains tax and tax on income, although basic rate taxpayers currently make no tax saving on dividends.
If you don't want the hassle of picking shares yourself, or think a professional might do a better job, then by all means consider a fund. However, You'll have to pay annual charges of up to 1% or more and quite a few managers don't do an especially good job, so it's important to choose carefully.
In you don't want to pay high fund management fees, or don't trust the manager to deliver, you could opt for low cost tracker funds. These simply aim to replicate index returns (e.g. the FTSE 100), less an annual charge of around 0.3% - 0.5%. However, it's still important to understand how your money will be invested (i.e. what's in a particular index and it what proportions) so you can gauge the risks and whether it's likely to be a good idea.
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