How To Invest In Stocks

“Investing in the stock markets can provide better, inflation-beating long-term returns if you have the time and know-how to build and manage a well-diversified portfolio. But who does? To the vast majority of UK savers, investing is a murky, complicated world, riddled with hidden costs and uncertainty"
                 -Michelle Pearce, CIO Wealthify


The first key question requires a choice between the extent of control and influence you are willing to take. The two options available in investing in stocks are:
1.Investing in Pooled investment funds
2.Investing and building your Individual stock portfolio

Pooled investment funds are funds available to retail investors that are meant to allow for easier diversification and reduced risk by spreading your investment across multiple shares and other investment securities e.g. bonds.

There are several types of pooled investment funds that are managed by fund managers that you can invest through and purchase from brokers, banks and directly from some fund managers. They include:
1.Unit Trusts
2.Open-Ended Investment Companies (OEICs)
3.Investment Trusts

All funds and fund managers of pooled investment funds should be REGULATED and authorized by local and/or international regulators e.g. the UK’s Financial Conduct Authority (FCA) and US Securities and Exchange Commission (SEC).

Because they are managed, there are COSTS to consider. Although these vary, the main types of costs to consider when evaluating investment funds are:
1.Initial Charges:A large majority of pooled investment funds charge an initial charge for investing in them. In many cases, this could be up to 5% of your investment.
2.Annual Management Charge (Ongoing Charges Figure): You may have to pay an annual management charge.
3.Exit Charge:This may be charged if you want to cash in your investment.

Are the COSTS worth it?

According to a 2017 Morning star data set covering UK Equity Income funds of ‘average risk’:
1.10 Year annualized returns ranged from 4% -8% (vs the UK’s FTSE 100 annualized return of around 5% over the last decade)

2.Initial Charges averaged about 5%, and annual ongoing charges ranged between 1.5% -3%.

Therefore, in many cases retail investors were paying initial charges and annual ongoing charges significantly more than the historic average returns of average risk pooled investment funds.

WHY invest in individual stock portfolios?
1.Inflation hedge, particularly when compared vs saving money in a bank account
2.Provides an avenue to invest in Growth and Income, depending on your risk appetite and investment capital. Favorable in a LOW YIELD world.
3.Allows part-ownership in companies
4.Intellectually stimulating, as requires a disciplined approach over a longer time horizon, and a commitment to carefully studying potential investments

HOW to invest in stocks?
1.Apart from investing via pooled investment funds, you can buy or sell shares directly through authorized stockbrokers.
2.Most brokers offer an online execution-only platform, allowing clients to buy and sell shares independently using apps or online without offering advice.

In addition to market access and online execution services, most online platforms will also provide data or company information resources including historic price charts, financial metrics, latest company news and corporate events.

The main dealing cost categories to consider when buying or selling listed shares, include:
1.Dealing Commission: Either a % of your traded amount or a set amount for more frequent dealing. This may reduce proportionally for more regular and larger capital investing plans e.g. monthly investment.
2.Automatic Reinvestment charges: A reduced dealing fee is offered by most online brokers on dividend amounts reinvested into purchasing stocks. This varies but will usually be around 0.5% of the reinvested amount.
3.Other Fees & Tax: include Stamp Duty Levy, Panel of Takeovers and Mergers (PTM) Levy, broker Admin Fees, Transfer In & Transfer Out fees

What to be AWARE of when investing in shares?
1.Always have a plan as to what you want to achieve by investing stocks i.e. what are your investment goals and investment horizon?
2.Always understand the costs, charges, and fees you have to pay in transacting and maintaining your share account.
3.Reflect carefully on YOUR risk tolerance. This should be related to how much work are you willing to put into research.
4.The Market will NOT always go in your favor, your investment may drop as well as rise.
5.HOPE IS NOT AN INVESTMENT STRATEGY

So the main question arises where to invest, so you can learn all of that from my Blog and If you want to know which Stock I hold, just contact me on deep08dew@gmail.com, also visit hostcontry.com for more details