Money: Time to take a plunge into the stock market

In the last in our series of articles by a novice investor, Margaret St John assesses the financial advice available

I HAVE made my mind up. I am taking the plunge. With my pounds 2,000, I hope slowly to build a small portfolio of stocks. I have chosen two companies that I want to invest in, and I'm keen to get going.

What services are available for what is politely known as "the small investor"?

My first stop was my bank, where I have held my account for 13 years. Barclays runs a share-dealing operation offering various levels of service. It produces a snappy little booklet which explains everything and gives a table of charges. You don't have to have an account with Barclays, although it simplifies matters if you do, as dealing is mostly done by telephone.

I then popped into NatWest. Did I have an account with them? No, but my husband did; I was picking up some information for him. "Well, all right," said the sales representative, "but we normally give this information only to account holders." The booklet wasn't available but they gave me a photocopied sheet with the prices.

Abbey National also runs a telephone service and produces a readily available and easy-to-understand brochure. You do not need an account there to benefit from the service but, again, it makes life easier if you have one. Both the Abbey National and the Barclays booklet take the precaution of warning novice investors like me that share values can go down as well as up. They also both state clearly that the basic share-dealing service does not offer any advice to clients.

So how would the share-dealing services work for me and, more important, how much would they cost?

As I have only pounds 2,000 to invest, I need the best deal around. Barclays would charge me 1.5 per cent on the first pounds 5,000, with a minimum pounds 17.50 charge. The small investor has to be very careful with the charges as they are charged on each transaction.

For example, if I want to buy a small number of shares worth pounds 500, I still pay the same pounds 17.50 charge as when I buy pounds 1,500 worth - in the same telephone call.

There is no way around this, which makes dealing in small figures very pricey.

There would be the same minimum charges of pounds 17.50 if and when I sold the shares. Even if you are selling different sets of shares in the same company there are separate minimum charges on each set, which I think is a bit mean.

There is also 0.5 per cent stamp duty on all transactions, making an additional pounds 10 on my pounds 2,000. So there is a minimum pounds 45 (including selling- costs) to consider before I make a penny on any transaction. As the shares I have spotted are only creeping upwards, I need to be prepared to invest for the long term.

NatWest would also charge 1.5 per cent on the first pounds 5,000, but its minimum charge was pounds 20, making it slightly more expensive to deal with. Abbey National charges 1.65 per cent for the first pounds 2,500 and its minimum charge is a beastly pounds 24.50. But for the next pounds 2,500 charges drop to 1.25 per cent (with the same minimum charge).

Abbey's charges for amounts between pounds 5 and pounds 10,000 were a very competitive 0.15 per cent of value, compared to between 1.5 per cent and 0.5 per cent (sliding scale) at NatWest and 0.85 per cent at Barclays. For amounts less than pounds 5,000 Barclays gave the best deal, but for amounts more than pounds 5,000 Abbey National offered a better rate.

You need to be careful of all the documentation because there are nasty charges of at least pounds 10 for reproducing share certificates. If you lose your Abbey National share certificate, there is a whopping pounds 25 charge for the completion of a form of indemnity and undertaking, which permits you to sell your shares in the future.

If and when I make some money, I may look into some of the extra services that the bank and building societies offer which would make life easier, though pricier. You can pay for advice on shares as well as extra help with paperwork facilitating filling in your tax return. Some of these services charge a quarterly fee as well as the transaction charges.

The dream of having my own private broker is a long way off, because experts politely suggest that I need a portfolio of at least pounds 20,000. They warn investors to use their broker as a service, and not to phone for "a chat". A good broker, they tell me, will contact me if something "interesting" comes up. Another way of adding to your knowledge as you gain experience is to use (or buy) a computer and get more information from the Internet.

As I am not a share tipster, I shall not reveal the names of the two companies I want to invest in, but I shall let you know how I get on. Wish me luck.

Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
News
i100
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Health
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
News
news
News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Extras
indybest
News
i100
Finacial products from our partners
Property search

How to protect your assets if the stock markets begin to head south again

Are you worried about your portfolio? Nick Paler asks fund managers and investment insiders for advice
Fuel poverty campaigners united in criticising the delays in helping those in fuel poverty

Plans to tackle fuel poverty are slammed by campaigners

Charities and action groups believe that the Government's proposals are woefully inadequate
Sell it with flowers: competition is 'intense' for homes with outside spaces

Gardens add a tenth to the value of your home

A London estate agent yesterday put a price on having a garden. David Pollock of Greene & Co reckons it can increase a property's value by a tenth.

Spectators at the Isle of Wight music festival watch the World Cup on the big screen. Betting promotions were a feature of the tournament
Lenders have been accused of persuading vulnerable people to borrow expensive credit

Payday loan firms accused of bombarding vulnerable people with nuisance phone calls

Payday loan firms have been accused of bombarding financially vulnerable people with nuisance phone calls, after a debt charity reported that a third of its clients were plagued by the messages.

The foundation proposed that the Government sets up a scheme to help people avoid losing their homes

Mortgages: 'Homeowners could trade down to shared ownership to defuse rate rise timebomb'

A plan to defuse a “mortgage debt timebomb” when interest rates rise is published today amid warnings that 2.3m households could struggle with their repayments.

Current accounts are too costly and confusing, says CMA as it announces investigation into Britain's biggest banks

Competition regulator to investigate market where it's hard for customers to make comparisons and the big banks' charges can be set too high
All the signs have been pointing up for buy-to-let, but there are clouds on the horizon

Buy-to-let: is it a boom or a bubble fit to burst?

People borrowing to be landlords could face the same restrictions as homebuyers, with MPs voicing fears that property speculation may be overheating the market

Moment of truth for payday lenders: Watchdog plans to curb cost of short-term loans

The chief of the City watchdog, Martin Wheatley, spoke exclusively to The Independent's Simon Read about its attempts to control the worst excesses of unscrupulous high-cost credit companies

Consumers given power to choose a green deal

How would you like to be able to choose how your electricity is made and even where it come from? It may sound futuristic and fanciful but the independent supplier Co-operative Energy has made it a reality this week.

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Financial Analyst - Forecasting - Yorkshire

    £300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

    Business Architect - Bristol - £500 per day

    £500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

    Regulatory Reporting-MI-Bank-Cardiff-£300/day

    £200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Day In a Page

    Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

    Hunters protect Russia's rare Amur tiger

    In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
    Transfers: How has your club fared in summer sales?

    How has your club fared in summer sales?

    Who have bagged the bargain buys and who have landed the giant turkeys
    The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

    The best swim shorts for men

    Bag yourself the perfect pair and make a splash this summer
    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup
    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable