Obtaining shares

[mikeyp]

I'm a student working over the summer, i'm going to have a bit of money saved by the end and was thinking about getting some shares. How do I go about doing this? Is there somewhere you can go and just buy some? How do I know which ones to get? I'm afraid i'm very new at this. Maybe that's a good reason to avoid the whole thing! But i thought it might be cool, so any advice would be appreciated. Thanks.

[GuavaHalf]

If you are a student and are going to need the money to support you then shares are not a good option. You need to put your money in a safe accessable account.

Shares should only be considered as a long term investment - 5 years or more (in my opinion)

[GuavaHalf]

I suppose my previous answer does not actually answer your question!

You can buy share through your bank or you can open an account with a stock broker. I think the best think to do is look at one of the internet dealing services eg www.iii.co.uk

[Hammer]

Or buy units in a collective investment scheme such as an OEIC or an Investment Trust. A professional manager will be deciding what to do with your dosh so you are less likely to lose it all!

[spudqueen]

Surely not a good idea for a student. You do know that you are as likely (if not more so) to lose money than make a profit?

[mikeyp]

Thanks for the help so far. My explanation as to why i'm interested in doing this while studying at uni, is that if i don't put the money into somewhere, i'm only going to spend it. If i put it into a bond, or buy some shares, or something, i'll still have enough money for uni, plus a bit extra when I get this back. As for what spudqueen said, I don't really understand shares that well, but surely if you buy some, and their price goes down, you only lose money if you sell them? Can't I just sit on them for a few years until they go up? Assuming they do, like if I buy them with a company that should do reasonably well. I'm happy with not having access to the money for a few years. It's just I was looking into savings plans. And for example, if I stick �1000 into a 5% interest savings account, if I don't touch my money for a whole year, all I get is �50, pretty lame. I just figured shares give you the opportunity to make a lot more? What about a bond?

[stevie21]

If you buy shares in a reputable company which has slow steady growth (think "Royal Bank of Scotland", or, less stable "GlaxoSmithKline") and leave them there for 10 years then you can be pretty certain of making a profit. More so than a savings account.

Can you afford to be without the money for this long?
Any less than this and the value of the shares will be more prone to temprorary fluctuations, especially the latter example.

In response to Hammer, Managed Funds tend to do worse than pot luck! Many underperform the stock market average, especially when you take the pricey fees into account. I'd avoid these. Even an index tracker which only promises to match (rather than attempt to outperform) the stock market is better in my opinion.

[ceebee007]

There are investment bond products from which you can choose to take a monthly income, whilst your original investment keeps growing.  There are some now where you have control over the actual funds the money is invested in.

Find yourself a good Independent Financial Adviser who can look at the bigger picture - ie all you income and outgoings, future earning potential etc etc.  He/she could then advise accordingly.  Good advice at this stage will really pay off. (no pun intended!)

[mikeyp]

Thanks for the help stevie21, as for your questions. I don't know whether I can be without the money for 10 years. That really depends on the return i'm going to be getting (obviously it's uncertain). For example, i'm not investing that much money, maybe 1000-2000? I don't know how much RBS shares will go up in that time, but is it worth tying up only that much money? I don't need the money as such, but if say I only invest �2000 and after 10 years get back an extra �200. I don't think it'd be worth it.

[mas449]

If you want to simply put money away and hope for some return greater than offered with a savings bank then try premium bonds, A chance of winning a million or smaller prizes and you will never lose money (excl the �50 interest you would have got). Access is easy and the odds are 24000/1 i think. Oh as from August there are now two seperate 1million pond jackpots. Take a look at  http://www.nsandi.com/  

[stevie21]

The reason that I've mentioned 10 years is that if you take every year since the London Stock Exchange began, add ten years and calculate by how much the share price (FTSE 100, just for simplicity) had grown, some years it's 5%, some it's 15% etc. On average, the growth over ten years is about 10 or 12% which far outperforms any savings account.

The main point is that you should only invest money in shares that you can afford to be without.
Just as you're about to cash in your shares, the stock market crashes. Any that I have, I can think "OK, I'll leave them for another few years, they'll recover at some point". Can you afford to?

Maybe shares aren't the right option for you at this time. Get something with a guaranteed growth (savings account, bond) and perhaps even that gives you an income if you need it.
http://www.moneyfacts.co.uk/menus/main/selections_saving s.htm

[mikeyp]

Thanks a lot for all your help guys. Maybe you're right stevie, perhaps shares are not the best option. I have some time until the end of the summer to think it over anyway. Cheers!