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It is all very baffling and confusing. I want to get started investing - how? Much written on the internet introduces the subject but does not provide a start - do I need an account? a broker? Where do I actually start? What is the minimum I can start with?...
Question
It is all very baffling and confusing. I want to get started investing - how? Much written on the internet introduces the subject but does not provide a start - do I need an account? a broker? Where do I actually start? What is the minimum I can start with? - Posted by Bob Mellor
Answer
ANSWER 22nd February 2010
Hi Bob,
It is not at all baffling or confusing!
Firstly you do need a broker of some sort in order to trade shares on the stock exchange.
Now who you choose, I suppose depends on how you want to go about trading, or investing.
What are the options?
1. Personal stockbroker (with telephone contact)
2. Bank or Building Society type broker.
3. Online broker.
Option 1 is suitable if you envisage reasonable size portfolio (£20k+) or intend to trade fairly regularly with reasonable amounts (£2k+, once a week+). You could have an advisory account where you can discuss investments, strategy, markets etc. with your personal broker. Seems to me not a bad option.
Option 2. Ok banks own stockbrokers so this could be like option 1. But I am thinking more of a bank/building society that channels your order through another broker. Probably execution only, no 'phoning for a chat about the market, no advise or suggestions etc. Possibly delay from order to execution.
Option 3. Online broker. You have a access to your own dealing screen where you can input orders. Execution only. Small investment possible. Access to bulletin boards,research etc.
In most cases, it seems to me that option 1 is preferable. However you may feel that your size of investment precludes you. Maybe.
Whichever option you feel is best for you the 'broker' will require, apart from filling out the necessary application forms, some money up front. This will vary from broker to broker and may be a 'margin' account or a cash account.
I hope this is a start and don't want to go into too much detail all at once.
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