The sale of the government's remaining stake in Lloyds Bank has finally been announced, and it's good news for small investors. £2 billion of shares are up for grabs, and this is one of the few occasions where the 'ordinary' investor gets to jump the queue.
It's believed that George Osborne is keen to avoid the fiasco with the Royal Mail privatisation in 2013, where many wannabe investors were left empty handed, and as such anybody looking to invest up to £1000 will be given priority.
Anyone investing up to £1k will also enjoy a 5pc discount on the market share price at the time, as well as an extra share for every 10 purchased (up to a maximum value of £200), if they keep hold of the stock for 12 months. It's worth noting that to get the maximum bonus, you'd need to actually invest £2000 – but the government has stated that applications up to £1000 will be prioritised, so you might miss out if you try for more. It's not yet been made clear if applications of more than £1k will be rejected outright if the allocation has already been snapped up by smaller investors.
In fact, full details of the deal are yet to be published, but interested parties can register their details with gov.uk/lloydsshares for updates.
Since the sale of Royal Mail in 2013, the government has established an online service for buying shares to make it more convenient and accessible for members of the general public to get involved. The service is managed by a registrar company who issue the share certificates.
This is really the cheapest and easiest way to buy shares as you don't pay any fees for purchases. However you should be aware that you may have to pay a fee or commission when you decide to sell your shares.
It's unlikely that you'll be able to buy the Lloyds shares as part of a pension of stocks and shares ISA. If you're hoping to do this, it may be worth enquiring with your provider to see if they'll be catering for this, but reports suggest that the admin and tight record keeping that will be required, will make it inaccessible for these types of schemes.
Investing Online via Banks
Aside from buying direct from the government, you can also buy the shares through online investing platforms, some of which are offered by major banks.
Each platform has it's own charges and fees. These can be waived if the shares are bought and held outside of a SIPP or ISA, but keeping them inside these 'tax wrappers' will often lead to expenses to cover the admin involved.
If you're investing regularly, then platforms such as these can help to reduce your expenses. It's not all about how much you invest; some schemes will favour those who invest small sums, and others will favour those with far more to invest. Generally speaking, it's the frequency of your investment changes which will have most bearing on the cost to you.